The Tribune

By SIMON COOPER Res Socius THERE'S an ebb and flow to everything in life. The tides go in and out. After harvest we return the stubble to the field. When we die our mortal remains return to earth or sea. As one business dies, the competition claims its place. Some call this creative destruction. I never used to think of destruction as constructive. I've learned it sometimes is. Take Germany, for example. Hitler backed his nation into a corner from which there was no escape. Vengeful forces came that destroyed everything. Countless millions of people died. The country that emerged from this was inspired to rebuild. The rest is history. Now the world expects Germany to save the Europe that once hated it. Last week, the Nassau Institute hosted a video about Milton Friedman. His parents were indigent American Jewish migrants from Hungary, and he was born in 1912. I find it interesting how this nation pops up in moments of excellence. I sometimes think the world might have been quite different if Hitler hadn't had his way. In case you don't already know, the Nassau Institute supports economic development in a free market economy. They would like the Bahamas to become a developed model for the Caribbean to aspire to, and for the rest of the world to admire. That could take more than a dash of creative destruction, I should think. Back to Milton Friedman. He was a straightforward fellow who spoke his mind. The Economist said "he was the most influential economist of the second half of the 20th century...possibly of all of it". Who says you can't surmount your disadvantages and achieve anything in life? One of Milton's major contributions to western economic thinking is that there will always be imbalances. These include the rich and poor, and the wealthy versus the unemployed. He believed that business was there to generate profits (and, incidentally, to create wealth and jobs). He did not agree that business should do this with an altruistic conscience, though. Independent thinkers like Ronald Reagan and Maggie Thatcher seized on this to promote their economic visions. Huge political battles ensued. But Reagan did break the back of conscription, and Thatcher the power of the secret union vote. Some said at the time that this was the destruction of things their nations held dearly to their hearts. But Maggie and Ronald did springboard the West into almost unprecedented growth. On the micro-level, I believe that individual businesses have to be creatively destructive sometimes, too. This includes chucking out their holy cows, adopting new strategies and closing out unprofitable lines. When all else fails, I believe they also have the right to lay off hands, albeit as gently as they can. I think Friedman was right. The duty of managers is to be responsible to owners by generating profit. After all, that's why they invested in the first place. It follows that businesses do not have over-riding social responsibility per se - although I do grant all employees, including most senior management, the right to exercise this on a personal level. NB: Simon Cooper is a founding partner of Res Socius, a business brokerage firm authorised by the Bahamas Investment Authority that facilitates the sale and purchase of businesses. Contact 636-8831 or visit www.ressocius.com.