The Eleventh Round - Bernard Lietaer - p50
Lietaer argues that "interest indirectly encourages systematic competition among the participants in the system."
"Once upon a time, in a small village in the Outback, people used barter for all their transactions. One every market day, people walked around with chickens, eggs, hams and breads, and engaged in prolonged negotiations among themselves to exchange what they needed. At key periods of the year, like harvests or whenever someone's barn needed big repairs after a storm, people recalled the tradition of helping each other out that they had brought from the old country. They knew that if they had a problem some day, others would aid them in return.
One market day, a stranger with shiny black shoes and en elegant white hat came by and observed the whole process with a sardonic smile. When he saw one farmer running around to corral the six chickens he wanted to exchange for a big ham, he could not refrain from laughing. 'Poor people,' he said. 'So primitive.' ...
He took a cowhide, and cut perfect leather rounds in it, and put an elaborate and graceful little stamp on each round. Then he gave to each family ten rounds, and explained that each represented the value of one chicken. ...
"In a year's time, I will come back and.... I want ou to each bring me back 11 rounds. That 11th round is a token of appreciation for the technological improvement I just made possible in your lives.' 'But where will the 11th round come from?' asked a man. 'You'll see', said the man with a reassuring smile."
"Assuming that the population and its annual production remain exactly the same during that next year, what do you think had to happen? Remember, that 11th round was never created. Therefore, bottom line, one of each 11 families will have to lose all its rounds, even if everyboyd managed their affairs well, in order to provide the 11th round to ten others.
So when a storm threatened the crop of one of the families, people became less generous with their time to help bring it in before disaster struck. While it was much more convenient to exchange the rounds instead of the chickens on market days, the new game also had the unintended side effect of actively discouraging the cooperation that was traditional in the village. Instead, the new money game was generating a systemic undertow of competition among all the participants."
Same thing with the bank. They create the £100,000 principle when they lend you a mortgage, but they expect you to pay £200,000 back over the next 20 years to pay the interest. "Because all the other banks do exactly the same thing, the system requires that some participants go bankrupt in order to provide you with this £100,000... In other words, the device used to create the scarcity indespensible for a bank-debt system to function involves having people compete for the money that has not been created, and penalises them with bankrupcy whenever they do not succeed."
So if there are ten of us borrowing £100,000, £1m has been created. but £2m needs to be repaid. It doesn't work.
Interest is prohibited in Islam, and was prohibited in Judaism and Christianity. Henry VIII legalised interest for the first time in the western world in 1545 (p48).
So, if bank debt and interest are key design features, how did money work when interest was banned? (And how did communities work?)
Wednesday, 3 December 2008
Sunday, 23 November 2008
why
This summer in the queue for the showers at a music festival
i met a man called Soleil
he was from West Africa.
He was a sound engineer touring music festivals to learn stuff. In between festivals he was staying in Chiswick.
I asked him what he thought of the UK.
'Places like Doris (the festival), it's great, it's a lot like home. But Chiswick is strange. You do everything alone. You live alone. You raise your children alone. You eat alone. Your old people are alone. To do anything you need money. It's not like this in Guinea. If you don't have money you can still take part.'
I'm interested in togetherness and aloneness.
One morning I found myself locked in a hallway of a house divided into flats. I needed help. I knocked on the door to one of the flats. 'Hello?' called a wavering old voice. 'Hello', I called through the door. 'I'm locked in. Could you let me out please?' 'Hold on.'
Three or four minutes passed. I could hear shuffling. I didn't know what to expect. I was becoming a little nervous.
Then the old old man opened his door. He hadn't managed to button his shirt and his concave ribs shocked me. He grinned and moved slowly down the stairs to the hall to let me out. I had the feeling that I was the first person he'd seen for some time. Days. Longer.
There are some statistics about lonliness among the elderly. They make you sad to read them.
It's a shame because we feel that we need them. Some friends and I are having conversations about buying some land and creating a blended community, where there is a 'blend' of self sufficiency and participation in the formal economy. None of us want to retreat from interesting and important projects and work, but we want our lives to be less dominated by work. We want more time. A less hectic pace. And we want more togetherness.
We want older people to join us. We value our elders.
Then there's family time. Quality of relationships. The time that we have for each other. The fact that a house used to cost three and half times one salary and now it costs three and half times two salaries and so both parents have to work pretty much full time and fit in childcare along with the chores and cooking and trying to sleep and vaguely trying to squeeze in a bit of exercise if they're lucky and the quality of life is just shit.
Margrit Kennedy with her unsourced figures estimates that about 50% of our spending - the money we've squeezed so many other things to earn - goes on interest.
Which the graphs show makes a few people very rich.
I wonder what that's like for them. I wonder how much difference it makes to their wellbeing. I'm pretty sure that above a certain level it doesn't. The progress paradox.
I see big business like a bit of a cancer to be honest. It was amazing to come back into a town after being in Doris (the music festival) and be surrounded by junk food at every turn. Ads everywhere. Everyone looked the same. So did the buildings. Clone town Britain. Diversity and creativity had been squeezed out and standardised conformity took centre stage, along with people ill from all the junk food and insecure from all the ads protraying model people to aim to be.
I'm feeling anxious about the money project again today. It's back to the economics thing. I do my best work when it's about, for and with people. The money project pretty soon will become a people project but it has to start with a fair bit of political economy.
And that still feels like cold hard iron.
And difficult. It feels difficult.
But it's my loudest question. These are my loudest questions.
Shit they're too small to read. Back to the graphics anon.
And I think they're really really important. And answering them feels like the most important thing to do.
Because I think figuring out that side will enable us to live more sustainably and with more togetherness. Humm. I haven't articulated the link clearly but I feel it strongly.
My mother says we don't do that kind of togetherness here because it's cold and we need to stay indoors. In Africa they co-operate more because it's warm.
Humm. Alastair McIntosh describes super cooperative communities he grew up in, reciprocal economies etc, and that was on the Hebrides. Which has a much poorer climate than south east England.
i met a man called Soleil
he was from West Africa.
He was a sound engineer touring music festivals to learn stuff. In between festivals he was staying in Chiswick.
I asked him what he thought of the UK.
'Places like Doris (the festival), it's great, it's a lot like home. But Chiswick is strange. You do everything alone. You live alone. You raise your children alone. You eat alone. Your old people are alone. To do anything you need money. It's not like this in Guinea. If you don't have money you can still take part.'
I'm interested in togetherness and aloneness.
One morning I found myself locked in a hallway of a house divided into flats. I needed help. I knocked on the door to one of the flats. 'Hello?' called a wavering old voice. 'Hello', I called through the door. 'I'm locked in. Could you let me out please?' 'Hold on.'
Three or four minutes passed. I could hear shuffling. I didn't know what to expect. I was becoming a little nervous.
Then the old old man opened his door. He hadn't managed to button his shirt and his concave ribs shocked me. He grinned and moved slowly down the stairs to the hall to let me out. I had the feeling that I was the first person he'd seen for some time. Days. Longer.
There are some statistics about lonliness among the elderly. They make you sad to read them.
It's a shame because we feel that we need them. Some friends and I are having conversations about buying some land and creating a blended community, where there is a 'blend' of self sufficiency and participation in the formal economy. None of us want to retreat from interesting and important projects and work, but we want our lives to be less dominated by work. We want more time. A less hectic pace. And we want more togetherness.
We want older people to join us. We value our elders.
Then there's family time. Quality of relationships. The time that we have for each other. The fact that a house used to cost three and half times one salary and now it costs three and half times two salaries and so both parents have to work pretty much full time and fit in childcare along with the chores and cooking and trying to sleep and vaguely trying to squeeze in a bit of exercise if they're lucky and the quality of life is just shit.
Margrit Kennedy with her unsourced figures estimates that about 50% of our spending - the money we've squeezed so many other things to earn - goes on interest.
Which the graphs show makes a few people very rich.
I wonder what that's like for them. I wonder how much difference it makes to their wellbeing. I'm pretty sure that above a certain level it doesn't. The progress paradox.
I see big business like a bit of a cancer to be honest. It was amazing to come back into a town after being in Doris (the music festival) and be surrounded by junk food at every turn. Ads everywhere. Everyone looked the same. So did the buildings. Clone town Britain. Diversity and creativity had been squeezed out and standardised conformity took centre stage, along with people ill from all the junk food and insecure from all the ads protraying model people to aim to be.
I'm feeling anxious about the money project again today. It's back to the economics thing. I do my best work when it's about, for and with people. The money project pretty soon will become a people project but it has to start with a fair bit of political economy.
And that still feels like cold hard iron.
And difficult. It feels difficult.
But it's my loudest question. These are my loudest questions.
Shit they're too small to read. Back to the graphics anon.
And I think they're really really important. And answering them feels like the most important thing to do.
Because I think figuring out that side will enable us to live more sustainably and with more togetherness. Humm. I haven't articulated the link clearly but I feel it strongly.
My mother says we don't do that kind of togetherness here because it's cold and we need to stay indoors. In Africa they co-operate more because it's warm.
Humm. Alastair McIntosh describes super cooperative communities he grew up in, reciprocal economies etc, and that was on the Hebrides. Which has a much poorer climate than south east England.
Thursday, 6 November 2008
Is this actually a project on profit?
write up notes from Tomorrow's Owners margin
http://www.hup.harvard.edu/catalog/WEINON.html
'What motivates managers of nonprofits? Why are these organizations exempt from taxes on income, property, and sales?'
Or is it a project about interest?
And what would an economy that's not based on debt look like?
http://www.hup.harvard.edu/catalog/WEINON.html
The Nonprofit Economy
Burton Weisbrod
Or is it a project about interest?
And what would an economy that's not based on debt look like?
Monday, 3 November 2008
How to go about the project
- see notes on wall
- aim: the PhD sparks further research and change project activity
- Risk: PhD would be low impact if it were poor quality - methodology, readability, relevance, thinking, analysis, etc.
- PhD could be part of a collaborative project - how?
stage 1 - economics
stage 2 - political science
stage 3a - business change management
stage 3b - policy - national economic and development policy, in both developed and developing countries.
Principle: participatory and collaborative wherever possible. Look everywhere for opportunities to make it so.
Bibliography
Banks, James et al (2000). Wealth Inequality in the United States and Great Britain. UK: Institute for Fiscal Studies and University College, London.
Beck, Thorsten et al (2005). SMEs, Growth, and Poverty: Cross-Country Evidence. Netherlands, Journal of Economic Growth. Volume 10, Number 3, p 199-229.
Beinhocker, Eric (2007). The Origin of Wealth. Evolution, complexity and the radical remaking of economics. London, Random House.
Bernard, Prosper M. Jr (2008). Varieties of Capitalism and Inequality: Canada from a Comparative Perspective. Journal of Humanities and Social Sciences, Volume 2, Issue 2.
Brewer, Mike et al (2008). Racing away? Income inequality and the evolution of high incomes. London: Institute for Fiscal Studies
Burkhard, Ross (2005). Democracy, capitalism and income inequality: cross-country evidence. US, Boise State University.
Davies, J et al (2008). The World Distribution of Household Wealth. UNU-WIDER
Douthwaite, Richard (1996). Short circuit: Strengthening local economies for security in an unstable world. UK: Green Books.
Enderle, Georges. A rich concept of wealth creation: beyond profit maximization and adding value. Indiana, University of Notre Dame.
Hall, Peter and Soskice, David (2001). Varieties of Capitalism. New York: Oxford University Press
Hoogvelt, Ankie (2001). Globalisation and the postcolonial world: The new political economy of development. Maryland, John Hopkins University Press.
Kay, John (2004). The Truth about Markets: Why some nations are rich but most remain poor. London, Penguin.
Kennedy, Margrit (1995). Interest and Inflation Free Money. Philadelphia: New Society Publishers.
Lietaer, Bernard (2001). The Future of Money: Creating wealth, work and a wiser world. London, Century.
Meadows, Donella (1999). Leverage Points: Places to Intervene in a System. US, The Sustainability Institute.
McMillan, John (2002). Reinventing The Bazaar: A natural history of markets. New York, Norton.
Pettifor, A (ed) (2003). Real world economic outlook. London, Palgrave Macmillan.
Porritt, Jonathon (2005). Capitalism as if the world matters. London, Earthscan.
Shephard, Andrew (2003). Inequality under the Labour government. London: Institute for Fiscal Studies
Spratt, S and Wallis, S (2007). From Old Economics to New Economics: Radical Reform for a Sustainable Future. London, new economics foundation.
Surowiecki, James (2004). The Wisdom of Crowds. US, Abacus.
(2008). Tomorrow's Owners: Stewardship of tomorrow's company. London, Tomorrow's Company.
Yunnus, Muhammad (2007). Creating a World Without Poverty: Social business and the future of capitalism. US, PublicAffairs.
Beck, Thorsten et al (2005). SMEs, Growth, and Poverty: Cross-Country Evidence. Netherlands, Journal of Economic Growth. Volume 10, Number 3, p 199-229.
Beinhocker, Eric (2007). The Origin of Wealth. Evolution, complexity and the radical remaking of economics. London, Random House.
Bernard, Prosper M. Jr (2008). Varieties of Capitalism and Inequality: Canada from a Comparative Perspective. Journal of Humanities and Social Sciences, Volume 2, Issue 2.
Brewer, Mike et al (2008). Racing away? Income inequality and the evolution of high incomes. London: Institute for Fiscal Studies
Burkhard, Ross (2005). Democracy, capitalism and income inequality: cross-country evidence. US, Boise State University.
Davies, J et al (2008). The World Distribution of Household Wealth. UNU-WIDER
Douthwaite, Richard (1996). Short circuit: Strengthening local economies for security in an unstable world. UK: Green Books.
Enderle, Georges. A rich concept of wealth creation: beyond profit maximization and adding value. Indiana, University of Notre Dame.
Hall, Peter and Soskice, David (2001). Varieties of Capitalism. New York: Oxford University Press
Hoogvelt, Ankie (2001). Globalisation and the postcolonial world: The new political economy of development. Maryland, John Hopkins University Press.
Kay, John (2004). The Truth about Markets: Why some nations are rich but most remain poor. London, Penguin.
Kennedy, Margrit (1995). Interest and Inflation Free Money. Philadelphia: New Society Publishers.
Lietaer, Bernard (2001). The Future of Money: Creating wealth, work and a wiser world. London, Century.
Meadows, Donella (1999). Leverage Points: Places to Intervene in a System. US, The Sustainability Institute.
McMillan, John (2002). Reinventing The Bazaar: A natural history of markets. New York, Norton.
Pettifor, A (ed) (2003). Real world economic outlook. London, Palgrave Macmillan.
Porritt, Jonathon (2005). Capitalism as if the world matters. London, Earthscan.
Shephard, Andrew (2003). Inequality under the Labour government. London: Institute for Fiscal Studies
Spratt, S and Wallis, S (2007). From Old Economics to New Economics: Radical Reform for a Sustainable Future. London, new economics foundation.
