There Is No Such Thing As A Free Lunch, But The Temptation To Distribute One 0r To Get One Seems To Be Too Strong (Part 1)

During these absurd and uncertain times, it is easy to be consumed by the 24-hour news cycle, to be constantly distracted by the latest news and updates, and eventually to lose track of what really matters. We are indeed facing unprecedented challenges and we are witnessing a historic turning point in the relationship of the individual citizen to the state and to centralized power in general. Thus, one cannot be blamed for the urge to follow the most recent measures or restrictions or for the human need to discuss the overall situation with others, in an effort to make sense of it. Nevertheless, we must always keep in mind that actions speak louder than words, and that merely talking about any problem will do nothing to fix it. 

This is why I have always admired “doers” over “talkers” and this is particularly true in the world of business, private enterprise and entrepreneurship. As the old adage goes, everyone has a great idea every day, but few can actually bring even one of them to life. The effort, the patience, the sacrifices, the skills and the sheer perseverance that is required to run and grow a successful business are increasingly uncommon traits and not many people are willing or able to take on the challenge. 

My old friend, Daniel Model, is such a person and this why I turned to him for his views, experiences and insights into this crisis and what comes next. He is Chairman and CEO of the Model Group, a European supplier of corrugated and folding carton packaging solutions. It is a family business with a history that goes back almost 140 years, which is today managed by the 4th generation, by Daniel and his wife, Elisabeth and the company has 14 plants in five countries and more than 4200 employees. Apart from his successful business, Daniel is also an avid reader, devoted to lifelong learning and exploring all kinds of areas of human knowledge. He holds a PH.D. in business and economics from the University of St.Gallen and he is the founder of a new state on the green field called Avalon, while he has also long supported, fostered and championed the arts, culture, as well as the overall human pursuit of knowledge and understanding in its many manifestations. 

Claudio Grass (CG): The covid crisis has affected all of us and disrupted practically every facet of lives. However, the private sector has suffered the most, as a year of lockdowns and mandatory closures spelled disaster for countless employers and millions of employees. If you think back a year ago, at the start of all this, do you remember your initial reaction to the first government restrictions and business shutdown orders? Did you expect these restrictions to multiply and to last for so long?

Daniel Model (DM): First, I did an introspection into my own body, to check what my risks were and whether the virus could harm me severely. I was surprised at the clarity of the result: NO. But it also became clear very soon that many other individuals either are full of fear or had come to another conclusion, perhaps because their own health or physical condition maybe were not so good. This reality has to be respected without further judgement. When wearing a mask has a calming effect on your counterpart, wear it.

As far as the governmental response goes, I was not really surprised by the measures or their longevity, because states and their governments are too big and too powerful not to intervene in such a case. Fear itself is such a powerful force – although a bad consultant –  that it overrules serenity and reason. It is also the consequent continuation of a devastating policy with a compulsory health insurance system that suggests that health is not a matter of individual responsibility, but bad luck that could strike anybody, and therefore a subject of general uncertainty that turns easily into fear. 

I remember the responsible minister when promoting the new healthcare law, promising at that time that the costs will come down. Of course, the economists already knew that the exact opposite would happen: yes, the heaviest users of healthcare services will get a better price, because it would be paid by others and the demand will therefore go up with the consequence of higher funding needs to satisfy such higher demand levels. This is all bad enough, yet the worst effect of this system is the weakening of the disciplinary power to care for one’s own health – covid might have opened some eyes in this regard.

CG: As weeks and months passed by and it became clear that we were not going back to normal anytime soon, what were your main concerns and worries about your own business and the people who depend on it? How did you adapt and did you find yourself having to make difficult decisions? 

DM: My principal concern for many years is that so much power is in the hand of so few, who are not prepared for it and who become more and more corrupted by it. After a couple of weeks of severe measures by the government, we received a letter from a federal department, informing us that our products and services are regarded as “essential” for the supply of the population. As we have been in business for almost 140 years, we were not relieved by this letter, but rather concerned by its hubris. Neither were we relieved to receive the same letter three months later, as it signified that the decisions over what businesses are deemed “essential” were now being reviewed several times a year and that there is some probability that the verdict could change at any time.

Internally, we also faced the problem of having to satisfy the high demand for our packaging products with less people, as our employee absence rates went up by panic reactions after coughing or disproportionate quarantine rules.

CG: Over this past year, we saw a lot of stories about mass layoffs and extreme financial pressures on huge corporations and multinationals. From your own experience, even before this crisis, do you think there’s a difference in how family-owned companies have to deal with such pressures? Are they exacerbated by the weight of the responsibility that falls squarely on the owner’s shoulders, as opposed to being diluted or dispersed in a board where no-one really has a sense of direct ownership and duty?

DM: It is obvious that it makes quite some difference if you have skin in the game or not. But I would also like to stress that this sense of responsibility can arise in any human being; it is as much a matter of the individual’s maturity level as of their particular circumstances. 

It is true though that ownership creates the sense of responsibility more directly. So, bearing this in mind, what is the real motivation of a state which is weakening private property rights? Is it on purpose, to increase its own power, or is it unaware of what it does? What is even more alarming is when big government and big companies are uniting in the quest for even more power, a phenomenon that we are seeing more and more frequently over the last years. 

CG: I’ve known you for a long time, so I can confidently say that you have a very specific way of doing and thinking about business, one that focuses on honor, honesty and loyalty to those who work with and for you. Did those values play an even bigger role during this whole ordeal?

DM: Thank you for the “flowers”. I am glad to have many reasons to pass them on to many of my coworkers, who proved to be so engaged and passionate, motivating or reassuring more anxious colleagues and doing overtime work to compensate for the absent ones. It is in times like these where you can really study the differences between human beings and it is during periods of adversity that you can build up trust in the virtues and integrity of singular individuals.

—————End of Part 1

In the upcoming second part, we shift our focus to the monetary and fiscal realities of this crisis, the social and political divisions it fueled, while we also discuss the “bigger picture” and the key ingredients and core ideas for a happy, productive and truly fulfilling life. 

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