For years now, I’ve been writing for personal changes people can make in their daily life to make their life more sustainable. However, since about a year, I’ve started to expand that view. From that point on, I also started thinking about what I wanted society as a whole to look like. I started the category ‘My ideal world‘ on this blog, to write something about specific sectors and processes in society and what I want them to look like in the future. I can then translate that idealism into everyday life, so that I move towards that ideal world. Today I want to tackle the financial sector. I think we should use crowd-funding for a better financial sector.
I’ve been postponing this blogpost for a long time. It’s very high on my list, and my list is in chronological order (I put ideas for blogposts on the list whenever I have inspiration). I have been postponing this post because I am not an expert in financial markets or finances. I wanted to gain more knowledge and write this article when I had figured it all out. But that point isn’t coming, so I am just going to write down what I think about financial markets, keeping my ideal world in mind. I might delete this post later, or adjust it, depending on my future thoughts.
So, when I talk about the financial sector or financial markets, what am I talking about? That’s hard to grasp. I would say: the stock exchange and any place where people or institutions make investments. I want to talk about investments today. But again: I will probably forget a big part of this whole picture. Economics is a study and haven’t studied it, haha. I just want to write down what I think investments should do for us.
Why shares suck
Most people, when they make an investment, they invest in shares. They buy a very tiny part of a company and become one of the many (or few) owners. The more shares they buy, the more they own the company. If you have 40% of shares of a company, you have 40% of a vote in decision-making. Here’s my first bold statement: I think shares are harmful. If you buy shares, your only goal is to make money. So, as long as shareholders decide what a company should do, all companies on this planet only exist to do one thing: to make as much money as possible. Maybe I’m judging the very core of capitalism here, but I do think that is wrong. Shares shouldn’t exist.
Stockbrokers don’t add value
If shares wouldn’t exist there would be millions of people losing their job right now. This group of people are stockbrokers. All they do every day, is buy and sell shares in order to make money as well. Their goal is buy a share for a low price, and then resell it for a higher price. They don’t add any value to this world. They just profit off what already exists. I think it’s not a bad thing for this to disappear.
Why do shares exist?
Why do financial markets and shares exist in the first place? I think the idea behind is to gain capital. For companies (and governments also) the main reason to hand out shares is to gain capital. If you want to grow your company, you can slowly do so, organically, but you can also acquire capital to grow. I don’t think growth in this case is a bad thing. If the demand is there, sure, grow your company. But why go to the stock exchange and give people the opportunity to buy shares and become the owner of your company? Then the main purpose of your company, like I said before, becomes to make as much money as possible. That usually has negative effects on the employees, the community surrounding the company and nature is usually a victim too. Sustainability, for example, will never be the main focus.
Crowd-funding for a better financial sector
So what’s the alternative to shares? I think crowd-funding is the best alternative to the stock exchange. If a company wants capital to grow, they can make use of crowd-funding. This way anyone can invest in the company, like is the case with shares. These people then gain interest (as they want), but they don’t have a say in the company. I think the employees and the entrepreneur who started the business should be the only owners of a business. By using-crowdfunding, they stay in control. Sure, they still have to pay the interest for the loan (because that’s basically what crowd-funding is, a loan), but they can do so as they want.
The other alternative is banks. Banks are already here and we should definitely keep them, as they’re a safe way to store our money. In order to be able to keep operating, banks should give out loans to gain interest. Loans for whatever: mortgages, expansion of a company, etc. The principe is the same as with crowd-funding and I think that together they could make a great combination.
Downsides of crowd-funding
And if nobody invests in your crowd-funding attempt, then maybe there’s a good reason for that. Maybe the community around the company doesn’t want it to grow and started a powerful campaign. Or maybe the interest is too low. Well, then the company should consider taking a lower loan or increase the interest. It may slow down growth in some cases, but I don’t think that’s a bad thing. I don’t for-see it happening. As long there is interest to gain, why wouldn’t people invest via crowd-funding?
What about pension funds?
One question that immediately comes up in my mind is: what about the pension funds? We want to ensure that they still make enough money if we get rid of shares and start doing everything via crowd-funding. Pension funds make money by investing. And we still want them to do so to ensure all the pensions for the future. Well, they should be the one of the parties which invest in these crowd-funding campaigns. This way they gain interest, like they are doing now with investing in shares.
The right conditions for crowd-funding
Crowd-funding should be available to any entrepreneur or government in this situation. Right now, there are high standards for starting a crowd-funding on a platform. Those demands should go, nobody should be denied anymore. There should be one standard format for providing the information necessary for people who might want to invest. But no company should be denied of access to the platform. Crowd-funding platforms should be a public service and entering a crowd-funding platform should be free.
Crowd-funding increases transparency
There’s one big difference when it comes to shares vs. crowd-funding. You give insights into your business plan if you do crowd-funding. This way people can assess how likely it is for them to get their money back. I think that’s only fair and will ultimately decrease the risk of people losing their money (as is not the case with shares. Right now, a lot of people lose money investing in shared because they don’t have the right information). It will enhance transparency in that area, which I think is good.
I am not against investing
As you can see, I’m not inherently against investing. If you want to earn money by investing, I don’t think that’s wrong. You may even be helping society if you invest in the right projects. I just think we should invest via crowd-funding instead of shares. And also, I think taxes on investments should be higher than on labour. Right now, in most places in the world, taxes on income out of investments are way lower than the taxes on income out of labour. That’s extremely unfair. Labour is working hard. Investing takes little effort. The money does the work for you. Therefore, I think taxes on income out of investments should be higher than that for income out of labour. Something like 70%/80%, where labour is 50%. This decreases the amount of people getting rich over the back of other people working hard.
Not the whole picture
Like I said in the beginning, I am no expert. I am probably missing out a big part of the picture here. Maybe something to do with inflation or whatever. If you know anything about that, let me know in the comments below. For now, this is just how I feel. I just think we should replace the stock exchange for crowdfunding. But honestly, I don’t know how we could ever more towards a world without shares and the stock exchange. So, this article is not based on realistic possibilities. It’s based on idealism. It’s based on the idea that maybe one day we could have a society which does not resolve on money alone.
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