Surowiecki, James (2004). The Wisdom of Crowds. US, Abacus.
(2008). Tomorrow's Owners: Stewardship of tomorrow's company. London, Tomorrow's Company.
Yunnus, Muhammad (2007). Creating a World Without Poverty: Social business and the future of capitalism. US, PublicAffairs.
9. Models of Business Ownership
Should be able to find good info on UK biz ownership proportions here
http://www.ons.gov.uk/about-statistics/user-guidance/lm-guide/concepts/employers/ownership/index.html
ESOP - employee share ownership plan
British govt introduced tax favours for Esops. The aim was to promote a 'Share owning democracy" (Banks et al 2000:22)
http://www.nceo.org/library/esops.html
Employees can buy stock directly, be given it as a bonus, can receive stock options, or obtain stock through a profit sharing plan. By far the most common form of employee ownership in the U.S. is the ESOP, or employee stock ownership plan. Almost unknown until 1974, about 11,000 companies now have these plans, covering over 8 million employees.
ESOPs are most commonly used to provide a market for the shares of departing owners of successful closely held companies, to motivate and reward employees, or to take advantage of incentives to borrow money for acquiring new assets in pretax dollars. In almost every case, ESOPs are a contribution to the employee, not an employee purchase.
In an ESOP, a company sets up a trust fund, into which it contributes new shares of its own stock or cash to buy existing shares. Alternatively, the ESOP can borrow money to buy new or existing shares, with the company making cash contributions to the plan to enable it to repay the loan. Regardless of how the plan acquires stock, company contributions to the trust are tax-deductible, within certain limits.
Shares in the trust are allocated to individual employee accounts. Although there are some exceptions, generally all full-time employees over 21 participate in the plan. Allocations are made either on the basis of relative pay or some more equal formula. As employees accumulate seniority with the company, they acquire an increasing right to the shares in their account, a process known as vesting. Employees must be 100% vested within three to six years, depending on whether vesting is all at once (cliff vesting) or gradual.
When employees leave the company, they receive their stock, which the company must buy back from them at its fair market value (unless there is a public market for the shares). Private companies must have an annual outside valuation to determine the price of their shares. In private companies, employees must be able to vote their allocated shares on major issues, such as closing or relocating, but the company can choose whether to pass through voting rights (such as for the board of directors) on other issues. In public companies, employees must be able to vote all issues.
ESOPS are used:
To buy the shares of a departing owner:
To borrow money at a lower after-tax cost:
To create an additional employee benefit:
Caveats: The law does not allow ESOPs to be used in partnerships and most professional corporation. Private companies must repurchase shares of departing employees, and this can become a major expense. The cost of setting up an ESOP is also substantial -- perhaps $30,000 for the simplest of plans in small companies and on up from there. Any time new shares are issued, the stock of existing owners is diluted. That dilution must be weighed against the tax and motivation benefits an ESOP can provide. Finally, ESOPs will improve corporate performance only if combined with opportunities for employees to participate in decisions affecting their work.
http://www.nceo.org/culture/index.html
Research indicates that employee ownership companies grow faster than they would have been expected to grow without employee ownership and that they are more stable than their counterparts. Many studies have found that employee ownership affects corporate performance only when combined with initiatives that create an environment in which employees are given the tools, training, and opportunities to take more active roles as owners--in other words, only when the company creates an "ownership culture."
http://www.nceo.org/options/index.html
A stock option gives the recipient (the "optionee") the right to buy a certain number of shares in the granting company at a fixed price for a certain number of years.
A related type of plan is the employee stock purchase plan (ESPP), which is used mainly in public companies. Note: stock options and ESPPs have nothing to do with ESOPs
Channel 4 is a publicly owned non profit.
http://us.ft.com/ftgateway/superpage.ft?news_id=fto101420081729506314
Johnson, Luke (2008). Why public ownership is a failed model. FT.com 14.10.08
If things fall apart at a company, asset managers cling to a naive faith in the non-executives, as if they are really able to change matters. But on most occasions institutional investors find it easier to run from the battlefield by selling their shares. So who has any incentive to fix the cock-ups?
co-operative
http://www.co-operative.coop/aboutus/
in 2006 we returned some £19m of our profits to individual members.
In 2006 we had 1.5 million economically active members, making us the UK’s largest
co-operative. Just £1 allows anyone to be part of The
Co-operative, and each of our members has an equal right to a say in how the business is run and how we achieve our social goals.
A co-operative is a group of people acting together to meet the common needs and aspirations of its members, sharing ownership and making decisions democratically.
Co-operatives are not about making big profits for shareholders, but creating value for customers ‑ this is what gives co-operatives a unique character, and influences our values and principles.
There are many co-operative businesses throughout the world, of which The Co-operative Group is the largest consumer co-operative.
There are many other types of co-operative such as housing, worker, credit unions, agricultural and even political.
http://www.co-operatives-uk.coop/live/cme0.htm
GOOD INFO
http://www.co-operative.coop/aboutus/thecooperativemovement/ICD/
http://www.employeeownership.co.uk/share-schemes.htm
Visa finally sold up...
http://www.reuters.com/article/newIssuesNews/idUSN1441588020080314
Visa was owned by the banks that issued its cards - it had a member ownership model
Visa planned to sell 406 million Class A shares at $37 to $42 each, for proceeds of $15 billion to $17 billion, according to a regulatory filing last month.
Visa share price today at $56.47
http://finance.google.co.uk/finance?client=ob&q=NYSE:V
http://news.bbc.co.uk/1/hi/business/7263156.stm
Visa hopes to raise more than $18bn (£9bn) from the listing, which would make it the largest Initial Public Offering (IPO) in the US to date.
The share offering would be the culmination of a restructuring process that began in October 2006.
http://www.telegraph.co.uk/finance/newsbysector/utilities/2795061/Britain's-biggest-private-companies-The-raw-materials-of-everyday-life.html
http://www.ons.gov.uk/about-statistics/user-guidance/lm-guide/concepts/employers/ownership/index.html
ESOP - employee share ownership plan
British govt introduced tax favours for Esops. The aim was to promote a 'Share owning democracy" (Banks et al 2000:22)
http://www.nceo.org/library/esops.html
Employees can buy stock directly, be given it as a bonus, can receive stock options, or obtain stock through a profit sharing plan. By far the most common form of employee ownership in the U.S. is the ESOP, or employee stock ownership plan. Almost unknown until 1974, about 11,000 companies now have these plans, covering over 8 million employees.
ESOPs are most commonly used to provide a market for the shares of departing owners of successful closely held companies, to motivate and reward employees, or to take advantage of incentives to borrow money for acquiring new assets in pretax dollars. In almost every case, ESOPs are a contribution to the employee, not an employee purchase.
In an ESOP, a company sets up a trust fund, into which it contributes new shares of its own stock or cash to buy existing shares. Alternatively, the ESOP can borrow money to buy new or existing shares, with the company making cash contributions to the plan to enable it to repay the loan. Regardless of how the plan acquires stock, company contributions to the trust are tax-deductible, within certain limits.
Shares in the trust are allocated to individual employee accounts. Although there are some exceptions, generally all full-time employees over 21 participate in the plan. Allocations are made either on the basis of relative pay or some more equal formula. As employees accumulate seniority with the company, they acquire an increasing right to the shares in their account, a process known as vesting. Employees must be 100% vested within three to six years, depending on whether vesting is all at once (cliff vesting) or gradual.
When employees leave the company, they receive their stock, which the company must buy back from them at its fair market value (unless there is a public market for the shares). Private companies must have an annual outside valuation to determine the price of their shares. In private companies, employees must be able to vote their allocated shares on major issues, such as closing or relocating, but the company can choose whether to pass through voting rights (such as for the board of directors) on other issues. In public companies, employees must be able to vote all issues.
ESOPS are used:
To buy the shares of a departing owner:
To borrow money at a lower after-tax cost:
To create an additional employee benefit:
Caveats: The law does not allow ESOPs to be used in partnerships and most professional corporation. Private companies must repurchase shares of departing employees, and this can become a major expense. The cost of setting up an ESOP is also substantial -- perhaps $30,000 for the simplest of plans in small companies and on up from there. Any time new shares are issued, the stock of existing owners is diluted. That dilution must be weighed against the tax and motivation benefits an ESOP can provide. Finally, ESOPs will improve corporate performance only if combined with opportunities for employees to participate in decisions affecting their work.
http://www.nceo.org/culture/index.html
Research indicates that employee ownership companies grow faster than they would have been expected to grow without employee ownership and that they are more stable than their counterparts. Many studies have found that employee ownership affects corporate performance only when combined with initiatives that create an environment in which employees are given the tools, training, and opportunities to take more active roles as owners--in other words, only when the company creates an "ownership culture."
http://www.nceo.org/options/index.html
A stock option gives the recipient (the "optionee") the right to buy a certain number of shares in the granting company at a fixed price for a certain number of years.
A related type of plan is the employee stock purchase plan (ESPP), which is used mainly in public companies. Note: stock options and ESPPs have nothing to do with ESOPs
Channel 4 is a publicly owned non profit.
http://us.ft.com/ftgateway/superpage.ft?news_id=fto101420081729506314
Johnson, Luke (2008). Why public ownership is a failed model. FT.com 14.10.08
There is another victim of the credit crunch: the publicly traded model of ownership. The near-collapse of many of the large banks in perhaps a dozen countries shows that such corporate structures do not work.
I have served on the boards of various public companies for more than 20 years and most such constructs were dysfunctional. Interests were not aligned and there was more focus on pointless, ritual corporate activity than underlying profitability and productivity. Everyone tries hard, but the disconnect between management and ultimate ownership leads to the profound issues our economy now faces.
Large public companies are mostly owned by a hugely fragmented shareholder base. Fund managers meet executive directors twice a year for an hour and expect to understand what is going on. Too often they judge management based on their ability to carry off a presentation rather than their true skills as leaders. Professional investors have stakes in 100 companies or more and expect to have real insight into all of them: a fantasy. Meanwhile, the top directors of a large public company can spend a fifth of their time visiting hundreds of actual or would-be shareholders.If things fall apart at a company, asset managers cling to a naive faith in the non-executives, as if they are really able to change matters. But on most occasions institutional investors find it easier to run from the battlefield by selling their shares. So who has any incentive to fix the cock-ups?
After all, how can the non-execs really understand what goes on? They meet less than once a month for a few hours. Mostly, they are paid to conform. No one dares challenge the executive directors because the executives have all the information.
Under corporate governance guidelines, non-executives are not meant to have material shareholdings.
On stock markets the mad gyrations of a share price during a few days can determine the destiny of an institution that has been going for 200 years. If their shares had not imploded, would the government have stepped in to save RBS and the others?
I always thought it was a terrible sign when a chief executive had a screen in the office showing the company share price - but perhaps they were the clever ones. How can anyone run a business when hedge funds trade big chunks of their equity every day? Because hedge funds comprise up to 50 per cent of all broking commission and a fair portion of trading volumes, even though they only hold 2 per cent of all shares, they have a hugely disproportionate effect on market behaviour. One benefit of these troublesome times is that hedge funds are likely to be much less influential in future, since their resources will be greatly diminished.
I believe private ownership allows a more stable, long-term approach to wealth creation. Highly geared leveraged buy-outs may suffer in the coming downturn, but family or employee ownership offers advantages over the volatility of quoted companies. There is less minute-by-minute exposure to external scrutiny, and less obsession with immediate valuation. Organising such ownership structures for banks would not be easy, but it might lead to a healthy state of affairs.
http://www.nolo.com/article.cfm/objectID/6294EA66-70E7-4562-81AC734B34CAD352/111/182/ART/
'business ownership structures' - above. See also this book?:
LLC or Corporation? How to Choose the Right Form for Your Business
on employee ownership
http://www.ent.stir.ac.uk/Employee%20Ownership.htm
on mutualshttp://www.caledonia.org.uk/mills.htm
Community INterest Company
Public interest companyco-operative
http://www.co-operative.coop/aboutus/
in 2006 we returned some £19m of our profits to individual members.
In 2006 we had 1.5 million economically active members, making us the UK’s largest
co-operative. Just £1 allows anyone to be part of The
Co-operative, and each of our members has an equal right to a say in how the business is run and how we achieve our social goals.
Every year members receive a share of the profits that they helped to create. That is why in 2006 we returned some £19m of our profits to individual members.
A co-operative is a group of people acting together to meet the common needs and aspirations of its members, sharing ownership and making decisions democratically.
Co-operatives are not about making big profits for shareholders, but creating value for customers ‑ this is what gives co-operatives a unique character, and influences our values and principles.
There are many co-operative businesses throughout the world, of which The Co-operative Group is the largest consumer co-operative.
There are many other types of co-operative such as housing, worker, credit unions, agricultural and even political.
http://www.co-operatives-uk.coop/live/cme0.htm
GOOD INFO
http://www.co-operative.coop/aboutus/thecooperativemovement/ICD/
http://www.employeeownership.co.uk/share-schemes.htm
Visa finally sold up...
http://www.reuters.com/article/newIssuesNews/idUSN1441588020080314
Visa was owned by the banks that issued its cards - it had a member ownership model
Visa planned to sell 406 million Class A shares at $37 to $42 each, for proceeds of $15 billion to $17 billion, according to a regulatory filing last month.
Visa share price today at $56.47
http://finance.google.co.uk/finance?client=ob&q=NYSE:V
http://news.bbc.co.uk/1/hi/business/7263156.stm
Visa hopes to raise more than $18bn (£9bn) from the listing, which would make it the largest Initial Public Offering (IPO) in the US to date.
The share offering would be the culmination of a restructuring process that began in October 2006.
It is currently owned by banks that issue cards carrying the Visa symbol.
Of the net proceeds, $10.2bn from the listing will be paid to the banks who own the network.
Meanwhile $3bn will be set aside to cover the costs of a variety of litigation that Visa is currently involved with.
Why did Visa restructure? Did it need to raise the capital for the litigation? Must be more to it than that?
Tomorrow's Owners
"Table 3 compares the market capitalisation of domestic listed companies with the GDP of our chosen countries at the end of 2005" (p29, table is on p30)
http://www.telegraph.co.uk/finance/newsbysector/utilities/2795061/Britain's-biggest-private-companies-The-raw-materials-of-everyday-life.html
4 Viridian
Revenue £1.02bn
Viridian is one of Northern Ireland’s leading pan-utility groups. It supplies electricity to around 780,000 homes and businesses in the province and is also a leading supplier of gas and renewable electricity to the industrial and commercial electricity markets across Ireland through its Energia subsidiary. Viridian also operates two gas turbine power stations at Huntsdown near Dublin, in the Republic of Ireland, that together provide almost 20pc of Ireland’s electricity needs, as well as operating transmission and distribution systems in Northern Ireland. The Belfast-based company was bought by private equity group Arcapita in December 2006 for £1.6bn.
