Shocked and Persuaded

Icon

Separating Fact From Fiction

Interesting Shareholder Vote

So I have a couple of shares of GE and now that I know about their unwillingness to pay taxes and actually receive corporate welfare to the tune of $3.2 billion I am worried about the justification for this investment. Conveniently or coincidentally GE turned around in the last couple of days and announced “on Tuesday that it planned to spend $3.2 billion for a 90 percent stake in Converteam, a company based in Massy, France, that specializes in high-efficiency electric power conversion components like motors, generators, drives and automation controls.”

This comes around the same time as President Obama named the CEO of GE Jeffrey Immelt chairman of the President’s Council on Jobs and Competitiveness. Surely an ominous sign for both the word jobs and the word competitiveness when the man in charge of fueling a fire under both doesn’t believe in either when it comes to his own firm’s presence in the US.

Anyway in receiving my voting option I think I found another way that GE manages to skim that little bit of cream off the top of each investment/product margin. Below are questions C4 and C5 of GE’s most recent proxy ballot (Note: The Bold is what the board recommended and the standard is what I voted):

C4 SHAREOWNER PROPOSAL: CLIMATE CHANGE RISK DISCLOSURE
Against
For
C5 SHAREOWNER PROPOSAL: TRANSPARENCY IN ANIMAL RESEARCH
Against
For

Chart of the Day and it’s a doozy

OK

So in the past here and elsewhere I have commented on the general lack of relevance to real world prosperity reflected in the classic

GDP = C+I+G+(Exp-Imp)

For so many important reasons GDP sucks not the least being its unwillingness or inability to account for the monetary value of raising children or for that matter ecosystem services. One estimate that does a far better job of addressing not these issues but inequality is the Gini Index. A while back I discussed the bottom-left to upper-right trajectory of this index here in the US at a rapid and disturbing pace. The higher the number the more inequality exists. Simply put it is a number between 0-1 and at absolute Zero it means perfect equality and 1 means that all wealth is perfectly aggregated at the top among the types of elites that attend the Davos World Economic Forum, or TED, or whatever gathering you want to name including the Koch brothers recent get-together in Palm Springs, which was by invite only and the only requirement was that you be worth 1 Billlllllllion dollars!

Anyway tangents aside. I was originally disturbed by the slope of the Gini Index here in the US AND NOW……….I am even more so. I just got my hands on the index back to 1913 courtesy of an obscure paper by Eugene Smolensky and Robert Plotnick at UCal Berkeley (Yeah I know liberal haven but the data don’t lie folks!!!). Take a look and keep in mind the trendline just demonstrates the clip at which inequality is increasing annually, which at this point is about 0.47% per year. Soon we’ll be in Robert Mugabe and Myanmar territory….NO SERIOUSLY WE WILL!!

Wealth inequality has not done wonders for Zimbabwe, Myanmar, North Korea, etc., what makes us think it is a good thing for Ground Zero of Laissez-Faire capitalism? American Exceptionalism will turn the corner and run into reality at some point.