Dear Evan:
On Thu, 11 Nov 2004 11:24:24 -0700 (MST), you wrote:
Not knowing a lot of economics, I can see that putting one's money in a socially conscious fund (as I did when I had more $) is better than putting it in a local bank, but isn't local better than multinational?
Evan
It all depends on what you mean by "better".
Putting money into a local bank puts a very few dollars profit into that local bank.
For instance, putting $100,000 into an honest-to-god local bank in the form of a CD means that the bank will make money on the spread between the CD and the investments it makes less the cost of bricks, mortar, and salary.
OK, Evan, look at it from the bank's point of view.
Let's say that the local Boulder bank has the opportunity to make 5% investing in Cleveland or 3% investing in Boulder. Where is this money better invested?
Ceteris paribus, the economist would answer that it is better invested in Cleveland. Those without economic insight will argue it is better invested in Boulder.
But wait! That 2% spread between Cleveland and Boulder means that the bank *could* invest in better jobs in Boulder. Or, that 2% will be spent (maybe) in Boulder.
One simply cannot say what is "better." Those people willing to give 5% for the money in Cleveland certainly _want_ the money more than the people in Boulder. Assuming the risks are equal (which is part of what "ceteris paribus" means) the people in CLeveland are signaling to the economy that they can make more wealth than the people in Boulder.
That's going to make the people in Cleveland _and_ the people in Boulder richer. The people in Cleveland get working capital and the nice local bank in Boulder gets to make more money for its nice local people.
Now substitute "multinational bank" for "nice local bank" and nothing changes.
Money goes to where it is most wanted (most needed). In this way it creates wealth for everyone; whether it be Zimbabwe or Longmont.
If it goes to places where it is destructively used - for example, a bad polluter or a Ponzi scheme - then people and governments have the right and duty to step in and say "this shall not stand."
But even in the case of pollution, wisdom must be applied. Is it moral for us to apply our standards of cleanliness to those who are in desperate financial straights? Is it moral to say to a Third Worlder, "You can't pollute your river even a little even though it means your kid is going to starve."
These are fundamental issues that the human race needs to deal with. There are effective ways to deal with them and then there are the harebrained schemes - like the one you pointed out - that do nothing but make people spin their wheels completely ineffectually.
To me, those who propose such schemes are perpetrate (knowingly or not) true evil upon the world. They spread ignorance where there should be knowledge. Much worse, they waste the precious resources that this world has far too little of.
This is the real shame. This is what hurts people in both the long and short run.
Ralph Shnelvar