I'm writing about something that has bothered me for a long time. I've actually blogged about it intermittently when I started blogging, particularly in 2008 when the U.S. sub-prime crisis unfolded.
It's about the Catch-22 of modern capitalism.
As with all things, there's a Yin and Yang view (how wise the ancient sages were).
From the perspective of the leaders of modern large corporations, the KPI is the mantra of "shareholder value".
What is shareholder value? It's about generating profits. Not just profits, mind you. The target is profit growth year-on-year.
Just read the financial news. Just watch the financial media. Just read analyst reports.
If a large corporation made a billion last year and made another billion this year, the watchers and analysts and, yes, shareholders start decrying the zero profit growth year-on-year. This makes the company boring. The only consolation is if the company declares some higher dividend payout than from the year before.
Hell, unlisted companies have serious orgiastic parties if they record good profits every year. But, no, it's just not good enough for the shareholders of modern large corporations.
Flat is bad?
Flat growth is decried...even if it is still a highly profitable enterprise.
And, who are these shareholders?
Well, it's you and me.
Even if you hold up your hands to sanctimoniously cry aloud that you have never bought a single share of a publicly-listed company in your entire life, you would still be wrong.
We've all got money stashed away in pension funds, superannuation, or whatever one call it. So, indirectly, we're all complicit.
We bitch about poor returns, poor yields.
Where does that yield come from? Why, from the modern large corporations, of course.
Whether we like it or, not, we're in a carousel that is spinning out of control.
I have no idea how to stop the carousel. Do you?
Changed social values
All I know is that the correct social values as it existed in a village or kampung has disappeared in the era of modern capitalism.
Countries like our own Malaysia are caught in this awful carousel.
Our government is told that we need to reduce taxes in order to attract FDIs. FDIs are typically in the form of modern large corporations looking for cost-effective venues to produce goods and services at competitive prices. Competitively-priced products are attractive to consumers. Consumption of these products generate revenue and profits to the modern large corporations whose KPI is to generate growing year-on-year profits. And, the cycle is complete and, it repeats itself, year-on-year.
If only there was a better way to harness these great surpluses to plough into public amenities like more parks, community centres, welfare, public health, education, and so on.
We know that public finance comes in the form of tax revenues. But, wait a minute, aren't governments being told that taxes must be reduced in order to ensure competitiveness to attract FDIs?
If we peer across the Pacific Ocean to the U.S., we will see President Obama struggling to convince the American public that a tax regime that attempts to extract greater public revenue from modern large corporations and high net worth individuals is a good thing. Many believe that he is committing political suicide, because the U.S. is the citadel of modern capitalism.
Another equally ironic situation is when a bunch of tycoons in Malaysia buys out a lottery company owned by another tycoon in order to distribute welfare to non-Muslim Malaysians.
A lottery is what economists call a "voluntary tax".
I've blogged about this before.
The irony is that the Malaysian government was very enlightened up until the 1980s when Islamism and privatisation policies became the rage.
That spelled the death knell for the Social Welfare Lottery (remember that?) and Toto (remember that?).
As I said, it's ironic.
So, where does all this meandering lead to?
It leads to the one key takeaway that is good to mentally masturbate over.
The futile hope
A significant portion of the surplus of modern large corporations should be extracted for the public good.
If there were better social amenities, like public parks, sports complexes, sports programmes, academic instituions, vocational training institutions, better roads and pavements, better maintenance of public facilities all around ... and better public institutions to help farmers grow better fruits, vegetables, grains, dairy, meat (which is an excellent way to control food inflation)... then, we may not need to fret so much about savings and investment returns.
Then, we may leave the leave the modern large corporations to do more R&D on products and services that improves the human condition instead of generating the desire to consume at an irrational rate.
As I declared earlier, it's mental masturbation. But it does have some pleasurable side effects...