[Politics] Ethical Investment

[davywavy]

The latest buzz term in investment is ethical investing. I first encountered this as a concept about fifteen years ago whilst talking to someone about their investment portfolio and having them tell me about how they wouldn't put thier money into things that they disagreed with, like weapons manufacturers and so forth. However, as time has gone on ethical investment has gone from being a personal decision like that was to being big business - I doubt any major financial institution now doesn't offer ethical investment opportunities, from Green Funds to full-on Ethical investment right through to the slightly off-centre Blue fund for US Democrats.

You might have seen the news the other day regarding the ongoing fallout of the recent 'cash for peerages' scandal-ette which is that whilst the Conservative Party appears to have had a bumper few months and cleared it's outstanding cashflow shortage though donations, the Labour Party is still some £12m in debt. As the Guardian noted on December 17th, "More than £20m in debt, if Labour were a company, the party would now be calling in the receivers."
Whilst an interesting question would be what the constitional implications are if the ruling party of the day were to declare bankruptcy, this won't happen - Labour will fight back out of it's financial black hole through a mix of donations and loans. The difference is that now loans must be declared and charged at commercial rates, and with the recent hike in interest rates, commercial rates are about 7.5%.

And it's this that gave me my latest cracking wheeze. With commercial interest rates of 7.5%, a £10,000 loan over a 5-year term will carry about £50-60 per month in interest as well as payments to reduce capital. With this in mind, I'll be setting up a fund whose investment strategy will be to lend money to the Labour party because, when you think about it, there's no more ethical investment you can make. Every £10,000 lent to Labour will take nigh £3-4000 out of their coffers which otherwise they would waste on haircuts for Cherie, pies for Prescott and fighting elections - none of which I think are things anyone would really want to encourage them to do.
Thus the more money I lend to Labour, the higher my return and the less money the Labour party has to actually spend. Indeed, if I lend the party enough money it will actually put them out of business altogether, and I doubt anyone can think of a more decent, ethical way of spending your money than the destruction of the Labour Party.

I'm planning on calling this the Bankrupt The Labour Party Mutual Benefical and Friendly Society and shall be seeking investors.
The BTLPMB&S. It's good for the planet, it's good for the country, and it's good for you. Who's in?

Comments

[raggedhalo.livejournal.com]

I have looked at those salaries (jealously) but union membership is hardly exclusive to the public sector, and the biggest Labour-affiliated unions (i.e. the T&G, the GMB and Amicus) are all primarily blue-collar. You, like me, might well qualify for the Oxfam definition of poverty but you aren't (so far as I'm aware) on the National Minimum Wage...

[davywavy.livejournal.com]

This is where I shake my head and wonder about the blue-collar unions - given that the 50%+ corporation tax regime of the 70's was a great contributor of blue-collar manufacturing work moving overseas, I simply cannot understand why they'd continue to stump up to a political philosophy which is anathema to their members.

[(Anonymous)]

Even now, our high corporation tax rate makes it economical for foreign shells to own British assets. Companies declare their profits where taxes are low.

[davywavy.livejournal.com]

Alas, true. Apparently HSBC have told Brown that if their tax percentage goes up any further then they're going to shift their entire city operation to Zurich, and that's worth £1.5bn per year to the exchequer.
If you pay people to do stuff then they'll do it, and effectively tax rates are a means of paying organisations to do business in your territory. High taxes only hurt the little organisations, because the big operations can just leave.

[raggedhalo.livejournal.com]

You've gotta understand that, in philosophy, the traditional union model is fine as long as it's applied globally. Otherwise, as you rightly say, economic globalisation basically penalises both Governments and workers for having people-friendly policies.

[davywavy.livejournal.com]

The vast majority of philosophies are fine so long as they're applied globally. However, no philosophy can or will ever be. What this means is that philosophies which actively penalise people are to be avoided.
Anti-globalisation, for example, penalises Vietnamese peasants who might want to earn 5 time the average national wage by telling them they're not allowed to.