Monday, 20 October 2008
General reading list / things to check out
Jen says
consider deeper questions about what wealth means, why we need wealth, what are the social values the system is built on and how do we change those?
International Comparisons of Wealth Inequality - article by edward wolff
Mark Gater - PhD in money systems with Britannia BS.. interesting topic and partnership model
Jak - swedish bank with no interest
Brazil - favellas - token system with boys given vouchers for menoring younger boys that they could then spend as university fees
Zopa, Time Bank
Guildhall - 'best price' - concept, negotiate on the fair price, not on the highest or lowest it was possible to get.
david.boyle@neweconomics.org
Mark Gater
bang on www.bath.ac.uk/carpp/msc/alumni/gater.html
The Quakers' Made of Money project
Richard Douthwaite
James RIchardson
David Boyle
david.boyle@neweconomics.org - done
Sargon at nef
Responsible debt book author
REOS dialogue interviews
Report (Chatham house)
Layard, Happiness
MBA text book section on business models - look on MIT reading list
ESOP - employee shared ownership
google cooperative movement and political economy / philosophy / history / economics of
consider deeper questions about what wealth means, why we need wealth, what are the social values the system is built on and how do we change those?
International Comparisons of Wealth Inequality - article by edward wolff
Mark Gater - PhD in money systems with Britannia BS.. interesting topic and partnership model
Jak - swedish bank with no interest
Brazil - favellas - token system with boys given vouchers for menoring younger boys that they could then spend as university fees
Zopa, Time Bank
Guildhall - 'best price' - concept, negotiate on the fair price, not on the highest or lowest it was possible to get.
david.boyle@neweconomics.org
Mark Gater
bang on www.bath.ac.uk/carpp/msc/alumni/gater.html
The Quakers' Made of Money project
Richard Douthwaite
James RIchardson
David Boyle
david.boyle@neweconomics.org - done
Sargon at nef
Responsible debt book author
REOS dialogue interviews
Report (Chatham house)
Layard, Happiness
MBA text book section on business models - look on MIT reading list
ESOP - employee shared ownership
google cooperative movement and political economy / philosophy / history / economics of
Sunday, 12 October 2008
Theory of Time
Imagine a pie chart totalling where our earnings go. It's split into 4 portions, A - D
A: our lives now, and our families if we have them
B: our future lives: savings, pensions
C: our society: other people, community, infrastructure: tax
D: money we pass to shareholders via profits on stuff we buy, including consumer goods and financial services - so including interest payments on mortgages and loans that become shareholder profits.
So my thinking is that under the current economic model, portion d is too large. If it were smaller, we would have either more money or more time for a, b and c.
This is why it's a sustainable lifestyle issue.
(There's a question of what would happen to tax income if d were reduced. More radical question of what would happen to required tax income if time for a and be were increased; eg, lower NHS bills).
One implication is that the money project is only really useful alongside broader efforts to help people to derive pleasure and meaning from less material things, that need time rather than money.
This means opportunities, like, FF, rural hub, community food gardens, kids club, 'special sundays' and so on. (NB need to ask charlie for a name for special sundays)
These things are a rich source of happiness and social health.
That's what I'm interested in.
But as long as D is large, we work a lot and don't have much time for the good stuff.
But NB the risk: without the other stuff, the money project simply has the potential to distribute wealth more evenly, rather than aiding the emergence of more sustainable lives and society.
It's a big lifelong social / environmental / economic experiment.
Eg, Student co-operatives in the US cost 40% less than average private student accomodation.
What does that mean? a) they get in less debt, b) they work for money less and have more time for studies and fun, c) they spend more money on other stuff
But, in sum, I think this thinking is central to addressing the work-life balance and family time issues.
A: our lives now, and our families if we have them
B: our future lives: savings, pensions
C: our society: other people, community, infrastructure: tax
D: money we pass to shareholders via profits on stuff we buy, including consumer goods and financial services - so including interest payments on mortgages and loans that become shareholder profits.
So my thinking is that under the current economic model, portion d is too large. If it were smaller, we would have either more money or more time for a, b and c.
This is why it's a sustainable lifestyle issue.
(There's a question of what would happen to tax income if d were reduced. More radical question of what would happen to required tax income if time for a and be were increased; eg, lower NHS bills).
One implication is that the money project is only really useful alongside broader efforts to help people to derive pleasure and meaning from less material things, that need time rather than money.
This means opportunities, like, FF, rural hub, community food gardens, kids club, 'special sundays' and so on. (NB need to ask charlie for a name for special sundays)
These things are a rich source of happiness and social health.
That's what I'm interested in.
But as long as D is large, we work a lot and don't have much time for the good stuff.
But NB the risk: without the other stuff, the money project simply has the potential to distribute wealth more evenly, rather than aiding the emergence of more sustainable lives and society.
It's a big lifelong social / environmental / economic experiment.
Eg, Student co-operatives in the US cost 40% less than average private student accomodation.
What does that mean? a) they get in less debt, b) they work for money less and have more time for studies and fun, c) they spend more money on other stuff
But, in sum, I think this thinking is central to addressing the work-life balance and family time issues.
Monday, 6 October 2008
The Fear
I am fearful.
The money project scares me.
I started to get fearful on the bus. I stopped my reading. What am I afraid of?
A cartoon came into my head. I saw a massive black block of stone with a little stick figure working at high speed, pushing and pushing at this big block, 200 times its own size, pushing in fast forward, pushing with the arms, the hip, pushing more, not a budge.
I looked up and saw a Take Courage sign. They're always there when you need them. I believe Life talks to me in wind and Take Courage signs.
I returned to the cartoon. What does taking courage look like?
The stick person sat down with it's back against the block, knees up, pulled out a book and started to read. Gradually lines of illumination started to appear within the block, starting to describe its internal forms and functions.
Other people started to gather around the reading stick man, interested, peering into the book, looking at the new lines of insight revealing the block.
More and more people gathered, the pieces of the block started to pull apart, different people worked on different bits, pulling them away
I smiled and felt better
and started to read again.
I am scared because I think the Money Project is economics.
I am scared of economics.
I am reading a book by an economist. It's about economics. I am enjoying it. I started to get excited about economics, because political science always stops short of that kind of tangibility. Yes the clash of civilisations might be a bit about Islamic political philosophy but isn't it more about oil, money and the enforced replacement of Iranian bread with white sliced?
I'm scared of economics because it is not me. It is not mine. It belongs to my sister. I am not the little girl who used to colour in complex geometric shapes, she is, that's what economists do when they're small. I sung and danced around. I still do. That's who I am.
I am not an economist so I can't do an economics project. Why do an economics project when all the people competing with you for PhD places will be way, way ahead of the game. It's like snowboarding goofy when actually you're normal. Which is exactly what I did.
I get tension in my jaw and shoulders because, why would you go into a race with half a leg like that? Why would you put yourself up for that kind of disadvantage?
I should have taken that place at Edinburgh and studied Psychology and by now I'd be running mental hospitals and revolutionising the way the sick are treated and they'd all be growing vegetables and making music and having proper conversations with their doctors. And life would be more comfortable and I'd be richer.
Instead I'm in a very weak and scary position competing with the economists for a training I'm not qualified to do.
My fear is bigger. Economics will trap me. It'll trap me in a conceptual land I find hard. It'll trap me in numbers and mathematics and they'll be hard and cold and I'm the kid who sings and dances around.
But.
I am also the kid who did rows and rows of sums for fun. I am the teenager whos maths teacher said, 'you won't be fulfilled unless you study mathematics.' I am the economics GCSE student whos teacher said, 'you could be even better than Romily if you would only do some work!'
So, I just googled 'therapeutic psychology' and the third item that came up was all about inequality and it's relation to unhappiness.
My first dream was to be on the stage like Annie. I wanted that really badly.
Then I was interested in psychology.I asked my mum whether psychology or sociology was best. She said, oh, sociology's boring, it's all about society, psychology's really interesting, it's all about people.
Then I saw a documentary about hte way that mentally ill people were treated. I saw a doctor engage with a woman more superficially than a tesco's check out assistant and tick some boxes; then I saw a camera man start to sing with her and she came alive.
That day up in the attic aged 15 or so I vowed to become a powerful psychologist and change the way that we relate to and treat the mentally ill.
Then I wanted to be a film maker. I really reallly wanted to be a film maker.
Then it was documentaries. I really really wanted to be a documentary film maker.
Then it was sustainability. I really really wanted to help make the world more sustainable.
I ended up studying political science. I fell in love with the subject in the first or second lecture.
She was talking about world politics. I had sworn and blinded about having to do a module in world politics, but I went along and fell in love.
I realised that politics was about everything. About how we are able, and unable to live. It is about our freedoms and oppressions, why one person lives in freedom while another lives in misery; why one person ends up with three houses and another ends up in jail.
I found the stories Big and Bold and Fundamental. I read Hobbes and Nietzsche and Hannah Arendt oh how I loved Arendt and her distinction between Work and Action - she was a great seer of the truth that the best things in life are non materialistic - and I real about Wallerstein and got passionate about justice and came out the other end still not really having a clue what Political Science was but somehow having a 1st class degree in it.
and work since then has been bitty but ok and mostly pretty good and sometimes very exciting and often quite stressful but that's as much about the biscuits as it is about the work.
but it feels bitty
and it feels like it's time to settle into One Big Focus
and really do it.
but economics feels black and heavy
and on the other hand, it feels fascinating
it feels like it opens up and takes to the next level all of my questions about how we organise ourselves, how we do stuff and make stuff and trade stuff and meet our needs in a way that most maximises our personal, social and environmental wellbeing
see, i'm still fundamentally concerned with wellbeing
but in more of a preventative way now than the curative way of psychology
let's not be zero sum; i bet psychology can be fucking interesting; the insights you can get must be fantastic. But so is economics and political economy. It's what it's all about. I have a hunch that I'm seeing something important that people aren't paying any serious attention to, and things could get much better if we do
if we had more sustainable and just models of business ownership
we may be able to work less and play more
because less of our time would be sucked up by people making profit from our consumption and labour
ha! I'm a marxist!
and if land ownership were more equitable
people could do stuff, could make Action, with less pressure, and less unsustainability in their production and consumption
that's my hunch
so I'm going to check it out
and maybe if I do some work
in some years I can become as good as Romily
and maybe my knee will heal
but at the end of the day, it's a livelihood
and I've got to be comfortable with my livelihood
with my life.
With my days, and the ways I spend them.
So here's the deal.
I'm going to try and gain some insight into that block of Big Quesions that is the money project.
I'm not going to make any dark and lonely forays into such matters as econometrics
but i'm actually pretty happy with numbers, pretty comfortable
and i'm actually pretty hungry to read these books. I'm very hungry in fact.
and if I take a political economy route, I'm not starting at a major disadvantage, especially if I do a bunch of reading. And I can learn some economics as I go if I need to.
This money project has been bubbling in me for years.
It's time to take that energy somewhere.
That urge to solve mental health treatments was a manifestation of an essential characteristic
to try to solve problems
I love, I really love
imagining solutions
I really love
understanding problems
imagining solutions
and having a go at making them happen
i seem to be compelled towards
very difficult things
I seem to get bored otherwise
but completely captivated by very difficult things
and here, in modern capitalism,
is a very complex problem in need of a bit of solving
and it's a very difficult thing
and if it works for me,
maybe one day I'll end up at a university
teaching business students and poli sci students about business models and susatinability
but the most exciting thing would be working with businesses and entrepreneurs and governements
to try to figure out how to solve the problems
and then maybe one day I can do some work on the political economy of land ownership and lifestyle
and on the political economy of mental health treatment
maybe do something about that
through the yoga and the vegetable gardens and the way we design our economic organisation
they way we organise ourselves economically
man, it all comes down to how we organise ourselves economically
so here's the deal
if it's not comfortable,
i'll stop
i'll quit
and i'll live in a yurt and practice yoga and teach people and go teach in mental hospitals - nb - I have a promise to do that by the way that I have to keep
and I'll help the FF to grow
and i'll keep up with the social shamanism
the studying of problems
the imagining of solutions
and if I really want to read psychology, I can
but right now I'm far more interested in economics!
I do feel like political economy is the most interesting thing
why do we shut out our old people and mentally ill because they are economically inefficient?
we have so much to exchange with each other!
maybe if there were more embercombes there'd be fewer psychiatric hospitals.
if economics feels dark and heavy, perhaps that is because contemporary capitalist economics is dark
so what does light economics, an economics of light, look like?
i think it's time to gather some people (in a bit) around my book by the black block and do some thinking and talking together.
and maybe we can bring forward an economics of light.
an economics of light.
The money project scares me.
I started to get fearful on the bus. I stopped my reading. What am I afraid of?
A cartoon came into my head. I saw a massive black block of stone with a little stick figure working at high speed, pushing and pushing at this big block, 200 times its own size, pushing in fast forward, pushing with the arms, the hip, pushing more, not a budge.
I looked up and saw a Take Courage sign. They're always there when you need them. I believe Life talks to me in wind and Take Courage signs.
I returned to the cartoon. What does taking courage look like?
The stick person sat down with it's back against the block, knees up, pulled out a book and started to read. Gradually lines of illumination started to appear within the block, starting to describe its internal forms and functions.
Other people started to gather around the reading stick man, interested, peering into the book, looking at the new lines of insight revealing the block.
More and more people gathered, the pieces of the block started to pull apart, different people worked on different bits, pulling them away
I smiled and felt better
and started to read again.
I am scared because I think the Money Project is economics.
I am scared of economics.
I am reading a book by an economist. It's about economics. I am enjoying it. I started to get excited about economics, because political science always stops short of that kind of tangibility. Yes the clash of civilisations might be a bit about Islamic political philosophy but isn't it more about oil, money and the enforced replacement of Iranian bread with white sliced?
I'm scared of economics because it is not me. It is not mine. It belongs to my sister. I am not the little girl who used to colour in complex geometric shapes, she is, that's what economists do when they're small. I sung and danced around. I still do. That's who I am.
I am not an economist so I can't do an economics project. Why do an economics project when all the people competing with you for PhD places will be way, way ahead of the game. It's like snowboarding goofy when actually you're normal. Which is exactly what I did.
I get tension in my jaw and shoulders because, why would you go into a race with half a leg like that? Why would you put yourself up for that kind of disadvantage?
I should have taken that place at Edinburgh and studied Psychology and by now I'd be running mental hospitals and revolutionising the way the sick are treated and they'd all be growing vegetables and making music and having proper conversations with their doctors. And life would be more comfortable and I'd be richer.
Instead I'm in a very weak and scary position competing with the economists for a training I'm not qualified to do.
My fear is bigger. Economics will trap me. It'll trap me in a conceptual land I find hard. It'll trap me in numbers and mathematics and they'll be hard and cold and I'm the kid who sings and dances around.
