Much of my business activity over the last three weeks – professionally I am a translator and an occasional copywriter and copy editor – has revolved around two large Belgian companies: writing the annual report for one, and translating it for the another.
As a Christian theologian in my free hours, what I translate or write for others throws up inevitable questions. Let me focus on one here (others may follow if readers are interested), that is exemplified by these two companies in particular. Both are more than a hundred years old. Both have remained in family ownership, one totally, in the other the founder’s descendants, now in the fifth (?) generation, together hold a controlling share, enough to block a hostile take-over bid. In neither of them is a family member still involved in running the company on a day-to-day basis.
From an operating perspective this has the huge advantage of being able to operate in a long-term perspective, without being captive to the fickle mood of stock markets. You can take the risk of a couple of bad years without the risk of being taken over if your stock prices sinks. In conventional economic wisdom, this allows you to earn a higher profit over the long-term. It also tends to make for more steady jobs for those inside them – even if the pay can be a bit thin, especially at the bottom end.
But there is one aspect which irks: the dividend. The companies together pay out together somewhere around EUR 130 million a year to these family shareholders. Depending on how you do the arithmetic, this is between 1000 and 2000 families able to live for free because great-great-(great?)-grandfather was a very smart entrepreneur. The persons involved are often key figures in a mainly upper bourgeois echelon of society which operates largely detached from the rest of society here, their wealth well-guarded by excellent financial advisors, lawyers and private banks (gone are the days when a reckless heir could fritter away a fortune on women and cards!). Traditional financial theory tells you that shareholders are the ones who take the risk in the company, and are rewarded accordingly – but it has been twenty years since results were so bad as to reduce dividends: and indeed these companies’ commanding positions in key industrial sectors pretty much preclude this. Some of these ‘free-rider’ shareholders may do socially useful things: one I know is able to dabble in iconography and photography, act as a deacon and raise five children in an expensive suburban house (a near impossibility for a ‘normal’ couple where both have to go to work to make ends meet). Many, I suspect do not. I am no socialist, far from it, but I still wonder whether this situation is socially either just or – perhaps a better criterion in an inherently sinful society – optimal to the overall functioning of society in this country.