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The Role the Stock Market Plays in Concentrating Wealth in the U.S.

This article took some courage to publish, and some real work to write. It draws on freely available (if you know where and what to look for) data from the Federal Reserve to illustrate how much money is taken out of U.S. corporations from dividends, stock buybacks and mergers and acquisitions. Since 1952, U.S. corporations have distributed $14 trillion in inflation-adjusted dividends to shareholders, with 76% of that total, or $10.650 trillion, occurring in just the last thirty years.

My conclusions about the role of shareholders will rub some the wrong way. What I am trying to do here is paint a more objective picture about the real value that shareholders provide to the economy. They do play an important role, to be sure, but it is not what many of us assume it to be, and it comes at a relatively heavy price (more than 5% of our GDP, every year). 

As I say, questioning the value of shareholders here in the U.S. takes some courage. We've come to assume that the goal of "maximizing returns for shareholders" is inseparably tied to the pursuit of profit and even capitalism itself, but it is not, and I am not questioning those very important economic drivers here.

What I am trying to investigate here is the tenet of "shareholder primacy" and how it contributes to the growing problem that this country has with our concentration of wealth. I also attempt to foreshadow what could happen when more of our publicly traded corporations are increasingly automated with robotics and artificial intelligence. This is the "perfect, profit-making machine" and it could accelerate the process of wealth accumulation already underway. 

The way the timing of this piece worked out probably couldn't be worse, given the emotional turmoil wrought by the stock market in recent days.Things usually happen for a reason though, so perhaps this recent roller coaster will help to unleash a different kind of conversation than we might normally have about this very difficult topic. 

#stockmarket   #wealth   #shareholders   #pikkety  
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Putting Patagonia's recent moves perspective, +Jesse Lyn Stoner outlines why this mission-driven company truly stands out.
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The Economist weighs in on Unilever's social responsibility, giving it high marks. Mulls Kraft's attempted takeover, and raises important questions about the real-world challenges of #CSR
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This is a great interview of Marjorie Kelly by Fran Korten. Marjorie is the author of The Divine Right of Capital, which is one the most important books I've read. In this interview, the two of them talk about employee ownership as a powerful tool for transforming our economy into something much more fair and sustainable than what we have today. Well worth the read.
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Just in case, you were confused about the real purpose of a firm...and, no, it's not simply maximizing returns for shareholders. This article does a nice job of summarizing the case against shareholder primacy.
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I just had dinner at this place in Portland, Maine called Flatbread Company. Hung on a wall at the entrance is this great, big board with this cool map of all of the people who contributed to making this business possible.

That is just so cool. I wish more businesses did that. It really brings home just how dependent businesses are on communities of people.


https://www.flatbreadcompany.com/
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Over the last twenty years or so, my dad has built one of the world's leading edge innovators in applications of concrete. Their products, like the egg-shaped wine vats pictured below, are absolutely beautifully designed too.

Nice to see someone recognizing his work:
Steve is literally the modern day Willie Wonka, and Sonoma Cast Stone is literally the modern day Chocolate Factory.


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Ford Foundation Getting Serious About Impact Investing

With a total endowment of about $12 billion, that means there’s about $600 million granted toward charitable programs each year. (That 5% figure is the minimum requirement to maintain nonprofit status under federal tax code.) But it also means that 95% of the foundation’s money is sitting in stocks, private equity, real estate, and venture capital, not leveraged in the same socially responsible manner that the foundation insists on when making its grants.

In recent years, president Darren Walker has grown uncomfortable with that imbalance, which he sees as another “classic disconnect” affecting well-funded but sometimes apathetic institutions, including Ford. “We won’t solve big problems without deploying some part of that 95%,” Walker says. “So what I’m hoping is that we are reaching an inflection point, a tipping point in which the momentum has shifted to normalize a conversation about how foundations use our endowments from the margins to the mainstream. For too long this question has been sidelined. And I think the time has come where we’ve got to take it on and we’ve got to demonstrate the capacity to use our endowment to advance our mission.”

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Nice framework for actualizing stakeholder principles within an organization. By +Nadine Hack​.
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A new platform for values-based investment. Cool.
Investment platform Motif launches value-driven automated investment service

The tech-enabled investment advisory space gains a new entrant this morning as Motif, a mobile and web-based investment platform, launches its own version of automated investments for customers. While companies like Betterment and Wealthfront have built sizable holdings by creating automating investment tools that purport to better manage an investor’s money, Motif takes the technology one step further by overlaying issues-based filters around sustainability, corporate governance or fair labor. Through a partnership with MSCIESG Research, Motif’s software develops a portfolio of investments based on assessments of a company’s performance around metrics beyond basic earnings. That can include its adherence to child labor laws, environmental policy, or good corporate governance (in most cases good governance companies also adhere to the other two policies, #justsyain).

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