In the midst of what has been, from all reports and correspondence I have had, an amazing summer in Portugal for record numbers of tourists, a dark shadow has crept in amidst the sunny days full of great sights, culinary delights, and stunning history of this delightful country. And as is typical in Portugal, it has to do with the abuses of a few in powerful positions, and yet the entire country and its people is tarnished. I am speaking here of the news about Banco Espírito Santo, and what appears to be its imminent collapse.
There are few families as storied as the Espírito Santo family, whose investments include hotels in Europe and farms in South America, holding companies, and a murky balance sheet of intertwined companies across countries. Intertwined with the contemporary history of Portugal, the family has had a strong influence over Portugal’s economy for well over a hundred years, through the collapse of the monarchy in 1910, to the rise and fall of the Republic, the long gloom of Salazar, and through the Carnation Revolution of 1974 and the entry into the EU. As the highly leveraged "family business" struggles to survive, it appears that the bank will become nationalized, with the assistance of the EU banking system and the Portuguese Central Bank.
Amidst the oft-cited reasons for fostering entrepreneurship in any country, one is often overlooked, and it is something that I have written and presented at an academic conference about--what I refer to as "the aristocracy of economics." The excessive and centralized consolidation of economic power and influence in the hands of any person, government, industry, etc., is, as history has shown, typically bad for all. Further, one should not view a "one size fits all" when it comes to economic systems and countries and regions, for there are unique elements to each setting and people should always have the freedom and liberty to choose what works best for them. History is rife with passionate advocates who replace one system with another, and simply replace the one set of powerful actors in control with another set.
All of these systems are always susceptible to being undermined and controlled by the aristocrats. And there is where entrepreneurship comes in, and why they are so important to all of our futures, our communities, our nations. At its core, entrepreneurs disrupt existing power structures and systems, seeking efficiencies, uniqueness, and unrealized value. They wait not for the permission to do such things, nor do they typically have to cope with the organizational inertia and stagnation that larger existing entities have. They are much more free to fail, to "dust themselves off" and to try again, learning more from the experience and not letting it define who they are.
When aristocrats consolidate their power, and inherited wealth is freely passed to generations who have no knowledge, experience, and conception of the struggles of the lower and middle classes, one sows the seeds of disaster. That is one of the main reasons why billionaire investor Warren Buffett has refused to transfer his wealth to his children, and some other mega-rich families are agreeing to follow his example. This approach to inheritance would likely diminish the examples of those like Ricardo Espírito Santo Silva Salgado, the family patriarch and former head of the bank, who was arrested this past week in Portugal and charged with tax evasion and money laundering.
The good citizens of Portugal, and other countries as well including the U.S. and northern Europe, need to learn from these lessons. There are some nascent steps being taken within the EU, such as the Go Conference held earlier this year in Lisbon, fostering and stimulating young entrepreneurs. There are new programs and advocacy groups for entrepreneurship emerging, both within and outside of formal education in Portugal. These are all hopeful signs.
We need to seek more ways in which these young people, and young thinking people of any age, can reimagine and disrupt their own enterprises, ventures, churches, economies, political structures, not for the mere sake of change, but rather to foster new growth and prosperity for all.
We need to seek more ways in which these young people, and young thinking people of any age, can reimagine and disrupt their own enterprises, ventures, churches, economies, political structures, not for the mere sake of change, but rather to foster new growth and prosperity for all.
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