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Do Stock Markets Make Sustainability Impossible?


 
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#1 Krystof Huang

Krystof Huang

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Posted 13 February 2017 - 08:35 AM

I would like to receive discussion and feedback to the points in my article, "Do Stock Markets Make Sustainability Impossible?" Here is a paragraph from each subsection. (For full article see Vermocracy .Org.)
  • Unless stocks are deemphasized and bonds emphasized, it is ludicrous to assume that solar energyor anything elsecan create sustainability.
  • Protesting stock markets is as important as protesting air pollutionbut nobody is doing so.
  • The New York Stock Exchange is not an original or necessary institution for capitalism, democracy, Christianity, America or free enterprise.
  • There is no magical law that requires stock markets to have happy endings.
  • Overpopulation is not mandated by religion so much as by stock markets.
  • No movement is making the essential moves against Wall Street to make sustainability possible.
1. Unless stocks are deemphasized and bonds emphasized, it is ludicrous to assume that solar energyor anything elsecan create sustainability. Of course, it benefits the environment to develop non-polluting energy sources. However, overall “sustainability” must include financial stability. Otherwise, we face ever-repeating wars and stock market crashes and consequential ever-increasing populist demands to dismantle environmental protections. From about 1900 to 2000, we had a very inexpensive source of energy called “oil.” The personal computer also increased productivity several times over. All with no net increase in financial stability. In contrast, the ancient Hawaiians perfected fish farming. Thus, they primarily just needed to eat fish and then go surfing and dancing. Also, ancient Hawaiians were never told that they must eat more fish every year. That would have sounded ludicrous to everyone. Today however, we so-called modern people are told by most economists and politicians that we constantly face ruination, not only if productivity fails to grow, but even if the rate of growth fails to grow. At the crux of this naked inanity are stock markets.

2. Protesting stock markets is as important as protesting air pollutionbut nobody is doing so. Of course, there has been an “Occupy Wall Street” movement. However, the Wikipedia article on OWS mainly lists protests against some of the inevitable consequences of overemphasis on stock markets: “wealth inequality, political corruption, corporate influence of government.” There is no suggestion to deemphasize stock market investing. With no intellectual leaders speaking out against stock marketsit is obviously not feasible for political leaders to do so. Bernie Sanders, self-proclaimed “democratic socialist,” probably is the most harsh critic of Wall Street ever to make it to the US Congress. Every little bit helps. However, his most radical proposal is a small tax on high-frequency trading. Sanders has never proposed to reduce the general tax discount on stock market investingnor proposed a tax discount for bond investingnor criticized our dependence on infinite growth.

3. Contrary to popular assumption: the New York Stock Exchange is not an original or necessary institution for capitalism, democracy, Christianity, America or free enterprise. This article merely points out that modern society is dominated by corporationswhich are funded by stocks and bondsand that long-term stability and peace are possible if and only if we merely deemphasize the stocks! Some people will instinctively respond that to deemphasize stocks is somehow to advocate “communism” or “totalitarianism.” This is obviously not true. Here are the facts.
  • Bonds are not communist. The US government and most US corporations sell bonds.
  • You can buy books on the “all-bond portfolio.” This is a respected investing method.
  • China and Russia are communist or totalitarian or bothand have stock markets.
  • Washington, Jefferson and Franklin were not communistsand had no stock market.
  • Adolf Hitler was propelled to power by the stock market crash of 1929. Stock markets cause totalitarianism. They are not a cure for it.
Others will respond, “This is a free country. If you do not like stocks, you are free not to buy them.” Ironically, this is exactly what this article argues should be true. If the stock market game were deemphasized to the level of a Las Vegas casino, then we might all choose to play it or ignore it. Unfortunately, that is clearly not our situation.
  • Unlike casino games, every news show frets about stocks. Because they affect everyone.
  • The stock market crashes of 1929 and 2008 caused millions to lose their jobs and possibly their life savingsregardless of whether they bought stocks.
  • Walk in to any office of any stock broker and ask what will happen if you do not invest? The answer is that more than 1/2 the value of your savings will be lost to inflation.
  • Walk in to any university and ask any economist, why do we have inflation? The answer is that we must have inflation to support the stock market.
  • If a prostitute is forced to pay 1/2 her income to a pimp, she is said to be “owned” by the pimp. Similarly, everyone is somewhat “owned” by the stock market.
  • For more thoughts in this direction, Google the phrase: inflation is invisible taxation.
4. Contrary to most financial experts: there is no magical law that requires stock markets to have happy endings. Most financial gurus will advise a never-sell buy-and-hold strategy for stocks. Also, for those who desire greater safety, large investments in corporate or municipal bonds. This is in spite of the ubiquitous refrain by the same people: “past performance does not predict future performance.” Buy-and-hold is like a religious faith based entirely on the performance of US stocks in the previous century. This ignores what happened in 2008 and what has happened to most non-US stock indexes since 2008. Also, we saw numerous bankruptcies and near-bankruptcies of US blue-chip corporations, insurers and regional governments in 2008: California, General Motors, Goldman Sachs, AIG, Lehman Brothers, etc., etc. This has proven that corporate and municipal bonds are now like wooden fire escapes: only safe just so long as there is no great need to be safe. Investment-grade corporate bonds should be safe. If not for our over-emphasis on stock markets, most bonds would be safe. Currently howeverso long as the stock market has the power to trigger a cascade of blue-chip bankruptciesthen allocating anything for corporate or municipal bonds primarily means that you can allocate less for maximum-safety gold or US Treasury TIPS.

