This is one of those great conceptual works that completely changes the way one sees the world or certain parts of it. Over and over, page after page, and chapter after chapter, new ways of seeing economic systems we take for granted are displayed with clarity and brilliance.
Although I was always suspicious of it and the reality was always there for me to see, I never put the pieces together to realize just how big a con game the stock market and "public" corporations really are.
Stop and think about it: we are told day in and day out that stocks provide capital/equity for businesses. However, this is not completely true, and certainly a long way from accurate. Granted, the initial stock sale to the public provides some capital for a company, but after that, the money for the sale of stock rests in the hands of the buyers and traders of that stock. For example, a relative of mine bought Sears stock when it was 19 cents a share (long time ago - old relative), and that 19 cents went to Sears. I just looked at Sears stock, and it is selling for around 84 dollars today. The thing is, none of that 84 dollars will go to Sears (unless it is holding some shares and is actively selling) - the traders get their commission, and the seller, whomever that might be, gets the rest (and the IRS will want its share as well).
How does that benefit Sears (besides getting them good ratings for borrowing money)? People are selling shares which originally made Sears 19 cents, and making 50 times more than Sears got for that share, and NONE of that value goes to Sears. Stockholders still expect Sears to pay dividends on that 84 dollar share, even though multiple, repeated sales of it provide no equity or cash flow to Sears at all.
If that is not a con game, I don't know what is. What other business would put up with a situation like that. Would you expect your car company to provide you with free gas and oil changes for life, even if you bought the car second, third, or forth hand? Of course not. We would think someone completely insane to even suggest an arrangement like that. So why do we do the same thing for stockholders who provide no real benefit to the company whose shares they hold?
And spare me the nonsense about "ownership." Virtually no small shareholder "owns" any palpable interest in any company for which they hold stock. Stockholders no more add value to the company than do people who own antiques add value to the original maker of a piece of furniture. (Or a collector of Barbie lunch boxes.) The stock market is a rigged casino for the elite to "mine" the wealth created by others, at the expense of others. It is a parasitic cancer.
This and much more about how upside-down our economic system is can be explored in this book. It will stimulate your thinking about what is real wealth and value, and whether wealth belongs to those who create it, or those who control/manipulate the economy.
Another notion explored is that it is labor which creates wealth/value, not capital. In fact, capital is the product of labor, not the other way around, which our Founders understood quite well. The idea that capital creates wealth is especially stupid today, when it is extremely obvious that it is knowledge and artistry which create wealth, with capital little more than grease in the gears. Should the grease monkeys keep all the profit? I think not.
Unfortunately, the book is marred from time to time with less than well thought out examples, such as SAIC. SAIC is involved in a lot of highly secret "black" government projects, and its behavior is not as open to scrutiny as one would like in an example of good corporate behavior. Also, the idea that a certain percentage of employees share greater benefits than the rest without exploring the reason for them being chosen becomes a groundless argument which does not further the author's point. it merely reinforces the whole idea of economic aristocracy and class war.
A great read, full of brilliant insight, well thought out and researched ideas. This is a must read for anyone living in today's world.
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