The Stock Market. Wall Street. These are iconic symbols of our economy.
But they are not institutions that benefit the entire U.S. economy. They do not “lift all boats.” Wall Street and the corporate stock and bond market are a Robin Hood in reverse, primarily transferring money from the middle and working classes, the 99 percent of the population, to the wealthiest one percent.
Recent instability in the market has left many baby boomers wondering whether they will have enough money for retirement, especially those whose assets depend on stock prices to hold steady or keep on rising. Conversely, extreme market volatility, with or without a trade war, is leading more investors to turn to safer municipal bonds and local community development.
It is time for investors—governments, institutions, and individuals—to begin divesting from Wall Street. The city of Portland, Oregon, did it in April 2017. After being pressured by local organizations objecting to stock holdings in for-profit prisons, companies doing business with Israel, and financiers of the Dakota Access Pipeline, city commissioners agreed to move $539 million primarily to government bonds.
Divestment has worked in the past.
Divestment has worked in the past. It contributed to the collapse of the apartheid government in South Africa. It transferred billions from large banks to credit unions and community banks in a 2010 “Move Your Money” campaign. The environmental group 350.org has popularized “fossil fuel free” funds that have taken money out of big oil and coal. Divesting from selected stocks helps, but even so-called “socially responsible” stocks support multinational companies.
The stock market used to be seen as a pretty safe bet for investors. Not anymore. After the 2008 financial collapse — where stocks lost about fifty percent of their value including an $8 trillion hit for U.S. households, according to the Roosevelt Institute —it’s been a roller coaster ride.
As described by Marjorie Kelly in her book, “The Divine Right of Capital,” stockholder dividends are a corporation’s first priority. Workers, the creators of corporate wealth, have not shared the profits, which are at record-high levels. Company spending on local communities and the environment has suffered in the name of maximizing shareholder returns.
Most importantly, Wall Street has significantly contributed to the wealth gap between those with higher incomes and other Americans. The wealthy are the prime beneficiaries of Wall Street’s corporate largesse. The United States now has the dubious distinction of being the most unequal “developed” country in the world.
Thanks in part to Wall Street’s contributions to economic inequality, the U.S. has the highest rates of teen pregnancies, obesity, mental illness, and incarceration among industrialized countries.
Portland’s divestment from Wall Street should serve as an inspiration to other communities. The city’s investments are now in municipal bonds, where they are benefitting Main Streets across the country. A representative of Portland city commissioner Chloe Eudaly said that “Commissioner Eudaly has no regrets about her vote to divest,” and that “citizens have been supportive.”
Larry Dansinger
If we want a human scale economy that reduces economic inequality in our future, it’s time to divest from Wall Street and move our money to local economic development instead.
Larry Dansinger, who does not own any stock, does community organizing in Bangor, Maine. This column was written for the Progressive Media Project, which is run by The Progressive magazine, and distributed by Tribune News Service.