We have a lot of good people in the world, with access to vast financial and social resources; yet there are very few financial institutions whose business models reflect such values as ethical and moral integrity, empathy, concern for environment. Assuming she can afford it, a conscious consumer buy groceries at the local farmer’s market, not at some soulless corporation like Wal-Mart. They know that, like any other good that is produced, the quality of food is generally proportional to the amount of care and respect put into cultivating it; and that, from a broader perspective, the way you spend your money demonstrates your values and supports the cause of the seller. Do you want locally-grown, organic produce, the sale of which benefits those who produced it directly (excluding unnecessary middlemen)? Or would you prefer produce from abroad, shipped over via oil tanker, injected full of pesticides and preservatives, brought to you by an army of slave-wage laborers earning minimum wage, transported via supply chains that perpetuate dependence upon fossil fuels, corporate lobbying and other unsustainable practices?
Capitalism, in its current form, naturally perpetuates inequality of wealth, as r > g. (r, the rate of return on capital, is greater than g, the growth rate of the overall economy). All are free to disagree, but the facts speak for themselves:
- The top 20% of the global population, controls 94.5% of the wealth.
- In the U.S., the top 1% owns 40% of the wealth.
- The world’s eight richest individuals control as much wealth as the poorest 2 billion individuals combined.
By separating the financial returns from the social and ecological impacts of investments, our system effectively incentivizes ignoring the social and ecological impacts of our behaviors and investments – or worse, encourages the most socially- and ecologically-harmful corporations to spend billions on lobbying the governments of the world to amend or remove regulations in their favor.
- Evidence: In the week following March 1, 2018, nearly 100 corporations have announced more than $178 billion in share buybacks – “the largest amount unveiled in a single quarter”, according to WSJ. This represents the vast majority of the proceeds of the tax windfall – and benefits the top 1% who own over $1m in Fortune 500 stock. To get a sense of scale, by comparison, the United States’ annual spending on education was $70 billion in 2011.
This creates enormous value for the 1% of people with $10 million or more, reinforcing the incompatible dual narratives that the rich (“the economy is doing well”) and the rest (“taxation and immigration are to blame for systemic, structural economic inequality”) tell themselves.
The average American, who is struggling under the weight of 30% interest rates on credit cards or 8% student loans, is not only not participating in this upside; they are funding it themselves, as the consumer
In the U.S., the “investor” or “shareholder” has come to mean, “the top 1%”, the individual who receives the profits; the “customer” is the person who pays those profits, usually in the form of a premium, or other externality (such as environmental).
Our economic system currently values seniority over skill and ability; nepotism and cronyism over meritocracy; selfishness over moral and ethical integrity; shortcuts over doing the right thing.
Evidence: Over $3.15 billion was spent on lobbying in the US in 2016. The same year, only $73 billion was invested in pure impact investments.
The world’s top-paid athlete, Cristiano Ronaldo, currently earns more annual income ($151 million) than all of the United States’ 535 congressmen combined *($134 million). As a society, what does that say about our priorities?
The following are excerpts from The Clean Money Revolution, by Joel Solomon. Truly a groundbreaking work that could not be more pressing.
The mainstream mindset that money and investments are somehow value neutral is the root of the problem. – The Clean Money Revolution
Why do so many good-hearted, ethical people ignore the true impact of what their wealth is doing?
One reason is that, given the choice, people would rather not deal with their money at all. To say that people are money averse is a gross understatement. So, A) People don’t want to deal with it, because there are lots of more fun things they could do with their time, and, B) The system is set up to reinforce that inertia. The approach of the banking and financial services industries is to create inertia and intimidation.
The inertia is that these industries actually make it relatively hard for you to switch out of something once you’ve put your money it it. On the intimidation side, you get the army of guys in blue blazers who pat you on the head and say, “Honey, we’ll take care of this for you. Just chill out.” And while you’re there they give you a whole bunch of glossy reports that have seven thousand words on them that you’ve never seen before, and your takeaway will be, “God, I thought I didn’t want to deal with my money before, now I want to deal with it even less!” And you’ll want to say, “Yeah, Joe, yeah, why don’t you just take it from here. Let me know how it goes next quarter and I’ll just wait for my statements.”
If people feel their portfolio managers are working against their values, what do they do?
There are viable alternatives. For starters, you can bring your money to a community bank instead of Wells Fargo. You just have to get over the inertia and do it. Sure, the online bill pay system may not be as snazzy as your big bank. Deal with it. At least you’re voting with your dollars and standing up for something. And, there are way more options than there were even ten years ago to construct a portfolio, even as a small investor, that ensures your investments are at least closer to not directly conflicting with your values. The very first thing to start with is clarifying what you’re absolutely the most passionate about in life. What is the world you’d like to see? Start investing in those things.