When Good Money Goes Bad

Debt is bad. Saving is good. Or so we are told. The government has been squirrelling taxpayers money away to invest via the Superannuation Fund. It has also been squirrelling away money from ACC levies to invest for the future.

To encourage us to save, most New Zealanders have had at least 3% of their weekly wages spirited away into a Kiwisaver fund. Employers have contributed another 3% per week.

It is doubtful whether anyone really knows what happens to all this money when it leaves our pockets / pay packets. The main goal is to accrue interest, use the money to make more money. This used to be called usury and was considered immoral in many religions, including Christianity.

It turns out there was a good reason for looking sideways at money-lending for profit. It transpires that the most lucrative companies to invest in are also the most unethical. Companies that make weapons, including weapons that have devastating effects on civilians such as cluster bombs, spent uranium weaponry, and land mines. Weapons that the UN has been trying to have banned for some time. New Zealand has even signed treaties to this effect.

The most lucrative companies also charge exorbitant prices for lifesaving medicines, promote excessive consumption of harmful substances such as sugar, alcohol, tobacco, and fossil fuels. There are other ways to make excessive profits, such as paying workers a pittance, not ensuring workplaces are safe, thumbing their noses at measures to protect the environment. Speculating on property in countries where there are no restrictions on foreign ownership or capital gains tax. And of course, tax dodging. All of these things will increase dividends to shareholders / investors in the companies.

Fund holders flit between companies buying and selling shares as they rise and fall in value to make the most money for investors. Which leads to the question: is there any such thing as ethical investment?

We can make demands of investment companies. But realistically, can these be enforced? If all categories of unethical trading were banned, would there be anything left to invest in?

And ethics notwithstanding, does it make any economic sense to take so much money out of the local economy and send it overseas?

National Superannuation and ACC were both supposed to be ‘pay as you go’ schemes. The intention was that they would be funded from tax take and ACC levies at the time. It was never intended that excessive charges would be levied to stockpile money for the future.

Kiwisaver works well for people on high incomes. Not so well for people at the other end of the scale. It just ensures that people who are on low incomes have their meagre income reduced even further to save for their needs in some distant future. It also produces a large and ongoing amount of money for big investment funds to play with. And everyone wants their savings to grow, so it means everyone has a vested interest in supporting the neoliberal mantra that we must have continuous economic growth, no matter what.

Time for a rethink, perhaps. We could start with a recommitment to ‘pay as you go’ for national superannuation and ACC. Then promote local democratically controlled banking that invests people’s surplus funds in the communities they are drawn from, in ways that benefit everyone.

Finally, a more equal society that provides everyone with enough to live on comfortably rather than far too much for the few and not quite enough for the many, would mean there’d be much less surplus money floating around getting into mischief.