Investor-Owned Banks vs The People

Are you puzzled or upset or angry by the CBC’s recent Go Public revelations about banks serving their investors at your expense?  You need to ask, ‘What is the purpose of a bank?’  It is not to provide you with financial services or good advice.  The purpose of a bank, the reason it was incorporated, was to maximize the return to shareholders. Anything it does is done to achieve that purpose. In this particular instance the reason we know about what lengths banks will go to is that many people who work in them are good decent people.  You need to understand the banks will pay them as little as possible and pressure them.  They will replace them with cheap off shore labour if possible.

How do big investor-owned companies maximize their profits?  They cut the cost of supplies by getting them at the cheapest possible prices regardless of how the supplier treats his workers. They pay workers as little as possible.  They maximize their income from your bank fees.  They sell products that are best for profits – not for customers.  When a bank does any of these things, it is simply doing what its investors created it for.  This is why you see so much destructive behaviour from banks and other investor owned firms.  Remember as well that millions of Canadians have pension funds regulated by government.  The regulator, and pensioners, demand that those funds seek the highest possible return.  They are seriously discouraged from ‘ethical’ or ‘socially responsible’ investments.

But don’t banks do ‘good things|’?  Clearly they do but they will do ‘good’ only if it is profit neutral or adds to profits, or, if a person with enough decision making authority decides to do the right thing.  The banks have many, many good people in them as the CBC has discovered with Go Public.  It is the structure that creates the pressure to do whatever is necessary to maximize returns – that, and the desire of CEOs and senior managers to be able to say ‘their’s is bigger than the next guy’s’.  As KPMG, the Dryden Power and Timber, Loblaw’s Joe Fresh, oil companies, rail companies, countless junk food companies and thousands of other examples recent and past show, the investor owned company is a flawed idea.  It does not serve the best interests of society because it is very prone to anti-social behaviour.

There is a difference between a family doctor’s business and a huge investor owned corporation like a bank or Shell oil.  Doctors and family businesses are not driven to serve investors.  They have multiple bottom lines.  They want to feed their families, treat workers well, contribute to the community, etc.  Not all of them are angels but as a group they generally share these multiple objectives and want to treat people fairly and expect their colleagues to do the same.  Large investor driven companies expect the worst of their competitors and, as the calls to CBC from all the big bank’s workers show, they match their behaviour so they will not fall behind in the profits race.  Don’t confuse all business with big investor driven business.  Small family businesses, social enterprise and co-operatives are very, very different.

We are told over and over that Canada does such a good job regulating banks.  But let us revisit 2008.  Clearly the regulator has been looking the other way lately.  The shameful treatment of workers and customers went unnoticed.  Worse, when the story exploded the regulator’s spokesperson said, “In very serious violations we could even name the company.”  Now that statement surely did not make bank CEO’s shake in their shoes.  The problem with big and increasingly bigger companies is that they undermine democracy.  Regulators increasingly act on behalf of the companies rather than citizens.  The regulator talks to the companies, senior bureaucrats meet with them, prime ministers meet with them, their lobbyists crawl all over government.  More important they have economic power.  If governments do not do their bidding companies can cause rising unemployment.  No government wants that.  Banks can stop lending as they did post 2008 slowing the recovery.

Remember the 2008 collapse in the US which led to a global collapse and arguably millions of deaths globally?  What caused it?  It was US banks selling bad loans to people who could not meet the payments, and then packaging the worthless mortgages as clever investments.  Our regulator should have been all over the current mess which includes bad loans, and risky credit cards and lines of credit.  What happens when the bad loans cannot be paid?  When the bad lines of credit cannot be paid?  When the ill-advised credit card debts cannot be paid?  How big is the bubble?

But people ask, including the CBC, ”What alternative do we have”?  The real questions should be: “What if people in each community and region owned the bank they used?”  “Would it ‘up sell’ to them?”  “Fiddle them on fees?” “Talk them into loans they could not afford?”  “Would it loan their hard earned savings out at high risk?”  Clearly it would not do so.  Such behaviour would not be in the interests of its owners.

