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Investing in Life
Vitality May 2005
By Helke Ferrie
A few years ago, during our annual RRSP investment review, a chance question revealed that we had unknowingly been putting money into one of Canada’s worst environmental and social disasters. At the same time, we had been donating monthly to the Sierra Legal Defense Fund, Council of Canadians, and Greenpeace to help them fight this very same project. We immediately withdrew our money, even though the returns had been good. The advisor for self-employed professionals (who often have self-administered RRSPs) suggested as an excellent alternative investing in biotech and pharmaceuticals. Our old age was to be financed either by helping to wreck one of earth’s vulnerable eco-systems, or by investing in the deadliest and most criminal industry on the planet, next to arms.
In my experience, anything that enrages me has invariably already enraged many other people who usually have also already initiated organized action. It is merely a matter of finding the “kindred spirits”, a term coined by the immortal Anne of Green Gables. Soon we found ethical investment to be a viable choice. We also found that political action is necessary and possible against our government which blithely puts the bulk of your and my pension fund money into the manufacturers of weapons of mass destruction, namely the top 20 military contractors, as ranked by the Defense News (
July 21,2003
). On a monthly basis, that ranges between about 130 to 200 million dollars of your CPP contributions (CCPA Monitor, March 2004). If this planet is to remain capable of supporting life, and assuming human life should be saved from extinction, our economic system has to change dramatically. We need to turn on to ethics, drop out of the abusive parts of this economic system, and turn on to a new way of running the world economy.
The System is Stupid
A few days ago, our youngest son, who is a Phd student at
Macmaster
University
, picked up some discarded study notes for a business school exam. One card was entitled “Budget Balancing Mechanisms” and listed the following: “contract out extensively; use temporary employees; negotiate wage and benefit concessions; reduce position ceilings to limit number of full-time permanent staff; create incentives to prompt employees to leave.” This presents in a nutshell the dominant economic philosophy. But is this really what the people of the world want? Let’s have a very brief overview of the practical outcomes of this economic philosophy.
The Washington Post on February 3 and The New Yorker,
March 28, 2005
discussed the down-sizing trends in the North American economy. In line with the maxims outlined by that business school student in Hamilton, work has routinely been moved to Mexico, South East Asia and various islands most of us have never heard of where almost everything we use and wear is produced for slave labour wages and under working conditions that are no different from the worst of what we know about the beginnings of the Industrial Revolution. These measures are considered necessary in order to maintain the illusion of continued economic growth.
Clinton
’s foreign policy increased the grief of humanity greatly, but at home he was perhaps the most brilliant of all
US
presidents. Indeed, his autobiography is principally a tour-de-force on how to build up a country’s economy; unfortunately, his brilliant economics is not generally considered as interesting as his more juicy extracurricular activities. By 2001 the
US
economy no longer had a federal deficit and boasted a surplus in the billions. By 2004, the Bush administration, hell-bent on wrecking the world’s largest economy, had not only run through the surplus, but now has a deficit of over $ 500 billion. The unemployment rate during the Clinton years was between 3 and 4 %; over the past 4 years, as the Post reported, some 2.5 million manufacturing jobs disappeared (15% of the workforce in that sector).
International trade agreements force the fate of Canadians to be inextricably linked with that of the
US
, so our over-all experience is virtually the same. Canadians, however, also fear for that great national value, namely Medicare. At the heart of the Medicare issue is a clash between two economic philosophies: one sees literally everything in life as being for sale and as a potential source of personal wealth creation; the other view insists that the end does not justify the means, and if this neo-conservative delusion of “survival of the fittest” is what it takes to get rich – forget it. There may be a third position that transcends these two extremes of disgusting wealth and grinding poverty. Maybe sufficiency is a value after all, and the word “enough” is definable as a measure of shared, common wealth. We may be entering a phase in human history where greed is an embarrassing character flaw to be sublimated instead of rewarded.
According to StatsCan, health expenditures rose since 1975 from about $ 10 billion to more than $120 billion. This outrageous increase has nothing to do with inflation which would have merely doubled it. The greatest increase in expenditures has been for drugs -without any parallel sign of improvement in the nation’s health: the incidence of chronic disease is steadily increasing, even though the population is constant. Last year, drug payments were $16 billion of which 47% was paid for publicly. Canadians are also spending on average $ 382 out-of-pocket per person annually, according to the July 2004 report from the Canadian Institute for Health. Significant is the fact that doctors cost us a lot less than the drugs. Shockingly, about 24,000 Canadians die annually from the primary and side effects of properly prescribed drugs, as reported by the Canadian Medical Association; we also have a 1 in 13 chance of acquiring a life-threatening infection or experience a potentially fatal complication each time we are admitted to hospital.
Investing in pharmaceuticals has until recently been a fast way to get rich. But reality is catching up faster. The seemingly never-ending tide of revelations about fraudulent science, carefully hidden from regulators, on the basis of which the leading blockbuster drugs were brought to market, has now badly hit the ultimate Big Pharma cash cow, namely the vaccines. Three events were responsible: Veteran investigative journalist David Kirby’s new blockbuster book, Evidence of Harm, independent Japanese research confirming the MMR vaccine link to autism, and the introduction into the US Congress of a Safe Vaccines Act all resulted in a 9.5 % drop in the Standard & Poor 500 Pharmaceutical Index. According to The Financial Times,
March 25, 2005
, “a time bomb ticks under Big Pharma”, and therefore also under a large portion of the wealth of industrialized nations.