But.
I am also the kid who did rows and rows of sums for fun. I am the teenager whos maths teacher said, 'you won't be fulfilled unless you study mathematics.' I am the economics GCSE student whos teacher said, 'you could be even better than Romily if you would only do some work!'
So, I just googled 'therapeutic psychology' and the third item that came up was all about inequality and it's relation to unhappiness.
My first dream was to be on the stage like Annie. I wanted that really badly.
Then I was interested in psychology.I asked my mum whether psychology or sociology was best. She said, oh, sociology's boring, it's all about society, psychology's really interesting, it's all about people.
Then I saw a documentary about hte way that mentally ill people were treated. I saw a doctor engage with a woman more superficially than a tesco's check out assistant and tick some boxes; then I saw a camera man start to sing with her and she came alive.
That day up in the attic aged 15 or so I vowed to become a powerful psychologist and change the way that we relate to and treat the mentally ill.
Then I wanted to be a film maker. I really reallly wanted to be a film maker.
Then it was documentaries. I really really wanted to be a documentary film maker.
Then it was sustainability. I really really wanted to help make the world more sustainable.
I ended up studying political science. I fell in love with the subject in the first or second lecture.
She was talking about world politics. I had sworn and blinded about having to do a module in world politics, but I went along and fell in love.
I realised that politics was about everything. About how we are able, and unable to live. It is about our freedoms and oppressions, why one person lives in freedom while another lives in misery; why one person ends up with three houses and another ends up in jail.
I found the stories Big and Bold and Fundamental. I read Hobbes and Nietzsche and Hannah Arendt oh how I loved Arendt and her distinction between Work and Action - she was a great seer of the truth that the best things in life are non materialistic - and I real about Wallerstein and got passionate about justice and came out the other end still not really having a clue what Political Science was but somehow having a 1st class degree in it.
and work since then has been bitty but ok and mostly pretty good and sometimes very exciting and often quite stressful but that's as much about the biscuits as it is about the work.
but it feels bitty
and it feels like it's time to settle into One Big Focus
and really do it.
but economics feels black and heavy
and on the other hand, it feels fascinating
it feels like it opens up and takes to the next level all of my questions about how we organise ourselves, how we do stuff and make stuff and trade stuff and meet our needs in a way that most maximises our personal, social and environmental wellbeing
see, i'm still fundamentally concerned with wellbeing
but in more of a preventative way now than the curative way of psychology
let's not be zero sum; i bet psychology can be fucking interesting; the insights you can get must be fantastic. But so is economics and political economy. It's what it's all about. I have a hunch that I'm seeing something important that people aren't paying any serious attention to, and things could get much better if we do
if we had more sustainable and just models of business ownership
we may be able to work less and play more
because less of our time would be sucked up by people making profit from our consumption and labour
ha! I'm a marxist!
and if land ownership were more equitable
people could do stuff, could make Action, with less pressure, and less unsustainability in their production and consumption
that's my hunch
so I'm going to check it out
and maybe if I do some work
in some years I can become as good as Romily
and maybe my knee will heal
but at the end of the day, it's a livelihood
and I've got to be comfortable with my livelihood
with my life.
With my days, and the ways I spend them.
So here's the deal.
I'm going to try and gain some insight into that block of Big Quesions that is the money project.
I'm not going to make any dark and lonely forays into such matters as econometrics
but i'm actually pretty happy with numbers, pretty comfortable
and i'm actually pretty hungry to read these books. I'm very hungry in fact.
and if I take a political economy route, I'm not starting at a major disadvantage, especially if I do a bunch of reading. And I can learn some economics as I go if I need to.
This money project has been bubbling in me for years.
It's time to take that energy somewhere.
That urge to solve mental health treatments was a manifestation of an essential characteristic
to try to solve problems
I love, I really love
imagining solutions
I really love
understanding problems
imagining solutions
and having a go at making them happen
i seem to be compelled towards
very difficult things
I seem to get bored otherwise
but completely captivated by very difficult things
and here, in modern capitalism,
is a very complex problem in need of a bit of solving
and it's a very difficult thing
and if it works for me,
maybe one day I'll end up at a university
teaching business students and poli sci students about business models and susatinability
but the most exciting thing would be working with businesses and entrepreneurs and governements
to try to figure out how to solve the problems
and then maybe one day I can do some work on the political economy of land ownership and lifestyle
and on the political economy of mental health treatment
maybe do something about that
through the yoga and the vegetable gardens and the way we design our economic organisation
they way we organise ourselves economically
man, it all comes down to how we organise ourselves economically
so here's the deal
if it's not comfortable,
i'll stop
i'll quit
and i'll live in a yurt and practice yoga and teach people and go teach in mental hospitals - nb - I have a promise to do that by the way that I have to keep
and I'll help the FF to grow
and i'll keep up with the social shamanism
the studying of problems
the imagining of solutions
and if I really want to read psychology, I can
but right now I'm far more interested in economics!
I do feel like political economy is the most interesting thing
why do we shut out our old people and mentally ill because they are economically inefficient?
we have so much to exchange with each other!
maybe if there were more embercombes there'd be fewer psychiatric hospitals.
if economics feels dark and heavy, perhaps that is because contemporary capitalist economics is dark
so what does light economics, an economics of light, look like?
i think it's time to gather some people (in a bit) around my book by the black block and do some thinking and talking together.
and maybe we can bring forward an economics of light.
an economics of light.
Thursday, 2 October 2008
Business model design workshop
Alex Osterwalder
Understanding conservative businesses
Getting into their shoes, behind their eyes
Do good while doing well
Higher chance of success where the owners are – people who will be impacted by the business? People who will be involved in the business
Grameen phone
Wise – connect wealthy individuals with social entrepreneurs
Big green challenge – companies as case studies?
“if you want to go fast, you go alone. If you want to go far, you go together”
international capital markets
Blue Orchard – connecting the world of international capital markets with microfinance institutions like grameen
Myc4 – bridging gap between individual investors and lendors, and medium sized businesses in Africa
Investors: you’re getting 14%: where is that 14% coming from? Story telling...
methods for strategy analysis and design
few methods out there that help companies look at new ways of doing business
IBM CEO survey showing that business model innovation is top of the agenda – a lot of people are doing it, interested in doing it, don’t always know how
His methodology: reflect systematically on business models
Business Model Template – on his blog
http://business-model-design.blogspot.com
USP – seeing the whole thing on one piece of paper.
‘where is the money going to come from, to sustain this value creation’
in models – the power lies in simplicity, so people don’t get lost. The whole idea of a model is trying to represent reality in a simplified way.
Online football clubs where people can buy parts and shares online
He says, business model design is totally separate from organisational structure
You can have a variety of different organisational structures for the same business model design
Draw the line between the two
Unless the org structure is part of the design, eg, part of the relationship with the consumer or the partner etc
He knows of little work on that
Zameen aims to bring ownership further up the value chain
Eg, Cotton farmers owning factories, or mills
Trad model: buy from one source, sell it to another, make a margin on that
So big questions about the margin
Clear imperative to maximise the margin while you can – you will not always be able to. Make hay while sun shines
How much does ownership affect operations?
Skype – sim to telecoms – comms offer – has a completely different biz model to telco
Understanding conservative businesses
Getting into their shoes, behind their eyes
Do good while doing well
Higher chance of success where the owners are – people who will be impacted by the business? People who will be involved in the business
Grameen phone
Wise – connect wealthy individuals with social entrepreneurs
Big green challenge – companies as case studies?
“if you want to go fast, you go alone. If you want to go far, you go together”
international capital markets
Blue Orchard – connecting the world of international capital markets with microfinance institutions like grameen
Myc4 – bridging gap between individual investors and lendors, and medium sized businesses in Africa
Investors: you’re getting 14%: where is that 14% coming from? Story telling...
methods for strategy analysis and design
few methods out there that help companies look at new ways of doing business
IBM CEO survey showing that business model innovation is top of the agenda – a lot of people are doing it, interested in doing it, don’t always know how
His methodology: reflect systematically on business models
Business Model Template – on his blog
http://business-model-design.blogspot.com
USP – seeing the whole thing on one piece of paper.
‘where is the money going to come from, to sustain this value creation’
in models – the power lies in simplicity, so people don’t get lost. The whole idea of a model is trying to represent reality in a simplified way.
Online football clubs where people can buy parts and shares online
He says, business model design is totally separate from organisational structure
You can have a variety of different organisational structures for the same business model design
Draw the line between the two
Unless the org structure is part of the design, eg, part of the relationship with the consumer or the partner etc
He knows of little work on that
Zameen aims to bring ownership further up the value chain
Eg, Cotton farmers owning factories, or mills
Trad model: buy from one source, sell it to another, make a margin on that
So big questions about the margin
Clear imperative to maximise the margin while you can – you will not always be able to. Make hay while sun shines
How much does ownership affect operations?
Skype – sim to telecoms – comms offer – has a completely different biz model to telco
Monday, 29 September 2008
The money project and the credit crunch
What's the relationship between the money project and the credit crunch?
It's not the building societies and the member owned mutuals that are going down.
It's the banks that maximise profit from their trade in money and shares with consumers and businesses
what's that about?
First non-profit bank in UK opened in 2002 http://www.guardian.co.uk/society/2002/oct/17/charityfinance
looks like there's no such thing as a non profit mortgage lender
what's the coop bank's ownership model?
why are there no non profit banks and mortgage lenders?
credit unions... why do they not grow and do proper services?
non profit doesn't mean not making a surplus
where do we draw the line?
http://c-resource.com/~creso2/view_article.php?aid=98
http://www.esrc.ac.uk/ESRCInfoCentre/index.aspx
Charitable donations are dwindling as recession spreads - while charities' services are becoming more in demand.
It's not the building societies and the member owned mutuals that are going down.
It's the banks that maximise profit from their trade in money and shares with consumers and businesses
what's that about?
First non-profit bank in UK opened in 2002 http://www.guardian.co.uk/society/2002/oct/17/charityfinance
looks like there's no such thing as a non profit mortgage lender
what's the coop bank's ownership model?
why are there no non profit banks and mortgage lenders?
credit unions... why do they not grow and do proper services?
non profit doesn't mean not making a surplus
where do we draw the line?
http://c-resource.com/~creso2/view_article.php?aid=98
http://www.esrc.ac.uk/ESRCInfoCentre/index.aspx
Charitable donations are dwindling as recession spreads - while charities' services are becoming more in demand.
Thursday, 11 September 2008
Search terms, sources, things to check out
British Library
Anthropology of money
Anthropology and Politics of Commodity Exchange (Studies in Anthropology & History) by GREGORY
A History of Money: From AD 800 by Professor Forrest Capie and John F Chown
Maidens, Meal and Money: Capitalism and the Domestic Community (Themes in the Social Sciences)
Money and the Morality of Exchange by Jonathan Parry and Maurice Bloch
Corporate governance, wealth distribution
The Corporation
Corporation 20/20
Jen says
consider deeper questions about what wealth means, why we need wealth, what are the social values the system is built on and how do we change those?
Mark Gater - PhD in money systems with Britannia BS.. interesting topic and partnership model
Jak - swedish bank with no interest
Brazil - favellas - token system with boys given vouchers for mentoring younger boys that they could then spend as university fees
Zopa, Time Bank
Guildhall - 'best price' - concept, negotiate on the fair price, not on the highest or lowest it was possible to get.
david.boyle@neweconomics.org
Mark Gater
bang on www.bath.ac.uk/carpp/msc/alumni/gater.html
The Quakers' Made of Money project
Richard Douthwaite
James RIchardson
David Boyle
david.boyle@neweconomics.org - done
Sargon at nef
Responsible debt book author
REOS dialogue interviews
Report (Chatham house)
Layard, Happiness
MBA text book section on business models - look on MIT reading list
ESOP - employee shared ownership
google cooperative movement and political economy / philosophy / history / economics of
'Your search term 'SME, wealth distribution' matched no records' (no exact word)
SME, inequality
Google
business ownership models distribution capital
Ownership and Governance of Enterprises: Recent Innovative Developments (Studies in Development Economics and Policy) (Hardcover)
In Search of Secret India” by Dr Paul Brunton
Look at Tim Jackson and SDC re growth
Oatley, International Political Economy (2008) and Ravenhill, Global Political Economy (2008) by the end of the first term.
(IPE course recommended reading)
International Perspectives on Household Wealth
By Edward N. Wolff, Jerome Levy – business equity, p 183
Why does market capitalism fail to deliver a sustainable environment and greater equality of incomes?
* Autores: Christine Greenhalgh
* Localización: Cambridge journal of economics, ISSN 0309-166X, Nº. 6, 2005 , pags. 1091-1109
I argue that free-market capitalist economies are biased against inventing/using green technology and against supplying the basic needs of the poor. With no mechanism for setting globally optimal prices for non-renewables, entrepreneurs choose labour-saving resource-intensive production methods. Further pressure on labour costs comes from finite individual lifetimes combined with rising access to goods. R&D creates technologies/products geared to saving worker and consumer time, instead of conserving non-renewable resources. Demand for positional luxury goods by the rich crowds out the basic needs of the poor. Technology caters for the demands of the rich, accentuating inequality, as prices fall/quality rises with innovation. I conclude with policies to redress imbalances. Copyright 2005, Oxford University Press.
The Ownership Solution: Toward a Stakeholder Capitalism for the 21st Century by Jeff Gates, 1998/9
Employee Ownership in America: the Equity Solution (Issues in Organization and Management Series]) (1985)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=661444
Profit Maximization versus Disadvantageous Inequality: The Impact of Self-Categorization
Co-operative, inequality
• http://hsepubl.lib.hse.fi/EN/wp/?cmd=show&wpid=1021 - more about inequality as a driver of co-operatives, rather than vice versa
• Social inequality in Vietnam and the challenges to reform – book – no explicit mention in contents page
Not focusing on inequality of national incomes. Focusing on inequality of wealth held by individuals
Layard, Happiness
Capitalism, inequality
http://www.springerlink.com/content/m54165748147g455/
- extremist persective, neo-marxist and aggressively so.
“The sanctity of private property ownership would need to be drastically interfered with in order to bring about the qualitative improvement of the living conditions and experiences of the world's peoples. It seems to me that we would have to entertain the notion that private property ownership must be abolished and a social ownership and control of the commanding heights of the economy established as a first giant step towards a humane world.”
Capitalism and inequality: The negative consequences for humanity
Journal Crime, Law and Social Change
Publisher Springer Netherlands
ISSN 0925-4994 (Print) 1573-0751 (Online)
Issue Volume 6, Number 4 / October, 1982
DOI 10.1007/BF00728232
Pages 333-371
Subject Collection Humanities, Social Sciences and Law
SpringerLink Date Wednesday, December 08, 2004
So, I’ll need to strongly distinguished my approach from the socialists because that’s who I’ll get lumped in with.