We do have an alternative!  We have financial institutions called credit unions and ‘caisse populaires’ in Canada and some other countries and co-operative banks elsewhere.  They provide a wide range of financial services but seldom make loans people cannot pay.   I do not have a single cent in a bank.  I left banks when I was in graduate school and the Bank of Nova Scotia bounced a cheque that was a few dollars short even though a savings sub account had thousands of dollars in it.  They charged a ‘bounce fee’ and so did the university.  Said the bank manager, “This is a good learning experience for you son.”  It was.  I never dealt with his bank again.  I moved to a credit union.

So are credit unions the perfect solution?  Nothing in this world is perfect.  But I am confident in saying they are better than investor-owned banks.  The investor-owned structure is one that, in the words of Arthur Anderson accountant, Ralph Estes, ‘makes good people do bad things’.  The credit union/co-operative bank structure is one that pressures people to do the right thing.  Its purpose is not to maximize the return to some absentee investors but to provide members with financial services.  The people who use it, own it.  If it miscalculates and charges them too much the members get it back at the end of the year.  There is a set of values and principles that come with being a credit union.  It is this different purpose combined with the values and principles that exerts a pressure on the board, elected by the members (on the basis of one person one vote) and on management to do the right thing.

Do they always get it right?  No.  Alas, they are human.  Running a co-operative requires a different ‘business culture.’   When you are surrounded by a dominant capitalist business culture, that is a challenge. The goal is to ensure a financially sound business that is capable of meeting member needs as opposed to figuring out how to skim a buck off everyone who comes in contact with the organization so you can enrich an absentee investor.

So there is an alternative.  Credit unions would welcome new members and especially welcome former bank workers who are sick of being bullied, harassed and fired for not taking advantage of their customers.

It is About Humanity and Planet Earth

From the preface of From Corporate Globalization to Global Co-operation

“This book is not about economics or politics or society. It is about where they
all meet. It is not value free. The vision that drives it is the search for a better
world. The motivation for writing it is grounded in a growing apprehension about
the capitalism-driven trends of the last fifty years, a profound belief in the general
goodness of humanity and a sense of realistic optimism. It is a set of reflections
about the human condition and how we might better organize our thinking,
structures and processes to enhance human dignity. Intuitively and rationally, I
have come to the conclusion that the ideas, principles and values of co-operation
offer the best opportunity to enhance human dignity. My bias is that co-operation
is more important and healthier than competition; that forgiveness is better than
revenge; that giving and sharing produce a greater sense of personal well being
than getting and hoarding; and that love produces a better world. If these things
are true, we should base our actions and organizations and our economic, social
and political systems on co-operation, forgiveness, giving, sharing and nurturing
love. We have not done so.”

“To work against creation, or to subdue it, will ultimately lead to our own destruction, for we are enmeshed in it. The dignity of people and the dignity of creation are sides of the same coin.”

We should not feel fear about abandoning the ideas of capitalism.  What we should fear is clinging to them until they destroy human society and the natural world that supports our life.  We need to shift to business models that have as their purpose providing for human need.  Meeting that need means looking after each other rather than exploiting each other.  It means developing a healthy relationship with nature that will support all forms of life on the planet rather than mining nature to grow the wealth of the already very, very wealthy.  It means that meeting human need is not done as a means to hoarding more wealth, but because we need a better world.

Every day we should try and find some way, large or small, to disconnect from capitalism and build a co-operative economy.

Harnessing Discontent to Build Rather than Destroy

There are powerful forces in our world unleashed by growing inequality.   They are a significant part of where did Donald J Trump found the angry people who were so angry they stopped thinking and voted for him.  They fueled Brexit.  They are being used to whip up anti-immigrant and religious hatred across Europe.  A key source of inequality has been the series of trade deals designed by huge corporations for their benefit and the benefit of those who own them at the expense workers whose jobs are disappearing, wages and benefits shrinking.  Youth are looking at futures significantly worse off than their parents.  Huge debts, unstable work opportunities with no hope of the home ownership their parents enjoyed.  They will not have the homes they grew up in.  Some inequality facts:

