Political Threats

In many countries the greatest dangers to wealth may arise in the political arena. A friendly government can be voted out or overthrown, or the existing government may radically alter its political course. Recently, the opposition candidates were elected president of South Korea and mayor of Mexico City. Whenever the party in power changes, there is a massive redistribution of wealth as business ties with supporters of the old regime are cut and new relationships with new supporters are forged.

In every country, to greater or lesser degrees, the success of a business depends upon the relationship with the proper government officials. Contracts, licenses, permits, and privileges are granted to those who are able to cultivate influence at the right levels of government. When power in the government shifts from one faction to another, there can be a dramatic reshuffling of the wealth in society. Money and influence shift to the friends of the newly empowered, and those previously excluded enjoy their day in the sun.

The political and business forces removed from power face varying degrees of retribution. Cuba’s Fidel Castro confiscated the property of the Battista supporters and thousands were jailed. Business associates of the Shah of Iran were forced to flee the country, leaving behind their homes and savings. In the U.S., political ideology is secondary to an uninterrupted flow of campaign contributions. A change of administration only impacts those business owners who foolishly bet everything on the losing candidate and are unable to make amends with the winner.