For those who are still unaware of the drivers of today’s political and economic developments
The Actual Drivers of Politics and the Economy
While economists point to income inequality as the source of today’s economic problems, the facts cause cognitive dissonance in the minds of people wedded to an idealistic ideological view of the market, who dismiss documented fact as “conspiracy theory.”
However, the video above demonstrates the mathematical impossibility of that faith-based “conspiratorial” dismissal. Here’s how it works in the reality:
- 1% of the population owns 50% of the stock.
- A small group constitutes the major shareholders of the most influential corporations.
- This small group lays down the policy for management.
- This small group frames the discussion in the media.
- This small group exerts influence over government officials.
- The result: income disparity that mimics feudal times.
A recent case featured here discusses the example of the Hartford, in which a single major shareholder forced the company to divest itself of its life and annuity operations.
You may argue that this was just a hard-nosed business decision. What makes this a naive is that it cherry picks its facts. That facile conclusion excludes the fact that those of us in the financial services industry who have devoted our careers to promoting these product portfolios have no actual voice in the decision.
The economic result of decisions like these made by a rarefied strata of society has been economic devastation for the rest of us, and the general decline of the economy over the past 4 decades:
- Loss of jobs
- Lack of consumer product innovation, and
- Speculation on derivative instruments targeted to a small group of investors at the expense of the rest of us.
In short, majority shareholders representing 1% of the population have increased their tax-advantaged dividend income while promoting government policy that raises taxes, lowere incomes, and foists unemployment on workers.
So, to my friends who still adhere to a fairy tale ideological view of the markets, I say: idealism regarding some abstract economic theory is no substitute for objectivity and hard facts. Live, study and learn.