Next to Big Pharma, the automotive industry ranks as indispensably important to the world’s economy. Even the most conservative estimates suggest that we will be running out of oil in less than 50 years. The March 2005 issue of Scientific American discusses the inevitable transition to the hydrogen economy, the most interesting aspect of which is, as Jeremy Rifkin points out, that unlike oil, hydrogen as well as solar energy are shared resources which are literally “forever fuels.” Rifkin’s analysis shows how this transition will not only clean up our air and water, but also “makes possible a vast redistribution of power in which today’s top-down centralized system controlled by global oil companies becomes obsolete.” After all, the most abusive aspects of modern economic philosophy stem from a real or artificially created scarcity without which personal, corporate and imperial wealth is not possible.
Internationally, the whistle has been blown on our economic system by John Perkins, an elite financial “hit man” whose job it was for three decades to cheat small countries out of trillions of dollars in order to enslave them through debt for the economic benefit of the
USA
. He explains: “We are trained to build the American empire … which unlike any other empire in the history of the world has been built through economic manipulation, through cheating, through fraud … through economic hit men.” Working at the centre of international banking, he masterminded many of the crimes committed by the
US
in the name of globalization. First, loans are offered that cannot possibly be repaid, as the bankers fully realize, without wrecking that nation’s natural resources and social system. The point is, to gain total control of the debtor’s resources. If that approach proves unsuccessful, Perkins explains, “the CIA-sanctioned ‘jackals’ were always right behind us,” to assassinate those who were uncooperative. The book is dedicated to the presidents of two countries, Ecador and
Panama
, who were, with the author’s full knowledge, murdered by the CIA. If even that tactic doesn’t work, then war is the last resort – which leads Perkins to the economic facts behind the invasions of
Afghanistan
and
Iraq
. Following his work as an economic hit man, he spent years writing this searing dialogue with his conscience. Completed last year, his book scared almost every publisher in spite of his impressive credentials and legally unassailable information. At last, Berrett & Koehler, who specialize in whistle-blowing books, made his horrific story into a monumentally tragic bestseller.
Sea Change
Do most of us really want to be part of all this? Apparently not. The human mind seems to self-correct, the perennial appearance of a conscience being proof positive. We ended slavery almost two centuries ago, and that was a most powerfully wrenching shift in the economic system of the time. We are doing it again.
Billionaire and member of the exclusive Fortune 500 Club, Ray C. Anderson describes his personal awakening in Mid-Course Correction. Two events led to his enlightenment: a book by economic reformer Paul Hawken who had that effect on many CEOs the world over. The second was overhearing a comment by president
Clinton
to
China
’s president Jiang Zemin, “The thing I fear most,” he heard
Clinton
say, “is that
China
will get rich the same way we did in the West.” Suddenly, Anderson felt the truth that life and the earth are finite in resources and time, and he has labored mightily ever since to make his company part of the solution to everything from workers’ rights to environmental pollution.
Similar epiphanies are now affecting many CEOs who question the very logic of laws that require companies to put shareholder profits above all other considerations ( see Margaret Webb’s article on socially responsible economics in U of T Magazine, Winter 2005). A report by the World Economic Forum,
January 12, 2005
, identified as the “systemic” problem the mandate to produce “short term” results and recommended new governance principles. In addition to the runaway exploitation of the environment and off-shore labor forces, many economic analysts now point out that there is something terribly wrong with how progress of Gross National Product is measured. Thus, for example, crime, divorce and natural disasters are traditionally measured as economic gain. For an excellent discussion of just how crazy the measures of the GDP actually are and why the make no economic sense at all can be found on the website of the investment company Investing for the Soul.
On the international level, the United Nations announced on July 16 last year that it will develop a responsible investing guide for the world. This was prompted in no small measure by the extraordinary work former Soviet president Mikahil Gorbachev has done since he founded the International Green Cross for the protection of the environment and developed the Earth Charter Initiative, now endorsed by more than 8,000 organization representing more than 100 million people. Gorbachev writes in the introduction to the Worldwatch Institute’s 2005 report that “we need a Global Glasnost – openness, transparency, and public dialogue” and “preventive engagement “ with the world’s economic problems because “we are guests, not masters, of nature and we must develop a new paradigm for development and conflict resolution, based on the costs and benefits to all peoples and bound by the limits of nature herself, rather than by the limits of technology and consumerism.”
The Canadian Supreme Court has twice moved in the same direction by ruling that wealth cannot be built upon polluting the environment from which the resources for this wealth are extracted (Sierra Legal Defense Fund newsletter 42, March 2005). As for the common people who individually invest small amounts, but collectively are the driving economic force, polls conducted by Vector Research, show that by 2002 more than 74% of Canadian shareholders want business to include human rights, environmental concerns, and employee and community rights. Indeed, 54% stated they would invest in such ethically responsible companies even if the financial benefits were lower; 59% of the wealthiest shareholders preferred socially responsible companies. Polls addressing Canadians generally showed that 81% of us want the government to enforce ethical standards through international trade agreements, and 84% of Canadians felt that
Canada
should develop these standards, regardless of the rest of the world.
The Economy is Us
My concerns have always been about the environment, health and labour. I had no idea how much more fine-tuned one’s conscience can become until I attended a workshop by David Nitkin of Ethicsan on March 23 and learned that there are some 250 ethical parameters by which corporations can be judged. It was thrilling to learn that some of the largest corporations are very serious indeed about ethics. Toyota, Citizens Bank, Starbucks, Sobeys, Reebok, Sun Life Insurance, our own CBC, Alcan mining, Suncor oil, Tembec paper products, Mountain Equipment Co-op, Hewlett-Packard, and Manitoba Telecom are among the ones that came up smelling roses. The websites listed below specialize in ethical investing and will provide you with detailed analyses of any corporation.
Now it is up to you and me to inform ourselves. The truth is out there. Our money doesn’t just talk, it can change the world.
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