[raggedhalo.livejournal.com]

...whereas globalisation penalises Vietnamese peasants for, well, being Vietnamese peasants, by valuing their labour at a much reduced rate to working-class Americans, for example. It's institutionalised racism and colonialism all in one.

The lesson: everything's a bit shit, really.

[davywavy.livejournal.com]

This we look at overall benefits. The value of a working class american is directly linked to costs of living; it simply isn't economic for someone to go to work within that ecoonomy below a certain point - that point is lower in Vietnam. The advantage to the company in shifting production overseas and away from their core markets is that it is economic due to lower labour costs, despite increased transportation costs taking finished materials back to their core market. The advantage to the labourer is that their lower labour costs are still 5 times the average national wage. Demanding that companies pay wage parity worldwide is effectively a call for companies to stop shifting productionoverseas and away from their core markets as there ceases to be any benefit for them to do so.

I understand why unions support ideas like demanding higher wages overseas; it's certainly an excellent piece of protectionism for their home members as it stops manufacturing leaving home markets. However, it's actively detrimental for the people who actually want and need the work overseas.
But still, Vietnamese peasants like standing in paddy fields so best leave them there and protect ourselves first.

[raggedhalo.livejournal.com]

And slavery was a great job opportunity for all those Africans, yeah? ;-)

I think the point is that, from an egalitarian point of view, the point at which it becomes economical to work ought to be the same world-wide, because anything else is to say that it's OK for people in Place X to live in worse conditions than those in Place Y.

You can take wages outta competition without removing competition; indeed, it might actually promote more local industries to spring up in places like Vietnam as it becomes more economical to produce the consumer goods there than it would be to import them. So, basically, these policies provide opportunities for entrepreneurs, and you can't say fairer than that...*grin*

[davywavy.livejournal.com]

I actually don't understand the third paragraph. How can it be more economical for Vietnamese entrepreneurs to make stuff in Vietnam and ship it to (say) the US than it is for companies in the US to make stuff there, assuming that labour costs are equal in both countries?
The transportation costs from Vietnam to the US would make it less cost effective?

[raggedhalo.livejournal.com]

What I actually meant (and I probably didn't explain it very well) was that a rise in living conditions in (for example) Vietnam would tend to lead to a rise in demand for consumer goods. Currently, these would be made somewhere else (let's say China), shipped to the USA, and then shipped back to Vietnam.

A Vietnamese-based producer of similar articles would be able to massively undercut that current model of production, and thus there's an opportunity right there for all kinds of Vietnamese entrepreneurship. The only real way for the old school to compete would be to drive up the quality of their goods.

See? Competition without having to drive down wages.

[mrmmarc.livejournal.com]

Disagree. Violently.
Vietnamese worker DOES get much less- but comparative to their standard of living gets much more.
Lets simplify this- you do the same office job in London or here in Devon. In Devon you get paid much less. Why? Cost of living is less. Therefore you need less cash. But STANDARD of living is now higher because the job by Devon standards is well paid.
Anti-Globalisation is one of the great fallacies of our time. It's not about stopping the exploitation of developing nations- but the 'safety cushion' for developed nations.
Demand better rights for workers in Vietnam, know what will happenb. China will offer to take the buisness- their workers do NOT protest.
So the company moves. You gonna stump up the cash for the Veitnamese workers now out of their high paying (by local standrds) job? No? Folks were willing to force others to pay 'em more, but now the paycheck is gone, we don't wanna? And why won;t we allow Veitnamese produce be sold for the same price as UK produce? Why DO we have subsidies for anything? Isn't THAT racism- subsidisng our own so they can compete with others?

The lesson is right- everything is a bit shit. But since its EVERYTHING we have to ask- what makes it shit? The reality of the situation or our view of it.
Africa has the fastest growing economies on Earth- more millionaries are emerging on that continent than any other.
And the ultimate poo thing- China- remains as a balwark agsint any and all idealism. As long as it remains as it is- NO Western paternalistic methods of 'helping' are gonna work. EVER.

You gotta look at the context- gotta include cost of living. Remember the fastest growing global markets for luxery goods are to be found in India and China. A LOT of people are getting real rich out there. And both those nations are what were called 'third world' nations...

