Sunday, August 18, 2002

Oh, I'm still here.

You see, the place of my employment is re-doing its website and I have been spending about six hours a day working on it. Consequently, when I come home after a hard day's clicking, I mostly avoid my computer. But I've been reading lots and will share soon.

In the meantime, you have 5 days from the date of this blogging post to read this lovely little column by the Globe and Mail's "Lefty in Residence", Rick Salutin.

It begins:
Wouldn't it be nice if someone declared, in this summer of shame for the stock markets, a moratorium on price updates? Not abolish markets outright, be still my heart, but end their hourly glorification, the burbling reports from floor or studio of nothing but prices. Up good, down bad. They might as well add a track of cheers and groans.

Here is an except that I am noting so I can remember the facts later (oh, I wish that Rick had sourced these...)
People know the banks are just the banks, yet they think the markets are us! It can't be because everyone has got into the market, since that isn't so. Even in the U.S., by a recent calculation, fewer than half of households held stock, including mutual and pension funds, and the top 5 per cent held about 95 per cent of all stock. In Canada, we lack decent stats, but a good guess is that only 25 per cent of households own stock with a similar tiny minority having enough to matter.

Nor is it because of any role in the "real" economy. The stock market itself is just another way to make money. In that sense, it is an end in itself. It is related to "real" enterprises -- farms, stores, airlines etc. -- only opportunistically. It does not provide them, in almost all cases, with new money. Ninety-five per cent of investment in the U.S. between 1952 and 1997 was paid for by the firms themselves. The stock market moves shares around among firms and issues dividends. The partial exception is IPOs and especially bubbles such as the Internet; but it's clear those, too, are mainly about making money, not raising it: for the founders who "take" their business "public" and bite their nails to see how rich they'll get and for those who float and promote the issues. The markets are not a way of building the economy; they are a way of making money off it, and I know I sound like a 19th century prairie populist when I say that. It feels good.

I want to remember these ideas when the "lets privatise social security" specture is raised again. By the way, many of Rick's ideas are expounded in the book One Market Under God: Extreme Capitalism, Market Populism, and the End of Economic Democracy.

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