The Dow
posted in General |THE DOW
On December 11, the Dow Jones Industrial average closed above 10,000 – 10, 008 to be exact. The last time it hit that lofty level was 18 months ago. The high water mark had been reached at 11,700 4 years ago, before it dipped to about 7,000. Most economically cognizant people enthused over the 10,000 closing and viewed it as a solid measure of a recovering economy. Actually, there isn't much difference between 9990 and 10,010, but the psychological effect of 10,000 + can't be ignored. I would happily join that cheering chorus but for the wave of scandals and wrongdoings properly laid at the feet of prominent financial organizations in 2003.
In the early 21st century, most Americans save some of their money, but in contrast to the old days, they no longer put it away in old socks, pillow cases or under the mattress. Now, they invest it – in savings accounts, banks, S&Ls, stock, bonds, mutual funds etc etc. In so doing, they place their money in the hands of strangers they probably will never see, hear, or know about. There is an implicit assumption that their money will be safely invested and will be managed to their benefit — honestly. Then we hear about massive mismanagement (maybe a kind way to put it) by enormously powerful and wealthy people in high places. Companies, mutual funds, stock brokerage firms, mutual funds, etc., etc. To read and hear about these people who command 7-figure salaries and are worth millions and millions of dollars stealing from funds assigned to their trust is more than just disquieting. The transgressions are not just legal, they are also morally and ethically wrong. Why do people who have no material wants or needs feel compelled to abuse their power by ripping off the system, skimming, misappropriating, or just plain stealing the invested funds of others who trusted them with their hard earned money?
I believe in capitalism. In case that word is a bit jaded, I might say I believe in our regulated free enterprise system. In the USA, the investment base is larger and broader than it ever has been, so I have no worry about our system decaying from the bottom up. However, I do not have the same confidence when the economic system is viewed from the top down. I have a theory about these big time thieves who betray the trust of their small time investors. Blue collar crime or crimes of violence are often punished by stiff sentences while the white collar criminals get a slap on the wrist or probation. I think that the higher up the economic ladder we go, the more serious the crime becomes and the tougher the penalty should be. The sentences for these kinds of criminals ought to be geared to the level of responsibility of the prepetrator and the number of people affected by the crime. In short, throw the book and them and make sure these wealthy criminal fat cats understand that they will be spending years looking at the world thru a window with bars. No more probation and “public service”.
We cannot force individuals to be scrupulous and honest. But we can make it plain that the price of NOT being scrupulous and honest is very high. And that starts from the top down.