Capitalism is, of course, important. That lust for profits drives a great deal of the innovation we see across the economy. Markets are more important in that it’s that competition which limits the ability to profit and means that we out here gain the most from the system. Markets in that very capitalism itself similarly regulate behaviour.
Which makes this complaint more than a little ridiculous:
A group of powerful investors, including Legal & General, has demanded a crackdown on the shareholding structures used by tech tycoons such as Evan Spiegel and Mark Zuckerberg to retain control of companies after they float.
The group, which includes the Dutch pension giant PGGM, wrote to the two biggest US stock exchanges this month calling for a time limit on the use of multiple share classes with different voting rights.
There’re a number of companies out there into which one can invest. If the business plan of one is not to taste then there’s another which might be of interest. The same is true of the terms upon which one can invest. If this offer - say, no voting rights upon shares to be bought - doesn’t attract then unlike busses there will be another along in a minute.
If you’re not happy with voting rights and multiple share classes then don’t buy the stock. There’s really no great mystery to this at all.
It’s also true that these very investors know this. Bonds offer one deal, interest plus the return of capital - hopefully - and no voting rights. Preference shares another deal, straight equity a third and so on. All of these investors will have some exposure to each and every class of investment under those varied terms. Whining about the detail of one sub-class here is most unbecoming.
For this is rather the point of these public markets in the first place. We get to decide where we’ll invest and which terms we’ll accept for doing so. Demanding what isn’t being offered isn’t the correct plan, not investing on terms we don’t like is.