5. Overpopulation is not mandated by religion so much as by stock markets. Obviously, reproduction is essential for any species. Obviously, nature must create an off-switch for reason wherever reproduction is concerned. It is therefore understandable that even the most rationally-trained people are often bizarrely self-contradictory in opposing the clear mathematical imperative to stabilize the global human population. The Roman Catholic church has gradually been persuaded by scientific reasonsuch as that the earth is not the center of the universe. However, a religion can not be expected to abandon tradition for reasonwhen those supposedly representing “reason” are fanatics for tradition. It is not priests so much as economists who maniacally insist on infinitely more children. Even when the ignorance required to believe in “infinite population” is far more obvious than required for an earth-centered universe. In contrast, the Bible teaches that God created every species. Therefore, to destroy any species is to declare war against God. Not to mention the extinction of dozens of species every decade due to human overpopulation. Also, if all Christians are one family and all Muslims are one family — as both of their scriptures teach — then before having a second child, all parents should at least pay for the education of another child who is living among garbage.

6. No movement is making the essential moves against Wall Street to make sustainability possible.
  • There is what I call the “High Plains Drifter” initiative. This means firstly, for one reputable economist to write one book arguing that capitalism has a future if and only if stock markets are deemphasized. Secondly, for the leaders of one underdeveloped or “outsider” nation to read said book and thus to start one new game on their own terms: encourage corporate bonds with national insurance programs and low tax ratesmeanwhile discourage stocksand thus become increasingly admired and imitated after each new, ever-inevitable global stock market crash. Russia, China, India, Greece, Cuba, Venezuela and Indonesia obviously should encourage bonds over stocks. Currently however, every nation stubbornly bellies-up to be fleeced at the anachronistic Wall Street gameregardless of whether they are a naïve novice, an atheistic anti-capitalist, a religious fundamentalist or even a chronic loser.
  • Or, a “Newman Age” could be upon us if some new promotional strategy somehow enabled stock market corporations in every sphere to be eclipsed by for-charity corporations à la Newman’s Ownwith a similar ferocity as My Space was eclipsed by Facebook. Currently however, there seems little significant interest in such projects.
  • Or, a “Fight Fire With Fire” initiative might mean for some nonprofit foundation to manage “socially responsible” brokerages, autotrading systems, trust funds and mutual funds. If 1/3 of the foundation’s resulting income were used to finance pro-environmental politicians and organizationswhile 2/3 were hoarded and reinvestedthis eventually might build up a war chest with which to enable environmentalists to cross swords with billionaires and corporations. Currently however, environmentalists must forever act like the Dutch boy with a finger in a dyke.
Ebay, Google and Facebook all had humble beginningsand yet, soon eclipsed stock market giants, even before joining the stock market. For the first time in history, it is no longer necessary to own steel mills in order to challenge the likes of Carnegie and Mellon. What is lacking today is only the will, not the capability. Each of the above “non-Wall Street initiatives” obviously could be accomplished within fewer than a dozen years by fewer than a dozen inspired individuals. This is probably a narrow window of opportunity and to which almost nobody is yet responding.

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