How can business owners become richer while their companies fail to flourish?

Have you checked the Fortune Global 500 and the World’s Billionaires by Forbes?  I take a look at the rankings every now and then. The former gives the ranking of the 500 largest corporations in the world by revenue and the latter gives the net worth of the world’s billionaires. The first is based on companies, the second on persons. For years, Koç Holding has been the only company from Turkey on the Global 500 list. Meanwhile, the number of Forbes billionaires from Turkey has been increasing each year. The 2013 lists were recently released. Turkey still trails behind in the Fortune Global 500 while the number of billionaires in the Forbes list has reached 43. Compared to America’s 132, that's not bad at all. This whole picture makes me wonder: how can business owners become richer while their companies fail to flourish? How come? Let’s take a look.

First let me note one thing concerning the Fortune Global 500: on the global scale, Turkey is not a country with large corporations as it does not have global brands. The other day, in an interview with Vatan daily, Turkey’s famous contractor Ali Ağaoğlu said that if the revenues of the companies in the Turkey 500 list that ranks the 500 largest companies of Turkey were summed up as if they were a single corporation, the total would make it to third place on the Fortune Global 500 list. Turkey’s companies are small. But that’s not my purpose today. I rather wonder how the number of Turkey’s billionaires is rising whereas its companies are too small to make it to the Fortune Global 500. This does not seem normal to me. Turkey has 43 dollar billionaires and a single company in the global rankings while Korea has 22 dollar billionaires and 13 companies on the list. Sweden has 10 billionaires and 4 companies listed. Looking at these numbers, do you not think like I do? Don’t you think that something on Turkish soil allows individuals to get richer but restrains the ability of companies to grow? Don’t you wonder how these billionaires, who grow both in number and net worth, expand their wealth given that their companies are not expanding and flourishing? I do.

Let me derive a few conclusions. First, a climate that does not allow companies to grow and flourish makes it senseless to invest in education and experience in Turkey. I was chatting with a senior diplomat friend of mine the other day. “American companies employ retired American diplomats as consultants and pay them high salaries just to get their advice a couple of times a year. Companies in Turkey don’t do that,” he said. It’s clear why, don’t you think? Consultants are there for risk management. Managing the balance sheet of a company requires proficiency in managing a series of real world risks. If you don’t have a large company that undertakes great risks and carries out real operations in the field, you would not be much interested in global risks. At least, you would not be willing to pay a fortune for risk management. This story is also true for attorneys and economists. Particularly if the business environment is driven by relationships rather than rules, the importance of education and expertise vanishes. This is the first conclusion.

Second, the numbers of billionaires being radically high compared to that of large companies might be because company owners might be earning their wealth by ways other than company operations. For instance, in an economy like Turkey's where profits from real estate are a vital source of wealth production, the mismatch between the number of wealthy persons and of large companies is quite normal. It has to do with the system. Turkey’s investment climate has always been distorted like this. Nothing has changed; nothing to resent.

This commentary was published in Radikal daily on 12.07.2013