http://inequality.org/income-inequality/

http://inequality.org/wealth-inequality/

This is a global phenomena

http://inequality.org/global-inequality/

Books

http://inequality.org/books-inequality/

There are positive visions that we can adopt to build a better world and there are negative ones that can be used to destroy and sew chaos.   Stirring hate between groups for political purposes – the politics of lies, fear, hatred, violence and revenge – has often been a tactic of political extremists from the right and left.  The outcomes legitimize the worst fringe extremists.   A warped nationalism is often part of the tactics.   “Just as love for one individual that excludes love for others is not love, love for one’s country that is not part of one’s love for humanity is not love, but idolatrous worship.”  Eric Fromm, The Sane Society.  The America first rhetoric is idolatrous worship.  We need to turn to the positive visions.

A vision of Global Co-operation as explored in my book or Rutger Bregman’s proposal for a ‘universal basic incomes’ to eliminate poverty in his book Utopia for Realists are both visions of a better world.  They seek not to pit people against each other but to link hands and spirits in a common constructive endeavour.  Both ideas would eliminate poverty.  Both would provide space for people to make the contribution to society they wish to make.

But is it realistic to think bold new visions are more than idle dreams?  Says Bregman:  “I’ve heard for three years that many of my ideas are unrealistic and unreasonable and that we can’t afford them,” he says, by way of preamble to a more comprehensive reply. “And the simple answer is ‘Oh, you want to stick to the status quo? How’s that been working out?’” (Andrew Anthony in the Guardian 26 Oct 2017 (https://www.theguardian.com/books/2017/feb/26/rutger-bregman-utopia-for-realists-interview-universal-basic-income?CMP=fb_gu)  Growing inequality into the foreseeable future may be someone’s vision but it is surely even less realistic.  It is insane.

People who see themselves and their children being sacrificed to feed growing inequality should be angry.  And they can and should do something.  They will get more satisfaction out of building a better world than being betrayed by the false promises of billionaires who unlike them do not pay taxes.

The Sane Society by Eric Fromm

Published in 1955 this book still has a lot of relevant thinking.  For example:  “Exploitation as it developed in the nineteenth century was essentially different.  The worker, or rather his labor, (became) a commodity to be bought by the owner of capital… .   Exploitation was not personal anymore, it had become anonymous as it were.  It was now the law of the market that condemned a man to work for starvation wages rather than the intention or greed of any individual person.”   This is different from slavery and from a feudal relationship between an aristocrat and his vassal and yet is really more the same than different.

An further on: “The fact remains the same, that a man, a living human being, ceases to be an end in himself and becomes the means for the economic interests of another man, or of himself, or of an impersonal giant, the economic machine.”  Fromm’s point is that to be used this way erodes a person’s mental health.

Trudeau Government Breaks Electoral Reform Promise

An Open Letter                                                                               8 February 2017

Prime Minister Justin Trudeau

House of Commons

Ottawa, Ontario

K1A 0A6

Dear Prime Minister,

I do not often write letters to leaders of majority governments because they almost never listen, but on this issue I feel compelled to do so.  I am appalled by the decision to ditch electoral reform.  Why?  Not because you staked your integrity on it.  (Although you did.)  You are after all in charge of your integrity.  There is a route out of this bad decision suggested below but first let me tell you why this is not a good decision.

