Where Conspiracy and Reality Collide

Are you on the side of Capitol or Labor? The quick answer might be “both,” but in reality you can’t be on both sides for they are diametrically opposed.. The companies profit and the workers pay compete for every dollar of revenue a company generates. And the battle between these factions has waged for centuries.

But in the new internet connected, fast money world, a unique new phenomenon has emerged –the worker investor. These proud, upwardly-mobile, middle-class moguls-in-their-own-mind are the poster child of free market capitalism. No T-bills for these guys. T-bills are for sissies. And who can blame them, Right? Their wife’s, cousins, brother-in-law’s friend put $1000.00 in Cisco in 91’and cashed out 8 years later with a million!  But little do they know that for all but the very lucky few, the better life they pursue once they get over (i.e. make enough money to live off of their money exclusively) is a mirage.

Why do you think they keep the interest rates so low even in a runaway economy? To keep the interest rates on T-bill’s and savings accounts so low, you might as well keep the money in a coffee can. Your only option to make your money work for you is the free-market casino.

And in any self respecting Casino, the house always makes more money than the players. The house in this case is the investment banks and their high-ticket clients, hedge funds, military industrial contractors and their bought and paid for politicos, and even the smaller insider Wall Street traders, and being inside they have the inside line to predict or even the power to actually manipulate the market moves to their advantage. These insiders make the lion’s share of the returns in the markets frenetic moves, and yet they contribute no real value, nothing that makes peoples lives better, or contributes to the greater good. They give nothing, and take all. Many traders don’t even bet real money—they simply use their access to leverage (i.e. money created out of thin air) to make big returns with nothing invested but risk. They got the big line in Vegas without the baseball bat pipe that comes to collect.

To make matters worse, the short-term speculators (often referred to as day traders) thrive on volatility. The markets must swing and swing fast for them to generate consistent gains far above the average growth rate of the real economy. And as in any good casino, when someone wins someone else has to lose, and more and more the losers are the small investors, institutional investors, etc.., in other words, the players without the market savvy, insider knowledge, connections, or economic leverage to stay ahead of the market waves.

What the hard working middle-class investor may not know, however, it that the act of investing for the short-term quick score, actually serves to oppose their own economic interests long-term, for ironically, it is that very same day trader type speculation that fuels the short-term stock price competition that will ultimately drive their own employer to sacrifice the welfare of it’s employees, i.e. themselves in their quest for improving their stock price. It is the same trap as buying Chinese goods because they are cheaper. They are, but they also may cost you your job to outsourcing, and then you won’t be able to afford anything else. Playing Stock trader may also cost you your job.

And the average small investor has about the same chances of real wins (i.e. gains of over 10%) in the volatile modern stock market as the gambler does in the casino. Many will think they are winning, as their portfolios grow precipitously in the bubble markets, but only a lucky or connected few get out at the top. And the more volatile it gets, the more inside, lucky, or damn smart you have to be to win. And what you think is enough to get over today, will very soon be not even close, with the inflation that is ultimately caused by this vapor wealth.

Interestingly, many companies increasingly face a similar risk. Market and stock volatility can crush a healthy company in only days and turn them into investor world pariahs, with stock prices crashed by just a little bad press, true or otherwise. And it is the market hyenas, i.e. the Wall Street day traders that often start the rumors and then feed off of the resultant carnage.

There is however one investment the average middle class investor can make that can act in concert with their work, reduce volatility, and support their livelihood. That is a long-term investment in the companies involved in your own lives. Buy stock in your employer and HOLD. Buy stock in the companies in your town and HOLD. Buy stock in a company that is focused on sustainability and HOLD. You’ve heard the line “be the person you want the world to be”? Well invest in the companies you want to work for, or that create the kind of world you want to live in.

The mechanics are simple. CEO’s are beholden to only one entity — the stock-holder. If the stock-holder is looking for short-term, windfall profits, that’s what the CEO will work to give them, even if it is to the detriment of the company’s long-term success. Layoffs, scavenged pensions, wage cuts, whatever it takes. The CEO’s personal welfare is on the line, and they are compensated very well for the dirty business of the bottom-line.

