Wednesday, January 15, 2003

I believe in capitalism, as the best economic system we are likely to get before the Apocalypse. Capitalism, after all, does not depend on mankind being virtuous, to function more or less equitably. (It does require some virtue, especially in those overseeing it, but comparatively few virtuous people make a significant difference.) Every other system proposed seems to depend on good people running it, to avoid it not only going wrong, but going very, very far wrong. (There's a passage to this effect in Graham Greene's "The Power and the Glory," though he wasn't exactly talking about cpitalism vs. Marxism.)

But capitalism is an economic system, not a philosophy. However necessary it may be, however desirable that governments permit a free-market place as the most just (or rather, least unjust) means of distributing wealth, it is highly undesireable that we as individuals start thinking about other people the way capital markets do.

This inherent conflict requires constant attention, particularly for those of us who are politically conservative but view the Gospel as something more than how we spend the time the pregame show is on. Markets necessarily value people, over time, according to their ability to create and produce wealth. We must value people according only to the fact that they are in fact people. Truisms, I realize, and hardly worth repeating.

Except I found I needed to repeat them, as I thought about the GE strike up the road a few miles. GE did not invent the mess that is our health care system, and one can hardly blame them for saying to workers that the burden of the problems in that system ought to be shared. One can also hardly blame the workers for what is a very substantial hit on their net pay, with a 45% increase in a benefit that already takes a big bite out of a paycheck.

GE is a highly profitable company, after all. But, because it is pubicly traded, and few people own more than a tiny, tiny slice of it, the mutual stock owners necessarily want the maximum return on their investment. In one sense of the word, the shareholders are hardly "invested" in the company at all. They own it only so long as it returns better than some alternative. (For day traders, this "ownership" is measured in hours.)

On the other hand, if GE were "closely held" (that is, not a publicly traded company) the people who own it might well have absorbed the cost of the insurance without even thinking about it, recognizing that the company has been so profitable of late that this is a means of sharing the profits with the people who earn them. But, that is a difficult decision to make as an investor with 0.84469 shares of GE in your portfolio, and no realistic means of making that desire known to managers even once formulated, and even less means of seeing it come to fruition.

No obvious solutions to this problem leap to mind. There *are* many "socially responsible" mutual funds out there, but most of them define social responsibility in a way that conflicts with any number of moral principles I hold. Simply not investing seems to me a rather selfish thing, too. It is not good stewardship of your blessings (remember the parable of the Talents, where the one who buries his money in the ground is rebuked). But one thing we can do: make investments in companies that seem to treat their workers well, and recognize that the people of a company are more than factotems represented by the rise and fall of the value of those investments.


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