Also, everyone says ‘the top 10% blah and the bottom 10% blah’ – so, briefly recognise that ineq is growing (this is contentious) and move very swiftly on to introduce my angle, which is fresh.
Perhaps the literature so far has been divided into the capitalists on one side, the socialists on the other, and there’s a middle ground regarding the distribution of wealth that has yet to be explored fully.
- ‘Fruits of capitalism; inequality matters’ – Kim Petersen. Book, again quite extreme left
The case of China – capitalism and socialism – who owns the organisations and where does the surplus go?
YouTube - Inequality and Global Capitalism
Harvard labor economist Richard Freeman explores how social inequality and globalization are threatening the foundation of democracy in the United States in ...
www.youtube.com/watch?v=UKinQbBF1Ek
CiC, inequality
Community Interest Company, wealth distribution
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
Generally speaking, "wealth" is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth, which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."
We also need to distinguish wealth from income. Income is what people earn from wages, dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income.
Business model, inequality
Business ownership, inequality
• Steckel, R.H., Moehling, C.M. (2001), "Rising inequality: trends in the distribution of wealth in industrializing New England", The Journal of Economic History, Vol. 61 No.1, pp.160-83.
http://www.newsfromnowhere.org.uk/books/DisplayBooklist.php?BookListID=123 - long list of anti-capitalist books
SME, inequality
He said SMEs play a vital role in the country's socio-economic development, and aid in the eradication of poverty and inequality, an SME role that the government has realised.
http://www.economist.com.na/content/view/317/53/
http://www.oecd.org/document/38/0,3343,en_2649_34321_37130854_1_1_1_1,00.html
Economic Survey of Japan 2006: Income inequality, poverty and social spending
OECD Economics Department
Monetary flows
http://www.ingentaconnect.com/content/routledg/utis/1999/00000015/00000001/art00005
Inequality, business
Business, wealth distribution
Business, surplus distribution
Surplus distribution, inequality
Profit, inequality
Shareholders, inquality
Stock market, inequality
Business ownership, inequality
http://www.statcan.ca/english/freepub/75-001-XIE/10904/art-2.htm - Canadian dept of statistics
Of total wealth inequality in Canada, 98% was attributable to inequality within provinces. The factors affecting family wealth inequality within provinces include homeownership status, business equity, financial asset components, employer pension plan savings, and mortgage and consumer debt.
Business equity, inequality
International Perspectives on household wealth… Edward Wolff
nstitutional Pathways to Equity: Addressing Inequality Traps (New Frontiers of Social Policy)
by Michael Walton (Editor), Anthony J. Bebbington (Editor), Anis A. Dani (Editor), Arjan De Haan (Editor)
http://www.amazon.co.uk/Inequality-Prosperity-Liberal-Political-Hardcover/dp/0801443512/ref=sr_1_1?ie=UTF8&s=books&qid=1221652641&sr=8-1
Inequality and Prosperity: social Europe vs liberal America
Journal of Corporate Citizenship
Google – ‘stock market, inequality’ – most references focus on income inequality
Wealth in America
By Lisa A. Keister
Looks a little at wealth.
Google search – journal of coproate citizenship, inequality
http://findarticles.com/p/articles/mi_hb1445
can do a manual search through the back issues
JCC March 2007
http://findarticles.com/p/articles/mi_hb1445/is_200703?tag=content;col1
nothing on inequality from the titles
Ethical Corp – search on ‘inequality’ produces 45 results
http://www.ethicalcorp.com/content.asp?ContentID=5337
Governance:
Shareholder voting rights – Equity ownership’s endemic inequality
European investors want corporate decisions made on the basis of one share, one vote, but some companies are not listening
Despite protests from investors, more than one in four companies in Europe restrict the voting rights of shareholders.
Google
‘CSR, inequality’
World of Work Report 2008: Income inequalities in the age of financial globalization, produced by the ILO’s International Institute for Labour Studies also notes that a major share of the cost of the financial and economic crisis will be borne by hundreds of millions of people who haven’t shared in the benefits of recent growth.
http://www.opendemocracy.net/article/globalisation/philanthrocapitalism/power_inequality_democracy
The new philanthropy: power, inequality, democracy
Geoff Mulgan
The sceptical scrutiny of "philanthrocapitalism" by Michael Edwards is welcome. But markets and social enterprise could help realise the potential of a new donor economy, says Geoff Mulgan.
(how demorlaising – being a charity recipient. Is it? At the nag was it good to receive charity donations?)
Consumer driven market mechanisms to fight inequality: the case of CSR/product differentiation models with asymmetric information
The bottom up pressure of "concerned" consumers and the rise of "socially responsible" products represents a new market mechanism to fight inequality and promote social inclusion. To analyze the new phenomenon of competition in corporate social responsibility (CSR) amid doubts on consumer tastes and of the effective corporate SR stance we adopt a horizontal differentiation approach in which the Hotelling segment is reinterpreted as the space of product SR characteristics and consumer tastes are uncertain. We find equilibria of the pure location and of the price-location games and show what changes when we move from a duopoly of profit maximizing producers to a mixed duopoly. Our findings illustrate that a nonzero degree of CSR is the optimal choice of profit maximizing corporations under reasonable parametric intervals of consumers’ "costs of ethical distance", corporate cost of CSR and uncertainty about consumer tastes.
http://www.socialfunds.com/news/article.cgi/1930.html
The revised and updated edition of this text (originally published in 2000) examines how excessive executive compensation contributes to the widening gulf between rich and poor.
Premodern Trade in World History (Themes in World History) (Themes in World History) by Richard L. Smith (Paperback - 15 Dec 2007)
A Concise Economic History of the World: From Paleolithic Times to the Present by Rondo Cameron and Larry Neal (Paperback - 25 Jul 2002)
Anthropology of money
Anthropology and Politics of Commodity Exchange (Studies in Anthropology & History) by GREGORY
A History of Money: From AD 800 by Professor Forrest Capie and John F Chown
Maidens, Meal and Money: Capitalism and the Domestic Community (Themes in the Social Sciences)
Money and the Morality of Exchange by Jonathan Parry and Maurice Bloch
Corporate governance, wealth distribution
Corporate Governance and the Distribution of Wealth: A Political-Economy Perspective
Authors: Perotti, Enrico C.; von Thadden, Ernst-Ludwig
Source: Journal of Institutional and Theoretical Economics JITE, Volume 162, Number 1, March 2006 , pp. 204-217(14)
Publisher: Mohr Siebeck
| Volume 162:Number 1(2006:Mar.) | Available | Lending Collection | 5007.506000 |
Corporate governance: what about the workers?
Prem Sikka
Accounting, Auditing & Accountability Journal, 2008 vol 21 issue 7, pp 955 - 977
The effect of privatization on wealth distribution in Russia
SME, wealth distributionThe Corporation
Corporation 20/20
Jen says
consider deeper questions about what wealth means, why we need wealth, what are the social values the system is built on and how do we change those?
Mark Gater - PhD in money systems with Britannia BS.. interesting topic and partnership model
Jak - swedish bank with no interest
Brazil - favellas - token system with boys given vouchers for mentoring younger boys that they could then spend as university fees
Zopa, Time Bank
Guildhall - 'best price' - concept, negotiate on the fair price, not on the highest or lowest it was possible to get.
david.boyle@neweconomics.org
Mark Gater
bang on www.bath.ac.uk/carpp/msc/alumni/gater.html
The Quakers' Made of Money project
Richard Douthwaite
James RIchardson
David Boyle
david.boyle@neweconomics.org - done
Sargon at nef
Responsible debt book author
REOS dialogue interviews
Report (Chatham house)
Layard, Happiness
MBA text book section on business models - look on MIT reading list
ESOP - employee shared ownership
google cooperative movement and political economy / philosophy / history / economics of
'Your search term 'SME, wealth distribution' matched no records' (no exact word)
SME, inequality
 | Your search term 'SME, inequality' matched no records |
Rik Donckels and Asko Miettinen (eds), Entrepreneurship and SME Research: On its Way to the Next Millennium
Brian Snowden and Howard R. Vane, Conversations with Leading Economists: Interpreting Modern Macroeconomics
A. G. Kenwood and A. L. Lougheed, Growth of the International Economy1820–2000
business ownership models distribution capital
Ownership and Governance of Enterprises: Recent Innovative Developments (Studies in Development Economics and Policy) (Hardcover)
In Search of Secret India” by Dr Paul Brunton
Look at Tim Jackson and SDC re growth
Oatley, International Political Economy (2008) and Ravenhill, Global Political Economy (2008) by the end of the first term.
(IPE course recommended reading)
International Perspectives on Household Wealth
By Edward N. Wolff, Jerome Levy – business equity, p 183
Why does market capitalism fail to deliver a sustainable environment and greater equality of incomes?
* Autores: Christine Greenhalgh
* Localización: Cambridge journal of economics, ISSN 0309-166X, Nº. 6, 2005 , pags. 1091-1109
I argue that free-market capitalist economies are biased against inventing/using green technology and against supplying the basic needs of the poor. With no mechanism for setting globally optimal prices for non-renewables, entrepreneurs choose labour-saving resource-intensive production methods. Further pressure on labour costs comes from finite individual lifetimes combined with rising access to goods. R&D creates technologies/products geared to saving worker and consumer time, instead of conserving non-renewable resources. Demand for positional luxury goods by the rich crowds out the basic needs of the poor. Technology caters for the demands of the rich, accentuating inequality, as prices fall/quality rises with innovation. I conclude with policies to redress imbalances. Copyright 2005, Oxford University Press.
The Ownership Solution: Toward a Stakeholder Capitalism for the 21st Century by Jeff Gates, 1998/9
Employee Ownership in America: the Equity Solution (Issues in Organization and Management Series]) (1985)
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=661444
Profit Maximization versus Disadvantageous Inequality: The Impact of Self-Categorization
Co-operative, inequality
• http://hsepubl.lib.hse.fi/EN/wp/?cmd=show&wpid=1021 - more about inequality as a driver of co-operatives, rather than vice versa
• Social inequality in Vietnam and the challenges to reform – book – no explicit mention in contents page
Not focusing on inequality of national incomes. Focusing on inequality of wealth held by individuals
Layard, Happiness
Capitalism, inequality
http://www.springerlink.com/content/m54165748147g455/
- extremist persective, neo-marxist and aggressively so.
“The sanctity of private property ownership would need to be drastically interfered with in order to bring about the qualitative improvement of the living conditions and experiences of the world's peoples. It seems to me that we would have to entertain the notion that private property ownership must be abolished and a social ownership and control of the commanding heights of the economy established as a first giant step towards a humane world.”
Capitalism and inequality: The negative consequences for humanity
Journal Crime, Law and Social Change
Publisher Springer Netherlands
ISSN 0925-4994 (Print) 1573-0751 (Online)
Issue Volume 6, Number 4 / October, 1982
DOI 10.1007/BF00728232
Pages 333-371
Subject Collection Humanities, Social Sciences and Law
SpringerLink Date Wednesday, December 08, 2004
So, I’ll need to strongly distinguished my approach from the socialists because that’s who I’ll get lumped in with.
Also, everyone says ‘the top 10% blah and the bottom 10% blah’ – so, briefly recognise that ineq is growing (this is contentious) and move very swiftly on to introduce my angle, which is fresh.
Perhaps the literature so far has been divided into the capitalists on one side, the socialists on the other, and there’s a middle ground regarding the distribution of wealth that has yet to be explored fully.
- ‘Fruits of capitalism; inequality matters’ – Kim Petersen. Book, again quite extreme left
The case of China – capitalism and socialism – who owns the organisations and where does the surplus go?
YouTube - Inequality and Global Capitalism
Harvard labor economist Richard Freeman explores how social inequality and globalization are threatening the foundation of democracy in the United States in ...
www.youtube.com/watch?v=UKinQbBF1Ek
CiC, inequality
Community Interest Company, wealth distribution
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
Generally speaking, "wealth" is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth, which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."
We also need to distinguish wealth from income. Income is what people earn from wages, dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income.
Business model, inequality
Business ownership, inequality
• Steckel, R.H., Moehling, C.M. (2001), "Rising inequality: trends in the distribution of wealth in industrializing New England", The Journal of Economic History, Vol. 61 No.1, pp.160-83.
http://www.newsfromnowhere.org.uk/books/DisplayBooklist.php?BookListID=123 - long list of anti-capitalist books
SME, inequality
He said SMEs play a vital role in the country's socio-economic development, and aid in the eradication of poverty and inequality, an SME role that the government has realised.
http://www.economist.com.na/content/view/317/53/
http://www.oecd.org/document/38/0,3343,en_2649_34321_37130854_1_1_1_1,00.html
Economic Survey of Japan 2006: Income inequality, poverty and social spending
OECD Economics Department
Monetary flows
http://www.ingentaconnect.com/content/routledg/utis/1999/00000015/00000001/art00005
The World System of International Monetary Flows: A Network Analysis
Authors: Salisbury J. G. T.; Barnett G. A.
Source: The Information Society, Volume 15, Number 1, 1 January 1999 , pp. 31-49(19)
Abstract:
The emergence of the global service economy has altered the flows of information and capital among the world's nations. Electronic international banking networks now provide the economic infrastructure for the ''global village'' as millions of financial transactions are processed daily. This article describes the world system based on the financial transactions of an international credit card network. Using transaction data from the third quarter of 1995, a network analysis produced structural findings similar to those found for the international telecommunications and trade networks. These results indicate that the world's monetary flow system is composed of a single group with the United States, United Kingdom, Germany, France, Italy, and Canada at the core and the former members of the Eastern Block and less developed countries at the periphery. Additionally, a number of nations are marginal in the network with only a single link to a core member of the network.Inequality, business
Business, wealth distribution
Business, surplus distribution
Surplus distribution, inequality
Profit, inequality
Shareholders, inquality
Stock market, inequality
Business ownership, inequality
http://www.statcan.ca/english/freepub/75-001-XIE/10904/art-2.htm - Canadian dept of statistics
Of total wealth inequality in Canada, 98% was attributable to inequality within provinces. The factors affecting family wealth inequality within provinces include homeownership status, business equity, financial asset components, employer pension plan savings, and mortgage and consumer debt.
Business equity, inequality
International Perspectives on household wealth… Edward Wolff
nstitutional Pathways to Equity: Addressing Inequality Traps (New Frontiers of Social Policy)
by Michael Walton (Editor), Anthony J. Bebbington (Editor), Anis A. Dani (Editor), Arjan De Haan (Editor)
http://www.amazon.co.uk/Inequality-Prosperity-Liberal-Political-Hardcover/dp/0801443512/ref=sr_1_1?ie=UTF8&s=books&qid=1221652641&sr=8-1
Inequality and Prosperity: social Europe vs liberal America
Journal of Corporate Citizenship
Google – ‘stock market, inequality’ – most references focus on income inequality
Wealth in America
By Lisa A. Keister
Looks a little at wealth.