If, on the other hand, the majority stock holder is the employees, the CEO will be beholden to the welfare of the employees first, and that typically translates into long-term stability, high productivity, and steady, sustainable growth. Southwest Airlines is an excellent example of a highly successful (even in hard times) company mainly due to the fact that the employees are the majority stock holder. Of course, Southwest Airlines employees have always been strongly encouraged by management to invest in Southwest stock. The company founders understood the power of a proud, invested workforce and it has paid off. The Southwest employee gives their best every day because their pride, AND their retirement depends on it.

The same goes for those companies that practice truly sustainable business. If they are rewarded for their earth friendly practices by solid, stable stock prices from investors willing to invest with their principles, the companies will continue to do the right thing, even if it costs them a short term revenue setback, and all our lives will benefit long-term. There are over 200 “Green” Money Market funds available today such as Pax World, Calvert, and Domini Social Investments, but there is no replacement for putting your money in your LOCAL credit union, company, or your employer. (More on Green Market Funds)

Labor unions are a less effective and inherently problematic approach to improving workers lives. They can give employees leverage to force a company to consider their welfare, but their real value is only short term, for ultimately they are inflexible, promote mediocrity, and are inherently viewed by the CEO and stock holders as the enemy. There is simply no replacement for employees owning a majority stake of their company, for in that way their work acts in concert with their investment, and the CEO reports to THEM.

In line with this principle, I propose a slow but steady solution to improving the standard of living for the majority of working middle-class, and it is as follows: Create a federal law that requires ALL U.S. companies to offer stock to all their employees, (not just the execs) in amounts up to 10% of their wages, and at a discount of 10% off the market price. That means every dollar the employee invests in their company makes them a 10% profit right off the top. Only caveat– they cannot sell that stock for the duration of their employment, or at least 10 years. And make it tax deferred like a 401 K as long as they hold the stock until retirement. Slowly but surely, this law would encourage employees to invest, at least a portion of their earnings in their own employers instead of speculating in the market, and it would slowly but surely bring corporate ownership back where it should be, with the people who do the work, who create the technologies, who generate the profits, who create the economy.

So in conclusion, for the overwhelming majority of working-class people, the only free thing in the free market, is the freedom to give your money to those with the inside line. The only investments that can consistently make you windfall returns in the new global free-market are in the REAL next bubble, namely the Military/Industrial/Banking disaster capitalist sector (The Haliburton crowd) so graphically described in Naomi Klein’s landmark book The Shock Doctrine. And while those investments can give you the illusion of wealth, they will the ultimately destroy your quality of life, and impoverish three-quarters of the planet in the process.

Only the people with tens of millions socked away will live better in the new market free-for-all, because all the services we now take for granted like police, fire, disaster relief, unemployment, social security, all will be gone. You think saving the 30% you pay in taxes now will cover it all? Guess again… You will still pay taxes. You will just get less and less for your money, as the costs of the services skyrocket to cover the contractor’s wind-fall profits and corruption. And the violence that will permeate the lower income areas will create nothing but rich private islands in a sea of violent poverty. Think I am being overly dramatic? Guess again.

The private sectors track record in privatizing government services throughout South America, Russia, and even New Orleans is appalling, and the Milton Friedman Chicago School free-market cult members like Dick Cheney and Don Rumsfeldt, who drive the move to global privatization, have been amazingly immune to the testimony of their disastrous history. They insist, “Argentina failed because they just didn’t privatize ENOUGH!” and “The market has to be pure and completely unfettered to work!” All the while the ones at the top of each new “market” grow dramatically wealthy and the rest starve.  Everything the Disaster Capitalists touch turns to desparation for the many.

Time is running out. The Neo-liberal (in the U.S. they’re called Neo-conservatives, in truest of Orwellian doublespeak) leaders of Disaster Capitalist machine are absolutely ruthless in their quest to “free” the whole world from the “tyranny” of government social programs and protectionism, and throw it headlong into a new global wild-west of corporate anarchy. If you were to create a mantra for this new world order, it would be Get Rich or Die.

So you need to ask yourself one question. Are you certain you will get rich enough to afford a helicopter or private jet when you travel? How about that private mercenary police force to guard your neighborhood and your school? Willing to do anything it takes to get there? If your answer is yes, then you too can be a Disaster Capitalist. If no, well… you get the picture. So take back control of your life from the inside, and buy your country back. Invest in the world you want, not the machinery that is destroying it. Put your money where your heart is…

~ by ravingliberal on June 25, 2009.

Posted in Current Events, Economics, Eric's Commentary, Politics, RANTS