If being a tycoon were a race or a religion, it would get some respect, or at least some patronizing sympathy. But, alas, tycoons are left to their own devices, abandoned by all to defend themselves against malicious attacks with little more than a financially troubled daily newspaper or a prime minister more preoccupied with attacking Iran. Imagine looking down at the city from the wide window of your penthouse office suite at a Lilliput of sanctimonious social activists, pandering politicians, bothersome bondholders and nattering newspaper columnists, helpless as Gulliver to stop them.
It’s shame that when one tycoon misbehaves, the entire group is tarred. When one big shot imposes a haircut on his bondholders, well, of course, everyone says they all do that. If another is seen boarding his private jet after sending dismissal notices to employees, well, that’s typical, we say. Almost one of us can refute the charge of prejudice by saying, yes, but some of my friends are tycoons.
Let’s face it, our tycoons are not all that bad. Some of them are better than others. Not a few are exemplary examples of the kind of innovative, job-creating entrepreneurs so beloved of American Republicans. When they’re lined up against their peers in America, Europe, Russia or China, Israeli tycoons actually compare favorably.
Here are four good reasons not to loathe them:
There are good tycoons: In this age of overextended capitalists the ones who went on merry romps around the world picking up overpriced real estate and trophy assets to come home and impose debt resettlements on the pension funds of widows and orphans let’s not forget the other kind of tycoon. There are those like the Wertheimers (Iscar) and the Strausses (Strauss-Elite) who built and continue to build real businesses that create products and services in competitive markets while generating jobs. Even high-tech entrepreneurs, who have lately come in for a scolding for failing to develop big and sustainable businesses, make their money by innovation and drive. A few of them, like Gil Shwed (Check Point), Eyal Waldman (Mellanox) and Ronen Shilo (Conduit) have in fact shunned the quick buck of an M&A deal and stayed the course. These tycoons are the ones who are a credit to their class.
They are self-made: Our tycoons constitute a class, not a caste. For every Idan Ofer and Shari Arison, there is a Yitzhak Tshuva, Lev Leviev and Ilan Ben-Dov, all of whom worked their way into tycoon-dom. None of them as is typical in America these days made their fortunes trading their own or other people’s money in the financial markets. The tycoon class is not closed and the tycoons themselves exhibit little sense of entitlement, except vis-a-vis bondholders looking to be repaid. That doesn’t necessarily make our tycoons the kind of people whom you’d want to spend a quiet evening with, and a lot of them used the fortunes they made from their early industriousness to find a pyramid and milk it, but they have to be given credit where it’s due. For all the anti-competitiveness in the Israeli economy, there are opportunities to do honest, socially useful business and make money.
Their personal behavior: By international standards, our tycoons are gentlemen (and in a very few instance, ladies). Unlike their Russian counterparts, they don’t go in for teams of rough bodyguards or become entangled with paid assassins. Unlike their American peers, they do not spend fortunes buying public opinion for bizarro political causes a la the Koch Brothers or Sheldon Adelson. They have their private jets, yachts and big homes, but as conspicuous consumers go, Israeli tycoons are relatively modest compared with big shots overseas. They don’t buy foreign sports teams or marquee properties (except for an occasional Plaza Hotel) to massage their egos. Few of then have trophy wives. Some engage in eccentric behavior, such as consulting x-ray rabbis or showing an odd affinity for oriental religions, but these are mild personal eccentricities. In spite of all the many accusations of conflicts of interest and of frittering away the public’s savings, none of the tycoons have been accused of criminal acts. Money has evaporated, but the public knows where it went in bad investments, not into Swiss bank accounts. Indeed, our tycoons’ personal behavior is so modest that they almost never present good press except when they are negotiating debt settlements.
Their businesses’ structure: Pyramids, the business organization of choice for many of our most infamous tycoons, have been unfairly maligned by the press and by government committees. Yes, they do create a conflicts of interest between the various operating companies and the tycoons’ insatiable appetite for dividends and control. Minority shareholders are often short-changed and creditors take on added risk by exposing themselves to a murky network of interconnected businesses. But the economy’s real problem is monopolies and near-monopolies. Tycoons exploit those, but the monopolies would exist with or without them.
Super-Sol and Blue Square would still have a lock hold on food retailing if they were controlled by the public rather than by Nochi Dankner or David Wiessman. In any case, the most egregious monopolies the ports, electricity and land aren’t owned by tycoons at all but by the government and for all intents and purposes their unions.
A stout defense of tycoons is one thing, but the bigger question is whether we really need them at all. Not being so bad is not quite the same thing as being socially and economically useful and that’s where the tycoons have their problem. True entrepreneurs create and operate businesses in competitive markets and succeed because they have deep understandings and insights into their industries and know how to manage companies. Too many of our tycoons are people who may have started that way but decided to spend the second half of their life perched on pyramids of cash cows. While they don’t detract from the economy as much as they are accused of, they also contribute very little. The businesses inside their pyramids do indeed contribute, but those businesses rarely need the expertise or cash of the tycoon. They could do perfectly fine without him. And so could we.