Google search – journal of coproate citizenship, inequality
http://findarticles.com/p/articles/mi_hb1445
can do a manual search through the back issues
JCC March 2007
http://findarticles.com/p/articles/mi_hb1445/is_200703?tag=content;col1
nothing on inequality from the titles
Ethical Corp – search on ‘inequality’ produces 45 results
http://www.ethicalcorp.com/content.asp?ContentID=5337
Governance:
Shareholder voting rights – Equity ownership’s endemic inequality
European investors want corporate decisions made on the basis of one share, one vote, but some companies are not listening
Despite protests from investors, more than one in four companies in Europe restrict the voting rights of shareholders.
‘CSR, inequality’
World of Work Report 2008: Income inequalities in the age of financial globalization, produced by the ILO’s International Institute for Labour Studies also notes that a major share of the cost of the financial and economic crisis will be borne by hundreds of millions of people who haven’t shared in the benefits of recent growth.
http://www.opendemocracy.net/article/globalisation/philanthrocapitalism/power_inequality_democracy
The new philanthropy: power, inequality, democracy
Geoff Mulgan
The sceptical scrutiny of "philanthrocapitalism" by Michael Edwards is welcome. But markets and social enterprise could help realise the potential of a new donor economy, says Geoff Mulgan.
(how demorlaising – being a charity recipient. Is it? At the nag was it good to receive charity donations?)
Consumer driven market mechanisms to fight inequality: the case of CSR/product differentiation models with asymmetric information
The bottom up pressure of "concerned" consumers and the rise of "socially responsible" products represents a new market mechanism to fight inequality and promote social inclusion. To analyze the new phenomenon of competition in corporate social responsibility (CSR) amid doubts on consumer tastes and of the effective corporate SR stance we adopt a horizontal differentiation approach in which the Hotelling segment is reinterpreted as the space of product SR characteristics and consumer tastes are uncertain. We find equilibria of the pure location and of the price-location games and show what changes when we move from a duopoly of profit maximizing producers to a mixed duopoly. Our findings illustrate that a nonzero degree of CSR is the optimal choice of profit maximizing corporations under reasonable parametric intervals of consumers’ "costs of ethical distance", corporate cost of CSR and uncertainty about consumer tastes.
http://www.socialfunds.com/news/article.cgi/1930.html
The revised and updated edition of this text (originally published in 2000) examines how excessive executive compensation contributes to the widening gulf between rich and poor.
Premodern Trade in World History (Themes in World History) (Themes in World History) by Richard L. Smith (Paperback - 15 Dec 2007)
A Concise Economic History of the World: From Paleolithic Times to the Present by Rondo Cameron and Larry Neal (Paperback - 25 Jul 2002)
8. Existing and historical approaches to redistribution
- Perameter interventions - eg, one off payments to help pensioners deal with high fuel bills
- “Britain’s leading tax experts - the Institute for Fiscal Studies – said that despite the billions of pounds spent on tax credits, Labour had yet to meet its 2005 benchmarks for reducing child poverty by a quarter.” Guardian 11.06.०८
- different approaches to income from ownership: Denis Healey put a 98% tax on unearned income in १९७८ (History of Modern Britain)
- cost plus' - form of regulation where companies are allowed to make back cost put a specified percentage and no more. Cap on profit essentially, sometimes used with utility companies
The problem with cost-plus pricing is that it pays no attention to market prices. This means that it inevitably leads to either margins that are lower than they need be, or less sales. In the extreme case, applying cost-plus pricing to a commodity (not that anyone would — not for long anyway!), could lead to no sales at all if the cost-plus price was above the market price.
A pricing method similar to cost-plus is sometimes imposed by regulators on monopolies such as some utilities (Ofwat's methods of setting prices, for example). This is usually somewhat different as the the price setting process is modified to give sellers motivation to be efficient: for example, by basing it on what the regulator calculates costs should be, rather than on actual costs.
Banks et al 200:27
- "prior o the mid 1980s in Britain there was a tax bias away from direct holidings of equity towards wealth held in housing or occupational pensions, since equity was more heavily taxed than consumption, and housing and pensions benefitted from tax advantages relative to consumption... The introduction of personal equity plans and employee share ownership schemes meant that, from 1987 at least, equity could be held in a more favourably taxed manner by British households."
- Dividend income is taxed in both the US and UK.
- Stamp duty - 0.5% levvied on all share transactions in the UK
3. Evidence on Enterprise governance and wealth distribution
- 'Welsh Water gives £27m back to customers' - Guardian headline, 12th June 2008
- (http://www.guardian.co.uk/business/2008/jun/12/utilities.consumeraffairs)
- "The company... is unique among UK utility firms because it has no shareholders and reinvests all its surpluses for hte benefit of Welsh Water's customers." Each customer recieved a £21 dividend this year. totalling £27m. The remaining £14m profit will be taxed and reinvested into the company.
- "The interest we pay on our borrowings is much lower than if we had shareholders" says Nigel Annett, chief exec of Welsh Water. "Unlike other parts of industry, we're looking at a service. We are removed from the profit bit, which gives us a legitimacy with customers. I think it has worked better than we thought it would."
- It has 'no shareholders' but does have investors. "We are regarded as a low risk company because we have removed risks," says Annett. "Our investors want a safe home for their money. Investors charge lower interest. Lower interest means lower bills for customers." "We spent two years in the city of London arguing our case to investors. We had to raise £1.9bn, which I think is still one of the largest corporate bonds ever."
- Welsh Water is owned by Glas Cymru
- http://news.bbc.co.uk/1/hi/wales/1433520.stm
Glas Cymru launched what was described as a "people's bid" back in November 2000, pledging to take over Welsh Water from its present owners - Western Power Distribution - and run it on a non-profit making basis.
Instead of paying dividends to shareholders, cash surpluses would be shared with customers.
The company has promised to reduce water charges for Welsh Water customers, which are among the highest in the UK.
- Instead of shareholders the company will be controlled by a group of 200 or so members - led by some some prominent names from the business world.
The purchase price - nearly £2bn - would come from selling bonds in the City of London.
Welsh Water, which supplies water and sewage services to nearly 3m people, was part of the Hyder group which fell victim to a hostile takeover by the US company Western.
Welsh Assembly First Minister Rhodri Morgan welcomed the news of the go-ahead.
"I particularly welcome the prospect of Welsh Water being owned once again by a company based, managed and controlled from Wales, based on a principle originated in Wales," he said.
Glas Cymru is a single purpose company formed to own, finance and manage Welsh Water. It is a ‘company limited by guarantee’ and because it has no shareholders, any financial surpluses are retained for the benefit of Welsh Water’s customers.
____
Kennedy 1995
Makes some interesting claims with no discussion of sources or methodology (and as a result I do not trust this source)
Interesting claims:
Figure 3 – p 23 – proportion of cost that is interest payments:
• Garbage collection fees: 12%
• Drinking water costs – example of a northern German water supply works, 1981 – 38%
• Use of drains / Sewage costs – example of the city of AAchedn, 1983: 47%
• Cost of rent in public housing: calculations of the German Federal Office of Statistics, 1979: 77%
“On an average we pay about 50% capital costs in the price of our goods and services. Therefore, if we could abolish interest and replace it with another mechanism to keep money in circulation, most of us could either be twice as rich or work half of the time to keep the same standard of living as we have now.” P25
- very sketchy calculations – the number is probably inaccurate but the argument is interesting.
Dieter Suhr argues that the money system is a government service (is it??) – and therefore it works against the constitutional rights of the individual in most countries, for 10% of the people continually receive more than they pay for that service at the expense of 80% of the people who receive less than they pay for.
She presents the graph shown in Lietaer but does not reference is properly. She says the figures are from Helmut Crutz. I am in email trail for full reference details.
margritkennedy@monneta.org, Helmut.Creutz@iit-online.de
Alternative argument:
- companies create employment, pay taxes, through section 106 contracts give back to the community. Building societies don't give loans to poor people.
http://tutor2u.net/economics/content/topics/marketsinaction/producer_surplus.htm
http://en.wikipedia.org/wiki/Consumer_surplus
The producer surplus is the amount that producers benefit by selling at a market price that is higher than they would be willing to sell for.
So, it could be that:
companies are aiming to maximise producer surplus. This raises prices and the demands on the consumer, or, increases the flow of capital (financial, human, social) from the consumer to the company.
So, for the money project, we'll need to understand theories of pricing
If part of the argument is that excessive profit leads to excessive/problematic transference of human and social capital from the consumer to the shareholder via the company (money transferred below the line of producer surplus is not transferred to the shareholder because it is contributing to the costs of production, which is necessary) - then that debate will need to sit in the language of price, consumer and producer surplus.
A key question is how do you meet the need for fairness and for an organisation's need to make hay while the sun shines? That need seems fair and acceptable. How do we define when profit accumulation goes beyond acceptable haymaking?
What is the relationship between the ownership debate and the profit debate? They are separate yet related. For example, a co-operative could still make large profits and maximise capital transfer from consumer to shareholder.
In Adam Smith's capitalism, competition is what prevents producer surplus from becoming unacceptably or exploitatively large. Is that mechanism functioning adequately today?
http://www.ikeafans.com/articles/1000-ikea-corp/136-10-keys-to-ikeas-low-prices.html
IKEA's founder, Ingvar Kamprad, listed as one of the world's richest men
___
Douthwaite, Richard (1996). Short circuit: Strengthening local economies for security in an unstable world. UK: Green Books.
p125 - The Irish credit union movement began in 1958 and in 1993 had 1.3 million shareholders (out of a population of 5.14m including NI). The UK's started in 1964 and only began expanding significantly in the late 1980s, and membership in 1993 was 100,000, up 40% on the previous year. In the US, 66m people, almost 1/3 of the population, are members of a credit union.
"There are several reasons for wanting to end, or at least dramatically reduce, the involvement of outside banks in one's community. One is that using an external bank's services to do a job that can be done within the community causes a significant loss of purchasing power, which can only be restored if the community sells goods and services to the outside world and thus stays dependent on it. The farmers who lent £943 million to the Irish banks in 1993 would have been paid about £10 million in interest, while farmers borrowing the same amount would have paid perhaps £113 million for the privilege, making a net loss of £100 million to the farming community.
"Not all this different would have left rural areas become some would have gone to pya the bank staff and thus have been returned to the local flow of national currency. However, since branch operating costs are usually less than half a bank's income, using outside banks to effect a transfer from one group of farmers to another causes a substantial net drain from rural areas."
p125. I guess he did the calculations himself based on banks reported interest rates for savings and loans. The figures of amounts of savings and loans come from the Central Bank (of Ireland?) that collects figures annually for bank deposits from the farming sector, and that the figures reported are from 1993, discussed in Irish Farmers' Journal, 27 January 2004.
Beck, Thorsten et al (2005). SMEs, Growth and Poverty. World Bank / US National Bureau of Economic Research.
find no relationship between concentration of SMEs in an economy and the reduction of poverty or inequality. But they don't consider distribution of wealth.
i think firm size is important
they only consider SMEs in manufacturing
they find a statistically significant relationship between economic growth and the size of the SME sector
but cannot identify a causal relationship
they use a 'newly constructed database on the share of total manufacturing employment accounted for by SMEs (Ayyagrari, Beck and Demirguc-Kunt, 2003).
'it would be useful to have information on SME employment beyond manufacturing, but cross-country data are unavailable for the share of SMEs in other sectors."p10
___
Porritt
"Production for profit, as opposed to production for human needs, was perhaps the simplest of the old ideological divides between capitalism and communism. Some socialists and radical greens continue to argue that it is 'the profit motive' (the pursuit of profit as the single most important objective in any economic exchange) which still lies at the heart of capitalism's inherently destructive tendencies.... it is the urge to maximise profitsthat causes some companies to cut corners if they can getaway with it and to externalie as high a proportion of their costs as they are legally permitted to do. In The Corporation Joel Bakan (2004) describes the modern corporation as 'an externalizing machine.'"
argues that only governments can force companies to internalise costs.
"Profitability has quite simply become the key measure of corporate success in a capitalist system..." p73
(we value what we measure and we measure what we value)
"This process of 'creative destruction' ensures the reallocation of capital and other resources from the less productive to the more productive, however painful such reallocations might be at both the micro and the macro level. And it is those profits that provide the dividends upon which the lives of hundreds of millions of people now depend in terms of their pension and other investments." p73
issue around boardroom pay rising sharply at a time when company performance was falling, and pay at other levels was rising far, far more slowly
"Defenders of such an astonishingly powerful accumulative capacity point out that none of this necesssarilly impacts negatively upon those on low incomes in the UK, or in terms of the global economy, upon the world's poorest people. All of that money still has to go somewhere, whether it's in terms of consumption, philanthropy, investment or anything else. There is, therefore, an unavoidable trickle-down effect, regardless of the scale of accululated wealth... However, it seems impossible to argue that the world is a better place for the concentration of wealth in the hands of so few; by implication, therefore, 'sustainable capitalism' would necessarily need to find ways of limiting the concentration of wealth." p74
(I don't like this language of 'limiting' - it's very unattractive. I prefer a language of improvement)
Jeff Gates in the ownership solution reviews ways in which 'a pragmatic ownership strategy could weave a broader web of personal, economic, and civic participation.'
____
Karl Marx, Capital
p148 - time of the working day - argues there is the time to generate sufficient value to sustain yourself, your family, and we generally work more than that. (I think he doesn't include the need to accrue personal, community and state level surplus - savings, pensions, rainy day fund, new stuff fund).
For Marx, the greater the surplus value output, the greater the surplus labour input, or, in other words, the greater the theft of life time, life value, from worker by capitalist.
Think it's not that simple. Social and physical technologies can increase productiity without a correponding increase in labour, I reckon. Surplus is also created by inputs from consumers, (investors?) social and natural capital, etc.
p120 - like Porrit says - he distinguishes between making boots to make good boots so that your fellows may wear good boots and your family may be comfortable - one on hand - and making boots in order to produce capital on the other.
(margin notes - being should not suffer in the process of creating value for others. But if i am boss, shared ownership feels better. (If I can choose who I'm working with :)
5. Evidence on enterprise governance and sustainability
Tomorrow's Owners: Stewardship of tomorrow's company.
_____
Hall, Peter and Soskice, David (2001). Varieties of Capitalism. New York: Oxford University Press.
VOC is very interested in corporate governance, with a particular focus on shareholder vs stakeholder approaches to governance.
p338
"A widespread view is that, since international capital markets are increasingly dominated by diversified portfolio investors (such as mutual funds and pension funds) seeking higher returns, companies must adopt the shareholder model or be starved of the external capital needed to invest and survive."
p.350 - chapter titled 'impact of corporate governance on product market and innovation strategies'
p359
"The British company is dominated by a CEO with strong performance incentives linked to share price, owned by dispersed portfolio shareholders interested mainly in shareprice..."
p339 - argue that primary corporate goal of UK companies is profitability, whereas in Germany, which takes a more stakeholder model, it is multiple goals, including profitability, market share, and employment security.
