• The social stock exchange

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    Mike Wootton

    Mike Wootton

    Isee that two social stock exchanges have already been opened, one in London and the other in Mauritius. The right-minded idea behind these initiatives is that they will attract money to be used in ways which are more socially responsible rather than just profitable. Undoubtedly, this is a good thing to do in itself as well as toward stimulating inclusive development and making the world a better place for all. It may be quite a while before a social stock market opens in the Philippines [!].

    You have to wonder though how much activity there would be in these new exchanges. I remember being at a conference which was emphasizing social responsibility before profit, at which a lady who was the head of the New Zealand state pension fund was asked her view as to where the pension money should be used. Unhesitatingly, she replied, “where there are the biggest profits.” From this we can see that even in the advanced economies, it is not easy to get an enlightened view going. In terms of pension funds, perhaps they do need to gain the highest profitability but then just look at the trillions of dollars [estimated to be about $20 trillion], much of which is lying unused and will continue to lie unused, in pension funds because the people who are due the pension have not lived as long as the actuaries managing the funds allowed for. You could do a lot for poverty and the disadvantaged with $20 trillion.

    Pension fund money is the biggest single category of money available for capitalist development, well in excess even of sovereign wealth funds.

    But it will not be an easy run to attract this kind of money away from the conventional stock markets and safe rock solid institutional investments, government bonds, and the like. Nevertheless, there will be some enlightened players who will put some money into these exchanges and accept the high probability of lower profit margins in exchange for doing some good, but the value of the trades can only reflect the underlying value of the investments. Thus in the eyes of the traders and their advisors, they will be contributing what they will consider “forgone profit” as a social contribution.

    A social stock market in England or Mauritius could be used to provide funding for development projects in the Philippines, other people’s money could be accessed by development investors in the Philippines; for renewable energy, community medical services, education, farm to market infrastructure; the sort of things that are so much needed but which do not produce enough of a return for the local oligarchs, and for which government as ever seems not to have enough money. In the current increasingly nationalistic environment “only Filipinos can help other Filipinos” says the President, who gives every impression of stoically resisting foreign investment in the Philippines, then it would need to be Filipinos who would access these foreign stock exchanges, and other than the “elite” who would have the money and international “reach” required to list and so access the funds? These markets may not be much use to the development of the Philippines which so desperately needs access to development funds, simply because the local elite will find no motivation to forego profit, and foreign investment is viewed with such suspicion.

    I have to wonder why foreign investment is viewed as undesirable here. No doubt the education system gives a jaundiced view of the historic colonization of the Philippines by the Spanish and Americans, and these days there is quite some anti-foreign rhetoric around mainly focused on foreign investors “rape” of the Philippines economy. But to totally protect the local elite who are pretty good at making profits and good livings for themselves from the Filipino people by resisting foreign involvement in business or development, is a very blinkered sort of nationalism. In common with regional neighbors, the Philippines has to open its doors to foreign money, and involvement in business, and particularly development-based business, and that involvement has to be regulated honestly and fairly to ensure that Filipinos are not “raped” by either the foreign investors or the local oligarchs. To imagine that only Filipinos will help Filipinos is naive and just sustains the ever widening gulf between the rich and the poor. Foreign investment is not the cause of the awful social inequalities that exist, nor for that matter is historic colonization.

    I hope that Filipino groups will be able to combine their efforts and limited resources to find ways of accessing the funding in the social stock exchanges, but more than that I would hope that the lawmakers would open up the Philippines to private sector foreign development investment and management; that would undoubtedly be a good thing for Filipinos.

    Mike can be contacted at mawootton@gmail.com

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