"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Friday, July 15, 2022

The Joys Of Making And Spending Money–And The Fantasy Of The ‘Ethical Investor’

Nellie Clarkson had never been brought up to worry.  Born into a patrician Boston family, educated at Andover and Harvard, and groomed for leadership in historical family enterprises (commerce, shipping, seafaring), her expectations were unaffected by pedestrian worries.  Enough of her wealth had been spread and sheltered so that unless a financial tsunami flooded her shores, she would always be liquid, fluid, and mobile.

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Losing money is to be expected at any casino, but for Nellie it was a signifier.  Anyone could buy a diamond for $100,000 but to lose the amount  in one night meant something special.  The more she lost, the more the cash register in her offshore accounts rang as the till filled up with profits from Venezuelan oil and Middle East oil.

Wealth was not simply a thing,  gold or platinum in a vault, but a flux, an incessant movement of currency, futures, and shares that filled some coffers while depleting others, the profits from every trade adding up to millions in her banks in St. Kitts, Aruba, and Grenada.  Losing money was simply a part of the grand financial scheme of things, a perpetual round of profit and loss somewhere in the world.

There was no moral or ethical purpose to investing.  If every dollar invested had to be vetted according to moral and ethical principles, the instantaneous commerce which fueled equity markets from Hong Kong to New York would freeze.  In the long run, some investors benefited, others lost, minor fortunes were made, and crashes in minor markets inevitable. 

There was nothing more heady than being a player in that Grand Mechanism, to track the ups and downs of commodities on the Chicago exchange, oil and gas futures in New York, and shipping profits in Tokyo.

She was no George Soros or Warren Buffett, big players who, at the push of a button could send markets reeling – she had a team of financial experts whose investments on her behalf might cause tremors in central banks in minor Central Asian countries – but took no particular joy in the actual manipulation of money.  Her delight was to watch the kaleidoscopic show of the transfers of wealth.  It made no difference whether shares trended up or down, the thrill was in the cardiographic images on the her computer screen.

Somehow genes got crossed and her cousin, Arthur, spent all of his time on ethical investment. Every dollar invested had to do some good, not just a collateral benefit to remote villagers, but a direct benefit.  The mines in which they worked and which produced the valuable minerals used for electronics, had to be cooperatively owned and humanely managed.  

Every potential investment went through the same rigorous vetting.  Although returns on such investments were far lower than any Nellie realized on a daily basis, Arthur felt good about himself.

Image result for Images Ethical Investment. Size: 259 x 104. Source: www.ethicalinvestment.com.au

Of course what his ‘ethical investing’ overlooked was the endemic corruption in the African country which leased the mines to the Lexington Mining Company, itself a shell operation which sold its products on the black market, reported only a percentage of the profits to assure the continued investment from people like Arthur, free money over and above the black market profits it was making from its illegal enterprise.

Tribal, ethnic wars continue in much of the cobalt belt on the Rwanda-Congolese border, thousands have died in pursuit of the millions extracted each day; so it was no surprise that one day, Arthur was told that this particular ethical investment was no longer, his money gone, and his hopes of humane influence a dim memory.

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Although only modestly well-off, at least compared to his cousin, Arthur had the resources to invest elsewhere, and consulted his ethical financial advisors to find him something with less risk, less sub rasa corruption, and increased social value.

Arthur, however, was a progressive purist, and finding legitimate investments was a tricky business.  He foundered badly on minority company investments.  One, a seemingly respectable start-up machine-tooling components for advanced hydraulic engines, was a cover for a radical black incendiary movement whose founder and principal investor had recently been convicted on mail fraud. 

Arthur and his ethical investment team saw only the surface numbers – an incredible short term profitability and remarkable annual growth – but had no way of discovering what was soon to be a scandal of national proportions.  LaShonda Billups, the President and CEO of the parent company was a financial genius in her own right, knew that the whole ‘black thing’ would not last, and played the hurry-up money tune.

Arthur, still undaunted, moved to environmental causes, and found ways to invest in logging companies which had built a reputation on restorable forest management, careful culling of trees, and a profound respect for the environment.  One such company, although it did indeed respect its environmental principles, was as corrupt as the African shell company and sold much of its high-grade timber on the black market to the Middle East, trades facilitated by the same banks in St. Kitts and Grenada which engineered great profits for his cousin. 

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The logging company was soon found out as these things always are, and every penny of Arthur’s investment was lost.

Arthur was dunned by his cousin who chided him for his wooly, fantastical ideas of economic markets. “Even if your logging company had not been found out, or better yet was completely legitimate, what do you think all those board feet were used for?” All of her multi-million dollar homes, she explained, were constructed at least in part of wood from such ‘ethical’ companies. So much for ethical low cost housing.

The two cousins were, aside from their financial character, very attractive people and were the stars of every family gathering – charming, delightful, anecdotal, and happy.  Philosophy had no place at the dinner table; but to be honest few cared to understand the nature either of Nellie’s successes or Arthur’s sad, idealistic failures.  

Some, hoping to pick up some tips from their wealthy relative, asked Nellie for financial advice, but she demurred.  Advice and counsel would upset the balance of The Great Machine – that perpetual motion device which moved money from here to there and back without qualms, second thoughts, regret, or guilt.

When she asked by her less well-off relatives how she planned to administer her estate, she replied, “What estate?”.  Her wealth was to circulate through the same international banking channels as they always had in perpetuity.  No one from her family was to benefit, money had no value and was best kept moving in this endless flow.  The profits and losses would be incidental to any ethical purpose or intent.

Nellie lived a long life enjoyed to the fullest, with never a look over her shoulder, never a penance said in the confessional, never a moment of regret. 

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