Survival__ Structuring Prosperity for Yourself and the Nation - Charles George Smith [217]
Proposition two: We should revisit the public/private dynamic regarding distribution of risk. Current laws and practices seem to favor a system that privatizes benefits and publicizes liability. Presently any person can set up an unregulated, dummy company (i.e. a mortgage or brokerage firm), use it to essentially fence financial goods (i.e. bad loans or CDS’s) and then sell them off. This "any person" can also skim off huge fees and salaries, and just walking away when the company goes bankrupt without any consequence—no injury to personal credit score, no requirement to give back ill-gotten wealth, etc. If there were a tax on these free-wheeling deals, and if one’s private credit score and net worth could be at least somewhat affected by one’s financial decisions as leader or manager in decisions that have public consequence and from which there was private benefit, then one could conceive that some of these excesses might be mitigated.
Proposition three: Corporations should not be considered persons and should not have the attendant rights of citizens. This was based on court decision at a time in the country’s history when corporate robber barons basically ran the government. It was a nonsensical decision, allowing for a raft of abuses, and should be vacated.
Proposition four: Bankruptcy laws should be restructured so that citizens who legitimately fail on the private level can get back on their feet. Two-thirds of personal bankruptcies result from divorce, job loss, or failure of health. Well-considered attempts to start a business, for instance, aided by scrupulously examined lending, and personal investment should be encouraged and supported toward success, through training tax incentives, etc. If the business goes under, the hit one takes should not swallow one’s ability to simply live and provide for family.
Proposition five: The "good life" should not be about retiring early with wealth gained from speculative investing, but rather investing time, talent, treasure, and trust in communities of care and exchange with "returns" in higher quality living and respected, honored retirement as an elder within the community. "Get rich quick" mentalities should be called out as simply an effort to elope with other people’s money and leave them holding the bag.
Proposition six: Quality should be emphasized and rewarded over quantity/volume. Currently the “maximum profit” meme that drives big business incentives to cut corners and think short term. It contributes to the practice of creating phantom assets, so one can appear to be increasing market share. It contributes to corporate heads pulling gimmicks like buying back their own stock to inflate prices. It reinforces the generation of transactions, just for the sake of transaction so one can deduct fees. Quantity without any regard to quality or long-term impact is another way to say "mindless business, heedless of consequence."
Proposition seven: Use microfinance as a model for good business. After the tsunami hit Southeast Asia in 2004, it was microfinance institutions that continued to get steady repayments and which remained viable and even profitable.
Microfinance, small loans to the working poor largely in developing countries, demonstrates not only the opening of the world market to a new class of entrepreneurs and a way to lift many millions of people out of poverty, it also serves as a template for good financial practice to so-called developed countries: diversification (many loans are given to many different people), low default (2% or less, usually), high stakeholdership (lendees need