Still, nothing to say on governance and the distribution of wealth.
______
http://money.ninemsn.com.au/article.aspx?id=647198
Fund managers meet executive directors twice a year for an hour and expect to understand what is going on.
Professional investors have stakes in 100 companies or more and expect to have real insight into all of them: a fantasy. Meanwhile, the top directors of a large public company can spend a fifth of their time visiting hundreds of actual or would-be shareholders.
On stock markets the mad gyrations of a share price during a few days can determine the destiny of an institution that has been going for 200 years. If their shares had not imploded, would the government have stepped in to save RBS and the others?
How can anyone run a business when hedge funds trade big chunks of their equity every day?
I believe private ownership allows a more stable, long-term approach to wealth creation. Highly geared leveraged buy-outs may suffer in the coming downturn, but family or employee ownership offers advantages over the volatility of quoted companies. There is less minute-by-minute exposure to external scrutiny, and less obsession with immediate valuation. Organising such ownership structures for banks would not be easy, but it might lead to a healthy state of affairs.
lukej@riskcapitalpartners.co.uk The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm
http://www.ft.com/cms/s/0/73110d3c-4185-11dd-9661-0000779fd2ac.html
Tomorrow's Owners, by Tomorrow's Company
Definition 1
see public company.
Definition 2
Government ownership and operation of an enterprise for the public good.
Public Company:
Is The Rise and fall of St Luke's ad agency related to its ownership structure?
St Lukes (all bullets from John Oliver's presentation of his own research)
If you have any queries, or if you would like to participate in any part of the Tomorrow's Investor project, email Rowland Manthorpe.
The Tomorrow's Investor survey was completed by 225 fellows.
http://en.wikipedia.org/wiki/Participatory_economics
(this sounds very messy to manage)
_____
Hall, Peter and Soskice, David (2001). Varieties of Capitalism. New York: Oxford University Press.
VOC is very interested in corporate governance, with a particular focus on shareholder vs stakeholder approaches to governance.
p338
"A widespread view is that, since international capital markets are increasingly dominated by diversified portfolio investors (such as mutual funds and pension funds) seeking higher returns, companies must adopt the shareholder model or be starved of the external capital needed to invest and survive."
p.350 - chapter titled 'impact of corporate governance on product market and innovation strategies'
p359
"The British company is dominated by a CEO with strong performance incentives linked to share price, owned by dispersed portfolio shareholders interested mainly in shareprice..."
p339 - argue that primary corporate goal of UK companies is profitability, whereas in Germany, which takes a more stakeholder model, it is multiple goals, including profitability, market share, and employment security.
Still, nothing to say on governance and the distribution of wealth.
______
http://money.ninemsn.com.au/article.aspx?id=647198
Fund managers meet executive directors twice a year for an hour and expect to understand what is going on.
There is another victim of the credit crunch: the publicly traded model of ownership. The near-collapse of many of the large banks in perhaps a dozen countries shows that such corporate structures do not work.
I have served on the boards of various public companies for more than 20 years and most such constructs were dysfunctional.Professional investors have stakes in 100 companies or more and expect to have real insight into all of them: a fantasy. Meanwhile, the top directors of a large public company can spend a fifth of their time visiting hundreds of actual or would-be shareholders.
On stock markets the mad gyrations of a share price during a few days can determine the destiny of an institution that has been going for 200 years. If their shares had not imploded, would the government have stepped in to save RBS and the others?
How can anyone run a business when hedge funds trade big chunks of their equity every day?
I believe private ownership allows a more stable, long-term approach to wealth creation. Highly geared leveraged buy-outs may suffer in the coming downturn, but family or employee ownership offers advantages over the volatility of quoted companies. There is less minute-by-minute exposure to external scrutiny, and less obsession with immediate valuation. Organising such ownership structures for banks would not be easy, but it might lead to a healthy state of affairs.
lukej@riskcapitalpartners.co.uk The writer is chairman of Channel 4 and runs Risk Capital Partners, a private equity firm
http://www.ft.com/cms/s/0/73110d3c-4185-11dd-9661-0000779fd2ac.html
Tomorrow's Owners, by Tomorrow's Company
public ownership
see public company.
Definition 2
Government ownership and operation of an enterprise for the public good.
Public Company:
A company which has issued securities through an offering, and which are now traded on the open market. also called publicly held or publicly traded. opposite of private company.
Private company
A company whose shares are not traded on the open market. opposite of public company.
Private company
A company whose shares are not traded on the open market. opposite of public company.
This content can be found on the following page:
http://www.investorwords.com/3932/public_company.html- Research from John Oliver found that 'radical organisations have a tendency to evolve into post-democratic organisations over time. They transcend and include democracy, reintegratng hierarchies and structures.'
Is The Rise and fall of St Luke's ad agency related to its ownership structure?
St Lukes (all bullets from John Oliver's presentation of his own research)
- Spin-Off of Chiat/Day LA, already a radical company (Agency of the Decade).
- New Start-Up, 1995 – 30 people, 5 core founders.
- Co-operative
- Experimented with 2 Business Units
- Internal Market Hybrid
- Now 50 people, original founders have left.
- Progressive allocation of shares + ownership model
- Total creative freedom, from spontaneous structure.
- Co-operative, democracy.
- Shareholder value and responsibility – 90’s Zeitgeist.
- Boundry-less workplace. Hot desks.
- Latest collaborative technology tools.
- Structure turned outwards, based around clients.
- Peer and 360º team assessment.
- Growth: From 30 to 100+ in 4 years
- Awards: UK Agency of the Year in 1997, £75m turnover.
- Satellite offices: Sweden, India, France
- Achievments: Top Tier Clients, IKEA, BT.
- Media Profile: Articles (HBR), documentaries (BBC), Books.
- Consensus culture, 1 person / 1 vote.
- AGM attended by all employees.
- No single central power figure.
- Unconventionality, rituals.
- Open expression of emotions.
- Personal development – sabbaticals, ‘make yourself interesting fund’.
- Ecology values, role in society.
- Increased risk aversion.
- Consensus inertia, risk aversion.
- “I can say no to this task, because I am an owner”.
- Empowerment distorted - Experience [fn.] Influence.
- Hanging on to previous success attribution.
- Progressive HR policies taken outside of original spirit: Sabbatical time equivalent paid in cash.
- International expansion held back.
- From
- £5m turnover in ‘95 to
- £85m in ‘98 to
- £7.5m in ’05
- Founder Andy Law left to create sole ownership company.
- Scale of success boosted by buzz around its image.
- “A ship is safe in a harbor. But that’s not what ships were made for”. Mutual-fund mindset, rejecting risk, edginess, daring, difference.
- Consensus structure couldn’t manage the downturn.
- St Lukes still today represents a different working culture, and strong values.
Most people in the UK own shares. We own them not only in our own names, but also through our investments in pension companies and investment funds, a capital stake amounting to more than £500 billion in UK markets alone.
This democratisation of share ownership has changed the way public companies are owned. As recently as the 1970s, corporations were controlled by handfuls of wealthy individuals. Now, taken together, ordinary investors own large stakes in many of the biggest companies in the world.Yet despite high profile scandals, increased criticism of the behaviour of some hedge funds, and widespread public dissatisfaction with boardroom pay raises, we largely remain passive and uninformed owners. As a result, people often find themselves with shareholdings that conflict with their interests. And the corporate system has a vacuum of power at its very centre.If you have any queries, or if you would like to participate in any part of the Tomorrow's Investor project, email Rowland Manthorpe.
The Tomorrow's Investor survey was completed by 225 fellows.
66 per cent of respondents felt that they did not want to be more involved in the financial management of their indirect shareholdings.
49 per cent felt they did not want to be more involved in ethical management.
However, the vast majority of respondents felt that public companies would benefit from greater investor involvement. 59 per cent felt that ethical management needed investor input; 47 per cent felt that this was the case with financial affairs.http://en.wikipedia.org/wiki/Participatory_economics
Participatory economics, often abbreviated parecon, is a proposed economic system that uses participatory decision making as an economic mechanism to guide the production, consumption and allocation of resources in a given society. Proposed as an alternative to contemporary capitalist market economies and also an alternative to centrally planned socialism or coordinatorism, it is described as "an anarchistic economic vision",[1] although it could be considered a form of socialism as under parecon, the means of production are owned by the workers. It emerged from the work of activist and political theorist Michael Albert and of radical economist Robin Hahnel, beginning in the 1980s and 1990s.
The underlying values that parecon seeks to implement are equity, solidarity, diversity, workers' self-management and efficiency. (Efficiency here means accomplishing goals without wasting valued assets.) It proposes to attain these ends mainly through the following principles and institutions:
- workers' and consumers' councils utilizing self-managerial methods for decision making,
- balanced job complexes,
- remuneration according to effort and sacrifice, and
- participatory planning.
(this sounds very messy to manage)
7. Misc
- National income from wages / labour is decreasing in developed nations. So, what is the rest of national income made up of? Income from ownership - recorded how and by whom? the tax man?; Income from trade - manifested where? Company sales of domestically produced goods and services; company profits from foreign production under its leadership - traced to where?
(Source: TUAC John Evans presentation (2008) / OECD orig - expand image for details)
Cost of mortgage repayments in the UK have risen 78% in the last 8 years (source?)
what do the ecological and green economists say?
http://www.elsevier.com/wps/find/journaldescription.cws_home/503305/description#description
- what are the issues around how frequently stocks are traded?
57. At 7:45pm on 04 Oct 2008, NorrieC wrote:
(interesting claims to investigate but beware of trusting NorrieC directly)
The purpose of a money system is to provide a means for exchange of materials and labour between one person and another. Since the labour and materials are indivisible then 'money' in small denominations allows labour and materials to be traded between two people in fractional amounts.
In that sense it is much more flexible than a simple barter system.
Unfortunately that relatively simple requirement has been hijacked by the current, fraudulent system called Fractional Reserve Banking.
(Wikipedia says:
Fractional-reserve banking is the banking practice in which banks are required by governments to keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) with the choice of lending out the remainder, while maintaining the simultaneous obligation to redeem all deposits immediately upon demand. This practice is universal in modern banking. http://en.wikipedia.org/wiki/Fractional-reserve_banking.
(So, if you're a bank, you can't hold onto it, but you've got to be able to give it back at a moment's notice. This is probably why they lend to each other all the time.)
from another blog of hers/his:
the Federal Reserve. And where did they learn their tricks from....you've guessed it...the good old Bank of England. In fact nearly every country in the world operates this deathly system on the BofE's model
In a debt-based, fiat,
fiat?
The terms fiat currency and fiat money relate to types of currency or money whose usefulness results not from any intrinsic value or guarantee that it can be converted into gold or another currency, but instead from a government's order (fiat) that it must be accepted as a means of payment.[1] [2]
also interesting is...
Fiat (Latin for "let it be done") is a theoretical construct in policy debate—derived from the word should in the resolution—whereby the desirability rather than the probability of enactment and enforcement of a given plan is debated, allowing an affirmative team to "imagine" a plan into being.
In a debt-based, fiat, Fractional Reserve Banking system the majority of the 'money' in the system is fictional. It is an illusion of immense proportions. The 'money' is printed on a printing machine on a whim and bears no resemblance to any tangible asset or labour of any worth or value.
To work[sic], the mathematical model behind the system requires a geometric growth in debt, population, energy consumption, raw material consumption, waste production and pollution (and a complementary geometric decrease in our co-inhabitants of this planet !).
(so, what is this mathematical model and how can i find out more about it?)
The word geometric means non-linear. i.e the previously mentioned list doesn't just grow linearly, it grows exponentially, 1, 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024 etc etc. The earth CANNOT sustain geometric growth of any of the above list INDEFINITELY. That is NOT an opinion. That is NOT a political statement. That is NOT the viewpoint of a religious crank. That is NOT pathetic wish of a tree-hugger. It is a physical, mathematical, practical, undeniable FACT.
The model behind the current system is utterly flawed. Any talk of patching it up so that it can continue is unbelievably futile. The only reason it has managed to work at all until now is that a source of (almost) free energy has fuelled the previously described exponential expansion. That free source of energy (oil) is peaking out. Note: I did not say running out. I said PEAKING out. That means that since June 2006 the world's daily oil output has been in decline. i.e every day since June 2006 the worlds daily output has never been higher than in June 2006 and has been falling consistently since. It doesn't matter whether you believe in the Peak Oil theory or if you think anyone who believes in it is a nutter. The figures speak for themselves. The worlds daily oil output since June '06 has been decreasing. It is an absolute fact.
In order to satisfy the base requirements of a debt-based, fiat, Fractional Reserve monetary system the consumption of energy must increase to fuel the increase in manufacture of goods and general industrial activity which in turn increases the consumption of those goods by ever increasing numbers of people taking out more and more loans to buy those goods which in turn results in more and more fiat money being printed. If the increase in energy consumption is strangled because of a decrease in the supply (which it has been) then the bedrock of that geometric system is undermined and the financial system collapses with it.
Without the creation of new loans/debt/credit (call it whatever you will) the rate at which the money pot is being filled with new money is lower than the rate at which the loans are being repaid or written off, which destroys the quantity of money in the money pot (when its repaid or written off as a bad debt the original loan amount is destroyed but so is the leveraged amount - 40x in the case of Northern Rock). Therefore, if the rate of money destruction is greater than the rate of new money creation then the money pot shrinks. When the money pot shrinks it is called a DEPRESSION.
The cretins in Number 10/11 may understand the explanation thus far ( but I have my doubts) and therefore they look around for 'solutions' to the problem. The 'solution' they seek, however, is to find ways of printing even more new money to keep the money pot topped up. That's the limit of the 'fix'. But new money can only be printed as a result of new debt. New debt begins as government debt which is then spent into the economy through the commercial banks or the corrupt PFI schemes or their cronies in the Defense Contractors camp. All of the proposals outlined by Robert above are ways to print more new money in an effort to prop up the exisiting, failing system. e.g.
"public sector would inject new capital into our battered banks" That means printing new pound notes. Don't be fooled by the deliberately obfuscating vocabulary.
"[to] provide them with the muscle to start lending in a sensible way again." So the 'public' lend the banks 10 newly printed pound notes for them to use Fractional Reserve Banking to lend �100 (�90 of which is fictional) back out to the 'public' (at a 10:1 lending ratio, most banks are much higher). Well that seems like a plan, not.
"decided to inject billions of our cash into banks. " printing more new money again.
"savers would receive an automatic and instant uplift in the value of what they put in." They may receive an increase in the numerical amount of pounds but not the 'value'. The purchasing power (value) of those pounds will be diluted in exactly the same proportion to number of new pounds printed. It is a pyramid selling (Ponzi) scheme.
