Where Do We Go From Here?
During the recent economic downturn, the reputation of the hedge fund has been exposed to a battering which many believe will leave a permanent marker in the reputation of this business structure. The belief in rampant capitalism is no longer taken to mean gospel truth. Rather people are insisting that capitalism is always tempered by common sense approaches to economic policy to ensure that there is no exploitation of weak economic structures.
The people who used to own and run hedge funds still have that burning desire to make profits and they will always look for ways to resurrect their ambitions. This is in spite of the widespread condemnation that has been leveled at the system.
As for the various economies, they have to get over the initial shock of the economic downturn and think of new ways to improve the lives of their people. Of course they will be far more cautious about the presence of hedge funds but at some point they will have to invite them back to do business. In fact some bold governments have already set up initiatives to ensure that they can attract the hedge fund once again before other rival governments get in on the act.
One would like to think that the hedge fund managers have learn a good lesson and will not go back to the practices of making unmitigated risky investments. That they will learn the value of building good community relationships and ensuring that the people in the countries in which they invest get a reasonable benefit from their presence. This is not to say that they will all over sudden abandon their business instinct and start giving all their profits to charity. It merely means that they will balance their ambitions with recognition that they operate within a community and that they will feel the obligation to give back to that community.
However experience tells me that none of this is going to happen. The hedge fund will continue to be an instrument of exploitation to the maximum. They might make some half hearted attempts to appear to be socially responsible especially given the new obsession with environmental matters. However their core purpose can never move away from making maximum profits at minimum profits. It would be unthinkable to believe that a successful hedge fund will suddenly put the interests of the community above that of the people who give them money.
As for the communities themselves, they will continue to question the presence of the hedge fund within their communities and will demand to understand why they are not receiving the full benefit of such a lucrative business opportunities. The excuses will probably run out and eventually the hedge find might acquire a socialist twist in as much as it might increase the access to ordinary people who want to invest their savings.
There are no clear signs yet that the governments are contemplating such a move but history tells us that the greater the agitation from the people, the greater the pressure on the politicians to respond. Perhaps there is still hope.