Political systems are part and parcel of everyday life. Unlike the immediate post war era, when there was capitalism and communism, we now have variations on a theme. Capitalism won, the Wall came down, China adopted it for their economy while keeping the rigid rules of communism for governing.
The big winner was shareholder capitalism. Led by the United States, this essentially puts Wall Street in charge of the economy. Reagan de-regulated Wall Street, with one example being to enable companies to buy their own shares, which had been illegal. The executive team in a business could award themselves shares as part of their pay. With an option to buy at the price on, let’s say, the 17th March, which is, for our example, $10 per share, they then decide to buy back shares with the profits announced in April. As a result, because it is all about market prices, with the demand created by the buy back, the price goes up. So in the same deal they buy at $10 and sell at the new, company inflated price of $20 in one smooth move.
Shareholder capitalism also took control of businesses that are listed on the Dow Jones Index. It is no longer the actual performance of Apple, for example, that counts, it is the profits achieved versus the profits predicted by Wall Street analysts that matters. If they are below the prediction the value of the company falls, above and it goes up. It used to be the valuation was based on the actual performance and the profits available for shareholders dividends. That hardly matters any more, it is all about share valuation.
A recent example was the merger of Boing and McDonald Douglas. The Boeing workers who had always put safety first in all their decisions, were now being told that the driving force was the share price. This was the talk even in engineering meetings, with the drive to cut costs, save money, make more profit, increase the share price. The outcome was a failure of the Boing 737 and two crashes within months of each other. People died because Boing shaved the costs.
There are two dramas on Apple TV at the moment The Dropout, about Elizabeth Holmes and Theranos, and We Crashed about the rise and fall of We Work, a shared office company. They are the same story, with different details. The people who invested in these companies and the analysts in Wall Street talked them up to be worth $12billion and $19 billion respectively. The doled out millions in cash. And they were totally and completely wrong. They were, as it eventually became apparent, worthless.
The people running the global economy are running it into the ground. The current rise in oil prices is driven by speculation in markets, not the actual price of getting oil out of the ground. It is driving inflation in every other business as they all have energy bills to pay for premises and transport. That inflation devalues money, people will need more pay, and the long term is a recessionary economy, which hurts you and me, and the people who caused it in the first place!
The other capitalism is the one that we have in Northern Ireland. SME (Small and Medium Enterprises) Capitalism It is market driven only in the sense that price and quality will make a difference to the end purchaser, not a share holder that has to be kept happy. There are shares, but those are directly owned by the people in the business, or their family, so that they can share (that’s the origin) out the profits. Most shares are based on the level of investment at the beginning of the business, and the amount of work undertaken to grow it. The business is run to generate more profit for the people who take the risks in setting it up, and keep working to keep it going. Businesses like this look for ways to run better, but also employ local people, buy local goods and participate in the local economy.
Shareholder capitalists do not care about anything other than profit, and will move their jobs and supply chains at the drop of a hat if there is a dollar in it.
Within the politics of left and right, the two capitalisms get mixed up. one is a part of the local landscape, the other would concrete over it for a buck.
The next time you are enraged by fat cats, remember, there aren’t many in Northern Ireland, but there are plenty on Wall Street that are costing you money
Thinking about Things... 
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