The finance company debacle is an incredibly sad indictment of some leading figures in our society, writes Peter Lyons.
There are two types of people in this world: those who take responsibility for their actions and those who believe the negative events that befall them are never their fault. The latter never acknowledge the common element in the dramas in their lives is themselves. They are always the victims of someone else's actions. It is never their fault.
This sounds like a right-wing rant. It is not. It is the filter through which we should observe the pathetic denouement of the finance company collapses that have plagued our society in recent years.
The true heroes of capitalism are small-business owners who put their life savings on the line to start a business. Many fail, but those who succeed go on to create jobs and incomes for others and help grow our economy. These entrepreneurial heroes are self-starters who believe their efforts and enterprise will succeed, often against high odds. They are the drivers of prosperity. They are willing to take responsibility for their actions and accept the consequences of failure. Failure often means losing everything.
Let's contrast this attitude with those involved in the various finance companies that are now departed. Their misdeeds fall into various categories. There are those who acted as directors or trustees and received their fees but had little understanding of the risks of the businesses their names were associated with.
There are some who just failed as businessmen in a difficult time. There are those who continued to deceive the public while accepting their money knowing the business was about to collapse. There are those who were lending to themselves, friends and family knowing the cost of any bad debts would not be borne by them. There were some who paid themselves massive dividends knowing the business would collapse. They were effectively transferring the hard-earned savings of others to their own pockets. Most deny they were aware of the true situation of their business and this is where legal proof becomes very difficult. And maybe there were some truly innocent souls.
There are also those who used their public reputation in sports or the media to promote these outfits. The common factor in this sad procession of individuals is not one person has actually admitted any responsibility either in poor decision-making, general incompetence or less likely, outright deception. Not one person has accepted any responsibility for his actions in any capacity. This is an incredibly sad indictment of some leading figures in our society.
Many retain substantial assets while hiding behind legal niceties. Some continue to promote other products in the media. They seem blithely unaware their public proclamations enticed fellow citizens who trusted them with their life savings.
Many of those who lost their life savings in failed finance companies were those least able to recover. They were elderly folk who believed fixed interest investments were safer compared to exotic instruments such as shares or managed funds or exchange traded funds. They were people who worked hard hours in jobs for many years, rising early in the morning and taking packed lunches to work, They raised families while denying themselves extravagances. They lived for retirement in the belief this money set aside would allow them a few pleasures in their older years.
The actions of the finance company perpetrators can, in many cases, be likened to the economic rape of these citizens. These folk didn't aspire to mansions or heated swimming pools. All they hoped for was a few treats in their old age. They have been robbed of this. Yet, not one person has even admitted to getting it wrong, at least none I know of. No-one has taken any public responsibility for his actions in any capacity. The use of male pronouns in this article is deliberate.
No director has offered to return his fees. No promoter has offered to put the amount for which he sold his reputation into a fund for compensating the victims. Many continue to fight the obvious fact of their ineptitude, incompetence, or culpability. The evidence of their failure as businessmen and in some cases, decent humans, is there for all to see.
- Peter Lyons teaches economics at St Peters College in Epsom and has written several economics texts.
