Wednesday, April 22, 2015


Ah, the naivete of youth! Perhaps you've read about them - the students of the divestment movement - pushing for their respected universities to stop investing in fossil energy companies. These kids apparently haven't figured out that screwing everyone's tomorrow is the only way to live well and get an affordable education (cough, cough) today.  Perhaps the students are biased, thinking they have more of a future ahead of them than most of the (older) administrators do.

The typical assumption is that investments should be green (like the little green leaf on the back of cars to make us feel better about using them), or socially responsible. I doubt most of the students in these campaigns would protest against their university administration if they were instead invested in wind and solar companies. This assumption is where the true naivete shines through, however.

There is no such thing as green or socially responsible investment, at least none that would be available in any of the major stock exchanges or brokerage firms. The legal structure of publicly owned corporations ("green" or not) prioritizes the need to generate shareholder return above all else. In so doing, it subjugates the human qualities of morality and empathy that would otherwise temper business decisions. Come to think of it, I'm not aware of a single publicly owned corporation that exists outside of the industrial economy. Any business which uses fossil fuel extracted by the "bad" energy companies, is really just "bad" once removed.

It's not just that public corporations are inherently driven to do bad things, like skirting, ignoring, (or re-writing)  our lax environmental regulations. Investing in corporations is exactly what feeds the beast that has subverted democracy around the globe, with a particularly egregious example here in the US.  You did read that we now fit the textbook definition of an oligarchy, right?

Investment in corporations is what blinds people to the corporate behavior that subverts governments and destroys nations. "Don't look a gift-horse in the mouth" or you'll loose your retirement.

The subversion of democracy is very much in play right now with the Trans-Pacific-Partnership negotiations, which amounts to NAFTA on steroids. NAFTA played a huge role in destroying manufacturing and the middle class in the US while destroying agriculture in Mexico. This lead to destruction of thousands of families in Central America, waves of desperate illegal immigrants in the US, and the creation of new corporate wet-dream worlds such as Ciudad Juarez just south of our border with Mexico. Witness also the rise of super-powerful Mexican drug cartels soon after NAFTA was implemented. Coincidence?

Let's assume for a moment that you're a sociopath with no friends or family, concerns or desires beyond money itself. Social and environmental responsibility mean nothing to you, and you think democracy is massively overrated. I have a convincing argument for you to divest your portfolio as well. It's called peak oil. Oil drove the industrial economy of the 20th century, with stock markets and GDP closely tracking oil consumption.

When the peak in conventional crude arrived as predicted circa 2005, the economy started sputtering. Attempts to fill our tanks with unconventional oil since then haven't helped much. After 2007's now forgotten heart-attack, the stock market is again climbing quite nicely. Do you think that's because the economy is still really growing, or even capable of significant further growth? The Quantitative Easing game of twister currently employed by central banks around the world might make you think so, but eventually this tangled mass is going to fail.

So let's say you're a normal person still set on the concept of retirement, or are already retired. Our culture of the last several decades says that investment (in anything!) is a-okay so long as you don't peek behind the curtain too often. No investment means no retirement, and who wants to keep working until the day they die?

Well... sometimes there is no good answer, but there may be less-bad answers than business as usual. My own answer thus far has been to first invest in myself. First of all, paying off any debt. This will usually garner greater returns (through the fact that you will forego *paying* interest to someone else) than you can expect from much investment now anyway, and the returns are guaranteed. That's a no-brainer in my opinion.

So you're already debt free, and need to invest just to have income? I can't recommend any sure thing for returns, but I do have a suggestion which might ameliorate the damage of investing. The closer you are to your investment, the better.  Perhaps that's investing in yourself through classes that might allow you some increased returns (monetary or otherwise), or skills that may be useful now or in the energy-constrained future.  Perhaps it's a friend or family member that runs a business. Perhaps it's just someone you trust to remain human, and who is operating on a scale which makes that possible. The point here is to avoid the separation of monetary and human interests which occurs with larger corporations.

Ultimately, all investment will again be as it once was - with people we know personally and see daily, and probably with no money involved or needed.

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