  1. This leaves the door open to a “trump style’ government here. The US election shows that using the tried tactics of the political right – the politics of lies, fear, hatred, violence and revenge – it was even possible to elect a self-confessed sexual predator, who attacks science, who is a billionaire who does not pay taxes and is proud of it, who is a compulsive liar and who believes in stoking up the fear and hatred that leads to violence.  He won with almost 50% of the vote.   In this country with our current electoral system, 36-39% of the vote representing 24-26% of eligible voters, can get us back to a worse than Harper-like government with a majority.  (Was Harper ‘Trump with a fig leaf’?)   Is that really what we want for Canada?
  2. To then hear you express concern about radical parties hijacking the governing process was astounding. There is no compelling evidence for this in the history of Canadian minority governments, but, lots of experience that you have just ensured the far right in Canada another crack at destroying the country.
  3. For years in my beloved Canada we have lived with a quasi-democracy. 60+% of our people can be and are regularly ignored.  This is a system that protects ‘elite power’ over democracy.  The last election saw an increase in the percent of eligible voters going to the polls.  If you do not change your position on this, the next election will see a disturbing drop.  Why should 60% bother to vote?  Is this what your government wants?
  4. We have just had a decade of government that did not listen to evidence. A government that muzzled scientists and ignored evidence based analysis.   Up to now your government has undone much of the worst ignoring of evidence of the Harper era.  The experts who presented evidence at the parliamentary committee overwhelmingly recommended proportional representation.  They were ignored!  The best form of proportional representation will not be decided by social media facades run by slick public relations companies but by careful and thoughtful leadership.  I refuse believe you cannot show leadership.
  5. There is very strong evidence that people all over the world are losing faith in the business and political elites. Those who describe themselves as middle class, in Canada and abroad, are shrinking.   Graduates face an unstable work future carrying massive debts.   People see the wealthy grab almost every cent of gains in economic growth and productivity.   Trust in political institutions and business is shrinking.  Being told that our voting system, that ignores 60% of the people, will not be reformed adds to that distrust.  The growing distrust is destabilizing.  We are witnessing the election of far right wing governments south of us, across Europe and around the world.  We could join them.   Is that really what you want?
  6. You need to decide if you are the Prime Minister of all the people in Canada or just the unprogressive wing of the Liberal party or the ‘back room boys’. What do you really want?
  7. Are people afraid of minority governments?  As a former advisor to your father Prime Minister Pierre Trudeau, I can tell you one of the best governments this country ever had was the minority 1972 – 1974 Trudeau government.  It was neither perfect nor easy but it was good for Canada.  Arguably the worst government we ever had was the 2011 to 2015 Harper majority government.  I will not even begin to list the severe damage to our nation that occurred.  I believe another minority Trudeau government would be far, far better.   It would be better because, if elected by proportional representation, MPs representing more than half of the people, would have to co-operate.  Is that something you do not want?
  8. What unites 71.5% of Canadians? The statement in the ERRE online consultation: “Canada’s electoral system should ensure that the number of seats held by a party in Parliament reflects the proportion of votes it received across the country.”

If you want analysis, numbers and facts to back up the claims above, please do not hesitate to ask.   I spent time in Ottawa and I have faith that you and almost all of you colleagues do want to build a better Canada.  The most destructive thing you can do to our country is to leave this unfair voting system in place.   I stopped supporting the Liberal party because of cynical decisions like this.

That said, I can see the possibility of the next 150 years shaped by a government in which a number of political parties work together expressing the will of the majority rather than the dictates of the minority.   Most people I talk to are not supportive of your decision.  We all make mistakes.   Listen.  Say you listened and then set a new course.

Electoral reform can be done.  We can have a proportional representation system in time for the next election.  The government can strike an electoral commission made up of experts on proportional representation along with a bright, public spirited MP from each party.  Give them a year to design a system.  Don’t ask for unanimity – 75% would be just fine and reasonable.

Please do not sacrifice Canada for hoped-for electoral gain.

With Best Regards,

Tom Webb

232 Main Street

Mahone Bay, Nova Scotia

B0J 2E0

An Economy for the 1%

“The Oxfam report An Economy for the 1%, shows that the wealth of the poorest half of the world’s population has fallen by a trillion dollars since 2010, a drop of 38 percent. This has occurred despite the global population increasing by around 400 million people during that period. Meanwhile, the wealth of the richest 62 has increased by more than half a trillion dollars to $1.76tr. The report also shows how women are disproportionately affected by inequality – of the current ‘62’, 53 are men and just nine are women.”  https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/62-people-own-same-half-world-reveals-oxfam-davos-report

This is the opening paragraph describing Oxfam’s newest report on inequality released for the DAVOS meetings .  It is this performance by the global capitalist economy that fuels the unrest that is opening the door to the politics of lies, fear, hatred, violence and revenge.  Elders are told their pensions are no longer secure and there will soon be too many of them to care for.  Young people are told to forget stable careers, having pensions and benefits, paying off huge student loans or owning a home.  Parents see a bleak future for their children and grandchildren. This is not the output of a functional economy but a faltering one.

