The liberty of a people consists in being governed by laws which they have made themselves, under whatsoever form it be of government; the liberty of a private man is being master of his own time and actions, as far as may consist with the laws of God, and of the country. Cowley
Mr. Branville McCartney and his populist idea for government funded entrepreneurs.
18 June 2010
Joan Thompson, President, The Nassau Institute
The press quotes Mr. Branville McCartney’s speech in Parliament:
"There are a dozen businesses that I could name today, that with a bit of encouragement and start-up financing could benefit from revitalization."
Perhaps he means well in suggesting government funding for private enterprise, but Mr. McCartney’s wisdom is questionable when government has failed to give a full accounting for existing government financed Venture Capital programs.
Government has no money, only what it takes from tax payers who have the right to know how it is being utilized.
The PLP “Venture Fund” allocating $2 Million dollars in loans to start up a business is a typical example of Mr. McCartney’s “dream” program.
Then there is the $1.7 Million FNM program for the youth start up business.
The money is allocated, eventually distributed and the success or failure of these programs never reported to the public. After all, the money is forcibly taken and the public has a legitimate interest in knowing who received it, what they did with it and how it has benefited the general welfare.
The above two programs total $3.7 Million of unaccounted money in less than five years. They are only two of numerous others that have been initiated on the same misguided notion that when enough money is made available a viable enterprise is born and everyone benefits.
Popularity is the essence of politics and individual popularity the goal of every politician. Unfortunately the road to political popularity is mostly littered with the detritus of the misspent capital of those who earned it. The politician gets publicity and praise for the idea, but is not held accountable when it fails.
The law of scarcity is particularly evident today as the wishing-well of foreign investment money runs dry. The country is “deeply in debt” and there is no money for altruistic idealists to dispense particularly when they lack the insight to distinguish between the risk taken by self motivated entrepreneurs and those having nothing to lose taking advantage of government Free-B’s.
There are private sources for Venture Capital. The government role in boosting economic activity is to provide the necessary infrastructure the private market cannot supply like a safe place to operate a business, low taxes and a stable currency.
Mr. McCartney’s popularity is assured when proven policies such as the foregoing are recommended to parliament. It will be enhanced even further when he arranges for publication of full reports by independent analysts on all government Venture Funds.
Joan Thompson President, The Nassau Institute
Comments
Joan - 3 August 2010 10:53
Venture Capital
Mr. Reichenberger properly draws our attention to the need for an efficiently functioning court system. The tax-payer money wasted in the government Venture Capital fund referred to in our article would be more wisely invested in necessary improvements to the courts.
Wolfgang Reichenberger - 2 August 2010 14:41
Venture Capital expertise
The Bahamas VC funds should use the expertise available on the Islands managing international VCs. As Managing Director of inventages, I make myself available to assist local Bahamian funds. Please contact me if necessary. 21st July I am unfortunately off the Island
Bay Street - 30 June 2010 10:56
Risk of Business
I agree that the government's role is to provide the proper infrastructure to promote economic activity. In addition to what you stated, I would like to add having proper legal protection for business investors and shareholders. If I was to invest funds into a private enterprise and for whatever reason the creditors/investors have to take each other to court, it is extremely difficult to get things resolved. There is a lot of private capital in the hands of the public, but the risk of not be able to recover those funds in a court of law is very high. Thus the call for the government to provide funds to the private sector. In India, there is Consumer court that only hears cases where consumers bring charges against corporations/partnerships or sole proprietorship, Canada has small claims courts, and so on. What is the ratio of open to close complaints the Consumer protection department handled since inception? How many cases went to trial, need more evidence, etc?
I am still adovcating for some minority shareholder protection for public companies as most public companies do not consider minority shareholders. Case in point, how do we know that the minority shareholders of RND could not receive a higher value for their shares if the company was not shopped around? There should be some stipulations when the majority shareholder changes hands. But just as important, minority shareholders need to demand a higher return (stated or residual) for taking on such risk.
Comments
Joan - 3 August 2010 10:53- Venture Capital
- Mr. Reichenberger properly draws our attention to the need for an efficiently functioning court system.
The tax-payer money wasted in the government Venture Capital fund referred to in our article would be more wisely invested in necessary improvements to the courts.
Wolfgang Reichenberger - 2 August 2010 14:41- Venture Capital expertise
- The Bahamas VC funds should use the expertise available on the Islands managing international VCs. As Managing Director of inventages, I make myself available to assist local Bahamian funds. Please contact me if necessary. 21st July I am unfortunately off the Island
Bay Street - 30 June 2010 10:56- Risk of Business
- I agree that the government's role is to provide the proper infrastructure to promote economic activity. In addition to what you stated, I would like to add having proper legal protection for business investors and shareholders. If I was to invest funds into a private enterprise and for whatever reason the creditors/investors have to take each other to court, it is extremely difficult to get things resolved. There is a lot of private capital in the hands of the public, but the risk of not be able to recover those funds in a court of law is very high. Thus the call for the government to provide funds to the private sector. In India, there is Consumer court that only hears cases where consumers bring charges against corporations/partnerships or sole proprietorship, Canada has small claims courts, and so on. What is the ratio of open to close complaints the Consumer protection department handled since inception? How many cases went to trial, need more evidence, etc?
I am still adovcating for some minority shareholder protection for public companies as most public companies do not consider minority shareholders. Case in point, how do we know that the minority shareholders of RND could not receive a higher value for their shares if the company was not shopped around? There should be some stipulations when the majority shareholder changes hands. But just as important, minority shareholders need to demand a higher return (stated or residual) for taking on such risk.
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