There are two fictions in American culture that hinder good people from achieving the American Dream for their families. 

RAMBO. The Rambo fiction is where an individual can fight the world and win against all the odds. My friends, the world can crush any one of us individually. When you punch the world, you feel the world punch back. We are all vulnerable. We are sometimes the weakest link in our grand plans. We are prone to mistake. And, by the time you come into your wealth, later in life, only then do you realize that your children are not prepared to manage it; for they never have. 

GOOD CORPORATION. The Good Corporation fiction is where one forms a profit-seeking corporation and thinks ‘it’ really care about ethics. Since, the U.S. Supreme Court Dartmouth decision in 1819, corporations have enjoyed the same rights as natural persons to contract and to enforce contracts, sue and be sued. Yet, they are not like persons, as we understand the meaning, because while directors are liable for their own wrongdoing, they are not generally liable for the corporation’s actions they have directed. And if several bad acts bring down a corporation, the investors are not legally responsible for the corporation’s debts beyond their initial investment. In short, an “ethical” corporation can make a mess and yet not clean it up. We are looking at a “person” who claims it is a moral agent and yet none of its directors, owners, or the corporation itself are ultimately responsible for its actions. 

NOT A MORAL AGENT. The East India Company chartered in 1600 by Queen Elizabeth was the first multinational corporation. The EIC rose to account for half of the world’s trade in cotton, silk, and tea. Before, it was customary for a venture to be set up only for the duration of a single voyage. Investment in these expeditions was a very high-risk venture due to piracy, disease and shipwreck. However, by creating a “person” that could live forever, the EIC could weather any adversity. And, in time, this corporate model for the distribution of goods came to dominate our world. But it does have shortcomings—it is not a true moral agent. It will never be a moral force until it aligns obligations with rights and responsibilities with rewards. Instead, it does exactly the opposite by separating the two. The investor is separated from her money and is an owner in all but name. An employee works the hardest but is separated from any profits. The manager makes decisions but is not responsible for any corporate actions. The corporation is a person but is only responsible for what it can afford.  

So, we can go-it-alone Rambo style or work for the meaningless Man. I have done both, investing alone until I was 35, and going insane believing in corporate responsibility that was just marketing. Thomas Sowell says it best about corporate responsibility: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” 

But there is a third option: working within a family of professionals. It is the best of both worlds – an individual has a voice and yet is part of a team. And a family of professionals can be a moral agent for good. We can care about short-term returns and long-term relationships. And, most of all, the world cannot stop a small group of committed individuals. That is the secret to sustained success. If we commit ourselves to doing the good while making good business decisions, we will unexpectedly and very slowly change the world around us.    

A family of professionals will also support you if you have an early setback in your real estate investing career. That support matters!