Is this the climate that could allow millions of good people who are desperate for change to be manipulated by the politics of lies, fear, hatred, violence and revenge to vote for a billionaire who does not pay taxes, cannot seem to tell the truth and who is a self-confessed sexual predator?   Is this what causes angry and bewildered people to elect a leader who will cut government services, lower taxes on corporations and the rich, and allow destruction of the environment their grandchildren will inherit?

From Corporate Globalization to Global Co-operation suggests an alternative.  There are practical steps young people and elders can take.  Many people took steps to shift to an alternative during the Standing Rock demonstrations in North Dakota.  More about that in a later post.  In the meantime read the Oxfam’s report, An Economy for the 1%.  Then think about how we can create a new economy individually and in groups.

What You Pay for Capitalism

A Book on what it costs to prop up Capitalism?
What does it cost to prop up an increasingly unstable post capitalist economic system? The 2008 crisis cost an estimated $20+ Trillion USD globally. And this was just a slightly bigger than normal blip. There are a lot of insights in Joyce Nelson’s book Beyond Banksters: Resisting the New Feudalism, from Watershed Sentinel Books. https://watershedsentinel.ca/beyond-banksters/

Nelson sheds light on a law suit that is slowly moving through the Canada’s court system that would require the Bank of Canada to return to financing federal, provincial and local governments as it did prior to 1974. Since then our governments have borrowed at significantly higher interest rates from our big banks – much to their profit.

The cost to citizens of Canada has been in the hundreds of billions of dollars.
And what do we get for this shift? Stagnating incomes of middle class Canadians, growing income inequality and of course a decreasing ability for government to serve Canadians. We cannot afford to educate children, pay rising healthcare costs, look after the elderly or protect our environment. The purpose of the banks, who are the recipients of the higher interest rates on government borrowing, is to provide people with financial services or build a healthy economy but to maximize the returns to their shareholders.

This is a clearly written, well researched book. If you want a short introduction to help you decide this is a book you want to read try Ed Finn’s review at: http://behindthenumbers.ca/2017/01/16/beyond-banksters-eye-opening-expose-ravenous-financial-system/

This is a book that should be on every university student’s curriculum so they can better understand why their future will not likely allow them to pay down their student debt or find a career. Remember, when it comes to those who run Canada, the bankers come first.

Oxfam, Inequality and Co-operation

“The Oxfam report An Economy for the 1%, shows that the wealth of the poorest half of the world’s population has fallen by a trillion dollars since 2010, a drop of 38 percent. This has occurred despite the global population increasing by around 400 million people during that period. Meanwhile, the wealth of the richest 62 has increased by more than half a trillion dollars to $1.76tr. The report also shows how women are disproportionately affected by inequality – of the current ‘62’, 53 are men and just nine are women.”  https://www.oxfam.org/en/pressroom/pressreleases/2016-01-18/62-people-own-same-half-world-reveals-oxfam-davos-report

This is the opening paragraph describing Oxfam’s newest report on inequality released for the DAVOS meetings .  It is this performance by the global capitalist economy that fuels the unrest that is opening the door to the politics of lies, fear, hatred, violence and revenge.  Elders are told their pensions are no longer secure and there will soon be too many of them to care for.  Young people are told to forget stable careers, having pensions and benefits, paying off huge student loans or owning a home.  Parents see a bleak future for their children and grandchildren. This is not the output of a functional economy but a faltering one.

Is this the climate that could allow millions of good people who are desperate for change to be manipulated by the politics of lies, fear, hatred, violence and revenge to vote for a billionaire who does not pay taxes, cannot seem to tell the truth and who is a self-confessed sexual predator?   Is this what causes angry and bewildered people to elect a leader who will cut government services, lower taxes on corporations and the rich, and allow destruction of the environment their grandchildren will inherit?

From Corporate Globalization to Global Co-operation suggests an alternative.  There are practical steps young people and elders can take.  Many people took steps to shift to an alternative during the Standing Rock demonstrations in North Dakota.  More about that in a later post.  In the meantime read the Oxfam’s report, An Economy for the 1%.  Then think about how we can create a new economy individually and in groups.