Ethical investment: Me and my Bank (and Madoff)
My relationship with money resembles what some people have with feces: I know it’s a necessary part of life, but I’d rather not have to deal with it personally. The combination of this hang-up and the fact that I’m self-employed, really stretches my self-control to its extreme: Having to do bookkeeping, invoicing, occasionally pay other translators, calculate my taxes etc, are chores I hate to their innermost core.
Aside from bookkeeping, my general association with banks is hampered. I do use them, as they provide me with cards that help me pretend money doesn’t exist, but I postpone any eye-to-eye contact for as long as I can. Thus I find myself, on the very last day for contributions to my RRSP-plan (Registered Retirement Savings Plan –similar to the American 401(k)), in line at the local TD branch, to make my tiny, little annual contribution towards (maybe) securing my own future. Securing may be overstating it; it’s more like putting myself slightly above the cat-food-eating level some day when I no longer will be able to support myself through full-time work.
It so happened that I caught a glimpse of an article in Huffington post, where Bernie Madoff claims he’s a good person, right before leaving the house on my way to the bank. His exact words were:
“I’m not the kind of person I’m portrayed as.” And then went on to assert: “Everyone was greedy, “I just went along.”
Since I was already all worked up over having to deal with my money, I started analysing Madoff’s defense of himself. Certainly, the oldest line of defence in the universe is “It isn’t just me, everybody does it”. I’ve heard that more times than I can count from Italian politicians whenever they’re accused of nepotism, taking bribes, indecent conduct, abuse of office and anything else an Italian politician may do without giving it much thought.
The excuse doesn’t stick. We all know what we do is wrong when we break the rules, even if everybody around is doing pretty much the same thing. It only gives us the illusion that since so many are doing it, we’ll never get caught. Thinking that you’ll never get caught is, nevertheless, different in substance from thinking that you’re doing nothing wrong.
The other part of his defense is more credible. “Everybody was greedy” is a statement that describes even most of the small investors, even the people who lost most of their retirement savings in the crash. This greed, it has been argued, is what drives the capitalist system. Ayn Rand even described the Utopia of Greed as the “moral” basis of Capitalism. Though the few people who actually manage to finish the (atrociously badly written) books by Ayn Rand, rarely go the full length and accept her extreme economic Darwinism completely, the acceptance of greed as an important driving force usually sticks. It is greed that convinces us that we deserve to have amazing gains on the savings we have. It’s greed that make us rejoice when our shares go up while our neighbour’s stocks become worthless.
As I was pondering whether every individual investor’s greed was an acceptable excuse for Madoff, it was finally my turn. Mr. Raimondi brought me into his glass office, as if I were a real investor, and it dawned on me that this tiny operation of not so many dollars would give me more quality time with my local banker than I had wished for.
It turns out that my past payments had been put into a so-called “wait and see” account, wherefrom you’re supposed to move it to make real investment. In fact, from my point of view, it had worked as a “wait and see how log it takes before she realizes she’s getting no interest whatsoever”. So on top of making my payment, I needed to make some choices about “my investment needs”.
The bank has a neat little questionnaire online that is supposed to guide you quickly to the “right blend” of investment products. Pretty easy. No, I won’t retire in the next 10 years. Don’t want to; couldn’t do it even if I did. No, I’m not interested in high-risk-high-gain options. Money that’s made to quickly always carries a stench.
It takes 10 minutes and you’re through the questionnaire. Then they direct you at different funds, bonds etc. My banker looks up and asked if I have any preferences. By this time my head was spinning, so at first I didn’t think so. Then it dawned on me: I don’t want my (small amount of) money to be invested in industries that destroy our environment, that have unfair labour practices. I don’t want oil sands (look here), mining or Nestlé to benefit from my dollars (even if I may benefit from investing in them). Now, there’s a challenge, and my banker knows it. We spend more than half an hour going through different funds and just about every single one of them contains one of the above. If I want to invest in a “safe” manner from a banking perspective, I’m pretty much forced to contribute to making the world a worse place.
And here I was hoping I could put my money into solar energy, wind power, electic cars, culture. Instead, according to the list of funds my bank offers, it is not so. In the end I chose the lesser evils, feeling rather unsatisfied.
The Natural reaction for people who have my kind of relationship with money, would be to withdraw to avoid having anything to do with investment savings anymore. I’d say, “Hell, I’ll eat cat-food when I grow old, at least I can do it with a clear conscience”.
It’s either that, or keep your eyes half closed when you make your investment choices, repeating to yourself like a Mantra “it’s not my few hundred dollars that are going to make a difference to how these businesses behave” or “There is no other way to put away money to support myself when I’m old”.
However, since most of us can’t keep our money in the mattress, nor have the self-control to keep it in the bank without spending it, I’ll suggest another path of action; collective action. Only by being present, and making our views known, can we change how investment portfolios are put together. And it won’t be me alone doing the trick.
For all of us who have RRSPs , small like mine, or more substantial: Let’s educate ourselves about where our money is put. Let’s ask our banks for sustainable and ethical investment alternatives. Let the pressure be felt enough that next time I say “no oil-sands”, my banker knows right away what kind of customer I am, and directs my to something that won’t make me rich but that may keep my money safe, while improving the world around me. Even I found a list of sustainable and ethical investment options as soon as I got home from the bank. I’m sure a the people down at TD could do even better.
The only efficient way to protest against the Utopia of Greed, goes through small steps taken by many people.