In this post-Great Recession (2008) period we have seen a remarkable dependence upon accounting mechanics and alchemy to try and rebuild both the infrastructure of, and consumer confidence in, the global economy. It wasn't unusual, for example, for companies in difficult straits to lay off employees and cut other expenses, instantaneously producing a rise in "earnings". Combined with massive stimulus and diligent changes in fiscal directions, monetary policy "experts" sought to stem the tide of intrinsic deficiencies that brought us to the brink of insolvency. Unfortunately, we still stand at an interesting confluence of aggressive financial strategies and profound disaffection and mistrust of the players. To some, it seems as if the experts are as much in the dark about competent systemic solutions as are the rest of us.
But
aggressive policies and actions are a necessity to help assuage our concerns
and to begin rebuilding the capitalist infrastructure that too often fails
because of its own reliance upon the profit motivation at all costs. We need, I believe, a third leg to the
solution: moral policymakers who can guide the hand of those others in control
towards more informed and compassionate solutions.
Why
there is so little attention paid to social morality in the capitalist structure
is a question not many are willing to risk their reputation to answer. But it makes perfectly good sense to consider
that fixing falling bridges or polluted water systems is equally as valuable to
the equation as are net profits and EBITDA multipliers.
Are
socially responsible expenditures any more "expensive" than any other
costs?
There
are reasons given by our financial and political leaders for failures to
address altruistic investing. In large
measure, the justification given is that the return on equity is too difficult
to calculate, or sometimes simply not worth the effort.
They
find no need to "study" the issues that might make life worth living
and more wholesome. In fact, the last
recession was the inevitable by-product of that laziness and an egregious
exploitation of an era of greed and financial chicanery. By their own admission, policy makers
contributed to the failures by looking the other way or by rescinding rules and
regulations that provided for the oversight of avarice. Such is the lifecycle we seem to endure every
financial generation as the pendulum of prosperity inevitably swings from left
to right, then back again.
What
constitutes an "earning"?
Unlike
the policy makers, who seem befuddled by the right objectives, the general
public knows if things pass "the sniff test". Millions of people were displaced by the
recession, and today stand in opposition to the status quo which perpetuates a
myth of wealth concentration in one geography, one sector, or one social
strata. Perhaps the credit crash played
a role in galvanizing that latter school of thought, but I think not. Common sense cannot be impeded by
foolishness, and too many of us sensed what was happening even if we had no
intuition about how to stop it.
In
nearly predictable fashion, most of the market's convulsions earlier this year
seemed syncopated, timed just right to take down any ardor that might have
developed for stocks in 2015. Yet,
despite all the worries and fright that developed, the severe sell-off has
nearly been erased, thanks to steadier heads and strict fundamental analysis
bringing money back in at a cautious pace.
While we wrote that it was wise to be vigilant about stocks "at the
top", we nonetheless saw...and still do...reasons to be optimistic about
the recovery's staying power. Primarily,
some of the "accounting concerns" we spoke about above have been
supplanted by greater consumer confidence and higher demand.
So
now the solutions (for politicians, scientists, entrepreneurs, and educators)
are becoming clearer. Systemic factors
that produce unbridled, and oftentimes misdirected, greed are not the cause of
one person, but are perceived as unwelcome irritation to the steady hand that
guides financial markets. An emerging political
consensus is coalescing in the United States around the notion that that we all
play a role in the success of capitalism and the financial well-being of each
other. An informed and motivated
populous shouldn't shy away from its responsibilities for supervision.
The
creation of earnings and responsible outcomes is not an either/or
proposition. It's simply a function of
building trust, fair play, equitable distribution of opportunity, and
conscience back into the conversation.
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