(A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. It is named after Charles Ponzi.[1] A Ponzi scheme has similarities with a pyramid scheme though the two types of fraud are different. - http://en.wikipedia.org/wiki/Ponzi_scheme )
"but the risk of capital losses would, I think, be quite small." thats an incredulous statement to make given the example offered by the current circumstances. In a Fractional Reserve System with, say, a 10:1 lending ratio the loss of �10 from the system results in the destruction of (10x10) �100. Destructive losses are magnified by the Fractional Reserve Banking system. Thats why it is so destructive.
"This will be a semi-compulsory, contributory pensions scheme" You must be joking. The last place I want my retirement nest egg is in the hands of financial incompetents who want to make me better off by printing new, valueless pound notes. And then prevent access to it until you are forced to buy an annuity worth nothing in real terms. I'll invest mine in real, tangible assets accessible at all times thank you very much.
(ELC pension scheme...)
"there should perhaps be a dividend for those in low paid jobs and insecure employment, who are hurt most by the economic slowdown precipitated by this crisis." It is pathetic and devious to use the low paid as a crutch to support this repugnant viewpoint. The low paid (and those on fixed incomes ie pensioners) are hurt far more by the destruction of the spending power of the little money they do have by your beloved inflation (wholesale printing of new money), a cornerstone of your proposal.
"Personal Accounts Delivery Authority (PADA), which is setting up a new national pensions savings scheme for launch in 2012." Another quango to swell the ranks of the civil servants who represent 50% of the working population and 20% of the entire population.
"only governments, through the deployment of taxpayers' money" Don't lose sight of the fact that the government has no money of its own, it is not a revenue generator. Every pound spent by the government must first be forcefully taken from someone else.
If the problem could be solved and everyone made rich by the wholesale printing and distribution of new money then Zimbabwe would be the richest country in the world right now.
Inflation is the printing of new pound notes which has the effect of increasing prices because of the reduction in spending power of the pound notes already in existence resulting in the rise in prices.
The government pension system is a scam. You are led to believe that pension contributions are somehow invested in some trust fund and ring fenced for future payout to the people who paid them in. In reality the government takes your pension payments and squanders them immediately upon receipt and your future pension payments, if you get one, are paid out of the taxes of the people who are still working throughout the period of your retirement. The system is completely insolvent because the forecasted future withdrawals are greater than the future predictions for contributions.
_____
I think there's a whole other area of questions and discussion around the financial system - I think the question is around sustainable models of business ownership and finance.
___
http://en.wikipedia.org/wiki/Sovereign_wealth_fund
A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds have gained world-wide exposure by investing in several Wall Street financial firms including Citigroup, Morgan Stanley, and Merrill Lynch. These firms needed a cash infusion due to losses resulting from the subprime mortgage crisis.
Some sovereign wealth funds are held solely by central banks, who accumulate the funds in the course of their management of a nation's banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings which are invested by various entities for the purposes of investment return, and which may not have significant role in fiscal management.
The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and IMF reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings. These are assets of the sovereign nations which are typically held in domestic and different reserve currencies such as the dollar, euro and yen. Such investment management entities may be set up as official investment companies, state pension funds, or sovereign oil funds, among others.
There have been attempts to distinguish funds held by sovereign entities from foreign exchange reserves held by central banks. The former can be characterized as maximizing long term return, with the latter serving short term currency stabilization and liquidity management. Many central banks in recent years possess reserves massively in excess of needs for liquidity or foreign exchange management. Moreover it is widely believed most have diversified hugely into assets other than short term, highly liquid monetary ones, though almost no data is available to back up this assertion. Some central banks have even begun buying equities, or derivatives of differing ilk (even if fairly safe ones, like Overnight Interest rate swaps____
http://en.wikipedia.org/wiki/Market_capitalization
Market capitalization/capitalisation (aka market cap, mkt cap or capitalized/capitalised value) is a measurement of corporate or economic size equal to the share price times the number of shares outstanding of a public company. As owning stock represents owning the company, including all its assets, capitalization could represent the public opinion of a company's net worth and is a determining factor in stock valuation. Likewise, the capitalization of stock markets or economic regions may be compared to other economic indicators. The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007[1] and rose as high as US$57.5 trillion in May 2008[2] before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.[3]
____I think there's another macroeconomic discussion about the balance of size and types of company within an economy
___
From
October 28, 2008
After financial meltdown, now it's smeltdown
Bjork(Icelandic economy was predominantly fishing): Now we have three aluminium smelters, which are the biggest in Europe. (there are plans to build 2 more).
A lot of Icelanders are against the building of these smelters. They would rather continue to develop smaller companies that they own themselves and keep the money they earn.
The six biggest venture capitalists in Iceland are being booed in public places and on TV and radio shows; furious voices insist that they sell all their belongings and give the proceeds to the nation.
Iceland is a small country. We missed out on an industrial revolution and my hope was that we would skip it completely and go straight to sustainable hi-tech options.
There is a wonderful characteristic in the Icelandic mentality - fearlessness, with an addiction to risk-taking to the point of being foolhardy. In music-making, storytelling and creative thought, this risk-taking is a great thing. And after my introduction to a lot of Iceland's small, growing companies, I realise how many of them have shown this fearless approach either in biotechnology or high technology.
In the past, having all our eggs in the same basket has proven far too risky, as we discovered in the days when we got 70 per cent of our income from fish. Now we are facing a disaster from betting everything on finance.
Iceland can be more self-sufficient and more creative - and still have an approach that is more 21st than 19th century.
(really inspiring to see / hear the yin voice in politics, poetics in politics)
http://www.guardian.co.uk/business/2008/oct/16/europe-economy
European leaders are to go to Camp David on Saturday to press the US president, George Bush, to cap his eight years in power with a major international conference devoted to redesigning global capitalism.
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fiduciary duty
http://en.wikipedia.org/wiki/Fiduciary_duty
The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust.
duty is a legal relationship of confidence or trust between two or more parties, most commonly a fiduciary or trustee and a principal or beneficiary. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment.
A fiduciary duty [1] is the highest standard of care at either equity or law. A fiduciary (abbreviation fid) is expected to be extremely loyal to the person to whom he owes the duty (the "principal"): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents.
(so it sounds like this legal relationship to one stakeholder makes that stakeholder's interests out of balance with those of other stakeholders; the CEO does not have a formal fiduciary relationship to people and planet, so clearly that interest is out of balance. So what would an ideal structure for managing a set of stakeholder relationships look like? Bet there's lots of work on that. But need to discuss in relation to bigger systemic design questions about wealth creation and distribution.)
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John Bunzi claims that 97% of all money in circulation was created by banks as loans
Quotes from Email from John Bunzi – 6th November 2008
But here’s the rub: if virtually all money is created out of nothing as debt, where does the extra money needed to pay all the interest on that debt come from? Either someone somewhere has to go bust to pay it or the banks must lend even more money to keep the pyramid growing (or both).
Why is there government borrowing and government debt? And why should we have to pay high taxes to cover the interest the government has to pay?
Well, because governments only create about 3% of our money leaving the banks to create the rest.
If governments created all new money they wouldn’t need to borrow or pay interest and we could all have lower taxes.
our governments are caught in the pyramid scheme having historically allowed the private banks to take over the vital right of money creation – a right which should always have been the government’s alone, on behalf of the people.
debt-based growth becomes an imperative because if the pyramid doesn’t keep growing, it collapses
The simple solution, as I’ve suggested, would be for the government to create all of our money – the whole 100% - instead of allowing the banks to create 97% of it. That, after all, is only what most people think the government does anyway! If the 97% were created by the government too, on behalf of the people, interest could be eliminated, public works paid for without incurring debt, and taxes dramatically reduced. And the banks would be put back in their proper place as handlers – and not as creators - of money.
if the UK government were the only nation to forbid the banks from creating money and instead created it itself, the banks, like the hedge-funds, non-doms and many corporations, would retaliate by threatening to move their operations elsewhere.
As Michael Portillo, then Conservative Shadow Chancellor, said in a letter to a constituent, “Legislating against the credit multiplier would lead to the migration from the City of London of the largest collection of banks in the world. It would be a disaster for the British economy".[i]
I - Letters to Margaret Harvey and Barbara Panvel dated 28 September 2000 and 13 February 2001 respectively.
the then Labour Treasury Minister, Ruth Kelly, in a letter of 20 August 2001 to Robert Jackson MP.[ii] She said, "It is evident that this proposal would cause a dramatic loss in profits to the banks… . In this case it is highly likely that banks will attempt to maintain their profitability by re-locating to avoid the restriction on their operations that the proposed reform involves. Given the desirability of an internationally competitive market in financial (and other) services, it would not be in the UK's interests to insulate itself from such a market".
[ii] Monetary Reform – Making it Happen!, by James Robertson and John Bunzl, ISPO, 2003.
The transition “would quite possibly cause untold economic harm to any nation trying to move first.”
Unless we had a viable, local, sustainable alternative system in place beforehand.
But what if all or sufficient nations acted together, simultaneously, “all together, now!” That way, the banks would have nowhere else to run and the simple solution could be implemented without fear or risk.
(totally unpheasable politically without a global government)
http://www.islamic-world.net/economics/prohibition_of_interest.htm
the prohibition of interest and its affect on the distribution of wealth
one of the basic differences between the Islâmic system and the Capitalist system with regard to the distribution of wealth is that Capitalism allows interest, while Islâm forbids it.
A very simple consequence of the prohibition of interest is that it produces a balance and uniformity in the distribution of wealth.
since Islâm prohibits interest, it would in practice allow only two forms of investing capital in the modern world- "Partnership" and "Cooperation". Both these forms are completely free from this injustice and imbalance in the distribution of wealth. Under these two forms of investment, if there is a loss, it has to be borne by both the parties, and if there is a profit, both have a proportionate share in it.
Under the Islâmic system, every one who invests his money has a share in the enterprise and its policy, bears the responsibility of profit and loss both, and thus he is no longer allowed to have his own way in business.
“…Allâh has permitted trade, and forbidden interest." (2:275)
where is the economic theory, the evidence, the methodology, the counter arguments, the other possibilities, and so on? I would like to read more about this.
Margrit advocates charging a fee instead of interest – after silvio gesell. That money is a ‘government service’ – but this is really problematic, money is like language. Money is as much a government service as language is: as a system it dwarfs national government in both space and time.
Money Flows
... in search of the meaning...
Money flows are calculated as the dollar value of composite uptick trades minus the dollar value of downtick trades
http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html
the Chaikin Money Flow oscillator is calculated from the daily readings of the Accumulation/Distribution Line.
Money Flows/Methodology
Philosophically, money flow analysis takes its lead from the market. Instead of relying on fundamental ratios to assess value, money flow analysis looks to what the market itself is signaling about a stock, sector or market. This signal may be about interest rates, commodity prices, earnings expectations, future sales or takeover activity. Money flow analysis rests on the classic economic principles of how supply and demand imbalances affect prices. The complication is that the stock market is a market in which there is not normally an outside supply of stock (company issuance of new stock or repurchase of stock for cancellation are the exceptions to this). Therefore, the stock market operates as a closed system with all investors playing a zero-sum game: one group of investors supply the stock to fulfill demand from another group of investors.Constructing and interpreting money flows is done by monitoring every single trade in a stock. Although for every trade there is always a buyer and a seller, it is very important which comes first - the buy order or the sell order. For example, many buy orders cumulating up one after the other will eventually lead to upwards share-price performance as sellers of the stock require higher and higher price to sell their positions. Birinyi Associates monitors every trade for the major stocks not only in the US, but also in 36 markets worldwide to determine money flow.
http://www.birinyi.com/tour.1.php
Our approach is to understand the psychology and history of the market, and most importantly the actions of investors. Much of our effort involves money flows, or what has traditionally been called ticker tape analysis. We follow the ideology of Charles Dow in our methods. As he stated years ago, start with the market's input:
"The market reflects all that the jobber knows about the condition of the textile trade; all that the banker knows about the money market; all that the best-informed president knows of his own business, together with his knowledge of all other businesses; it sees the general condition of transportation in a way that the president of no single railroad can ever see; it is better informed on crops than the farmer or even the Department of Agriculture. In fact, the market reduces to a bloodless verdict all knowledge bearing on finance, both domestic and foreign.
http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:chaikin_money_flowHoogvelt
FDI
"'Direct' flows were made up of foreign direct investment... companies investing in wholly- (or majority-) owned subsidiaries abroad, making profits that were returned in the form of dividends. The defining criterion here was 'equity' ownership, which carried managerial control over the foreign operations. Indirect investments were, by contrast, interest-bearing debt intstruments, as in bank lending, whether to governments or private firms. At the time of writing, that distinction is becoming meaningless, as the development of stock markets in many so-called 'emerging' markets, as well as the general opening up of all the world's stock markets, means that non-residents can buy shares in any domestic markets. " p80-1
Totally embedded in the system:
"it has become common for governments... and indeed private companies, to issue bonds and 'treasury' bills (in the case of governments), certificates of deposit, or other forms of of 'commercial paper' in the world's credit markets, instead of borrowing from banks. (...) Public finances are raised from international private credit markets." p81
"the trade in currencies has become the fastest growing market ever, now reaching sixty times the value of international trade in goods and services." p82
"The Economist summed it up: 'The truth is that there is no longer any such thing as money. At least not in the sense required by monetarism and its siblings." The Economist 19 Steptember 1992 p30
"the 'core' today uses 70 per cent of the world's energy, 75 per cent of its metals, 85 per cent of its wood, and consumes 60 per cent of its food." UN Human Development Report 1992 p35
3 richest people have more wealth than the 48 poorest countries - from UNDP human development report 1999 p3. Same ref, p38: distance between income of 'richest' and 'poorest' countries: 3:1 in 1820, 11:1 in 1913, 35:1 in 1950, 44:1 in 1973, and 72:1 in 1992.
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John Kay
p26
Table 3.4 What the United Kingdom Earns (£bn)
29m workers earn on average £19,200 559
Profits of business 302
Taxes (less subsidies) on business 132
GDP 993
(Annual national accounts; OECD)
Table 3.5 Redistribution of United Kingdom income among households, 2001 (£bn)
Earnings o workers 573
investment income (net) 80
benefits and pensions 246
Total resources 899
Taxes -131
Other social contributions (?) -101
Left for households to spend 668
(UK National Statistics)
p27
What the United Kingdom produces: 2001 (£billion) - Total output column only. Two other columns I've not recorded here - 'sold to other businesses' and 'sold directly'
Agriculture 18
Mining 32
Manufacturing 376
Electricity, gas and water sply 46
Construction 127
Trade (?) 294
Transport & Communication 153
Finance intermediation 485
PUblic administration 85
Education, health & social wk 219
Other 80
GDP 993
(UK National Statistics)
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