Just some thoughts dude...

[davywavy.livejournal.com]

The problem with arguing with Joe is that he's becming increasingly a politician - he's very good at throwing out highly-politicised long term solutions, but he refuses to debate with regarding what the world is actually like here and now, which makes finding common ground with him difficult.

[(Anonymous)]

I dunno, I managed to steer him to accepting a market solution was necessary.

[raggedhalo.livejournal.com]

No, you managed to steer me to accepting one specific market solution as an interim step. But that's still quite an achievement.

[raggedhalo.livejournal.com]

That's not quite correct. I do debate with regards to the actual state of the world, but often we agree on the facts. It's our analysis which differs (i.e. you often argue that it should go further, I often argue that it needs to take a fundamentally different course). The point about politics is that it needs to be aspirational, it needs to be about the world you want to create.

And most of the time, we end up arguing ideology anyway...

[raggedhalo.livejournal.com]

I'm in no way claiming that this mythical Vietnamese peasant gets less than they used to, or that capitalism has damaged their standard of living. My point is that it still isn't good enough.

I'm arguing a principle; when I'm in a position to enact that principle, then I'll be able to develop the solution to the (entirely legitimate) problems you raise.

I tend to agree with you about subsidies, as it happens, but I am totally opposed to the competition on the basis of labour costs which goes on currently.

The number of millionaires in a given area is a really bad measure of, well, anything aside from the number of millionaires. And it doesn't matter how fast the economy is growing; what actually matters is the standard of living of everyone in that area. To be a bit cheesy, people must always come before profit.

[(Anonymous)]

I agree in part, however, if we create a high value (well educated, motivated, & law abiding) workforce then we have something besides strong backs & weak labour protection to offer the mobile corporation.
Democracy works best when both government & electorate have bargaining chips, and it's impressive how fast Nulabour has devalued the electorate.

[raggedhalo.livejournal.com]

Oh, for sure, but as you say, Labour have done a bang-up job of screwing up education and healthcare, as well as general welfare. Not that the Tories would have been better, but then I've never voted for either of those two parties, so I guess that's something.

[(Anonymous)]

Great how the Nulabour ruling class realise this & either arrange to win the postcode lottery, securing good education for their kids, or go the whole hog & pay for it.

[raggedhalo.livejournal.com]

Well, they can't have anything less than the best for their kids, can they? *wry grin*

[(Anonymous)]

Great how the Nulabour ruling class realise this & either arrange to win the postcode lottery, securing good education for their kids, or go the whole hog & pay for it.
About 10 years ago I met one of Boatengs aides on a train, & gave him an earful about how comprehensive education excludes the able poor from good education, and he confided to me that Labour knew this, but Comprehensive education is a sacred cow, and it's better to sacrifce the future welfare of thousands rather than admit they were wrong.

[raggedhalo.livejournal.com]

That's terrifying, but there is another way; invest more (and differently) in primary and secondary education. We could use the £20bn we're planning to spend on Trident replacement, for example.

If you raised the standard of Comprehensive education then everyone wins...

[(Anonymous)]

I agree fully. Our education system is a shambles, and we are as such failing to invest adequately in the future of our nation. As you say, just spending money isn't going to fix this - costly solutions aren't inherently better than low cost ones (which is why I have a casio watch - £9.99 and it works fine, whereas the mug I know with a Breitling has taken it back 7 times in 1 year, even though it cost 700 times more than mine)- I think fundamantally we need to get people to value education more, by creating an early understanding that education = prospects.

[davywavy.livejournal.com]

There's an incorrect assumption that spending money automatically solves all problems. Brown merrily trumpets that he's increased education spending from 4.6 to 5.7% of GDP, but name me a single teacher who thinks that their job has got easier or that they feel that the kids are learning more as a result of the practise.
I know you're an enthusiast for the throwing good money after bad economic forms, but I think looking at what has changed in the education system to result in declining standards and then changing them is probably more economically effective than simply chucking money at problems in the hope that they'll go away, when history demonstrates they didn't go away last time money was thrown at them.