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Updated Wednesday, March 3, 2010 9:28 am TWN, The China Post news staff

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It's time to bring responsibility back into the boardroom

According to Buffett, shareholders are getting the short end of the stick. “They [shareholders] have borne the burden, with 90% or more of the value of their holdings wiped out in most cases of failure,” writes Buffett. “The CEOs and directors of the failed companies, however, have largely gone unscathed.”

Perhaps we've placed too much faith in the supposed talent of people running large financial institutions. Warren Buffett has made mistakes in his many years at the helm of Berkshire, but one of the reasons he has been such a successful money manager is that Buffett is relatively averse to taking significant risks. Buffett knows a lot, and one of the most important things he knows is that he doesn't know everything so he hedges his bets.

Zodiac signs and astrology have a devoted following all over the world. Skeptics and scientists can point out that there is absolutely no validity to the idea that the stars somehow affect a person's personality but nonetheless belief in astrology is widespread. How is this possible? One of the keys to convincing people that astrological predictions have value is something called the “Rainbow Ruse,” which basically means saying two opposite things at the same time. “The stars of Aquarius are shining in your favor today and you should keep your eyes open for business or romance possibilities,” goes a typical daily horoscope piece. “But beware of the moon rising in Virgo which could portend difficulties in money or relationships.” The prediction of course would be valid for almost anything that happens to that person on that day or any other day for that matter. Watch many financial experts on TV and you'll be struck at how close their predictions are to Rainbow Ruses. You would be forgiven for failing to understand their predictions because there aren't any.

Warren Buffett is calling BS on the idea that CEOs should be held to a different accounting standard than the”common folk.”When a small businessperson takes out a loan for a business plan they understand that should their ideas sink, they will be responsible for the amount they borrowed; no “do-overs” are allowed. Buffett's suggestion to require CEOs to stake their own worth into the firms they lead is perhaps the smartest and only way we will see measurable change towards responsibility in certain segments of the business world.

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