Wall Street’s Assault on Democracy: How Financial Markets Exacerbate Inequalities

ISBN-13: 9783031290930 / Angielski

Georges Ugeux

Opis

On November 24, 2020, in the midst of a global pandemic, the Dow Jones Index surpassed 30,000 points for the first time ever. This historic moment exposed the incredible disconnect between financial markets and society.The stock market’s one hundred percent rebound was triggered by a massive injection of capital by the US Federal Reserve and by fiscal stimulus measures that reached $16 trillion globally in only a year. It was the taxpayer who came to the aid of the shareholders. This imbalance between low- and high-income individuals has become unbearable and calls into question the mechanisms that allow such an abuse of financial power to exist. This abuse has allowed populism to flourish, in a world where humanism should prevail.This book invites the reader to understand how such a financial drift of capitalism was even possible and proposes reforms to correct the system. Written by the former Group Executive Vice President for International & Research at the New York Stock Exchange, this volume provides concrete solutions for democratizing financial markets and reintroducing the morals and ethics that these markets and its leaders are so sorely lacking.Ugeux argues that the purpose of such reforms is to reduce the inequalities which are plaguing our democracies. Citizens are losing hope that equity exists in the system and it has become clear, as fundamental liberties like right voting rights are being threatened – that the problem lies much deeper. Ugeux insists that a change of perspective and a redefinition of societal goals is essential: social and solidarity capitalism is possible only if our leaders listen to the expectations of their citizens.While it is supported by research and facts, this book includes elements of opinion essays with an educational objective. It aims to educate readers who want to better understand these complex issues, without having to be specialists.

Spis treści

Introduction: Wall Street’s denial.- The disconnect with the real economy

O autorze

Georges Ugeux is the Chairman & CEO of Galileo Global Advisors LLC, a firm he founded in 2003 to offer CEOs, Boards of Directors and governments independent advice on international business development, restructuring, compliance, and mergers and acquisitions. Prior to Galileo, Mr. Ugeux was the Group Executive Vice President, International & Research, at the New York Stock Exchange.

Mr. Ugeux is a Lecturer in Law at Columbia University School of Law, where he teaches the seminar “International Banking and Finance: the Challenges” and leads a reading group on Brexit. He is a frequent visiting professor at La Sorbonne University Paris I and has guest lectured at the Catholic University of Louvain, from which he holds a Doctorate in Law and is Licentiate in Economics, and the College of Europe in Bruges.

Mr. Ugeux is a widely sought-after public speaker and author in the United States and in French-speaking communities around the world. As an author, Mr. Ugeux has published a number of non-fiction works in English, French, Flemish, and Chinese.

Blurb

                                                     “Without equality there can be no democracy.” Eleanor Roosevelt, 1944

Bill Gates famously said at the World Economic Forum in 2008:  We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well. This book is an attempt to make financial markets a critical element of this news and capitalism.

On November 24, 2020, in the midst of the second phase of COVID lockdown, the Dow Jones Industrial Average surpassed 30,000 points for the first time ever—to the delight of Wall Street. It was an increase of more than 100% from the beginning of the pandemic. It would peak at 37,500 a year later. This historic increase was not only the result of economic or financial performance but also from a dollar injection of more than $ 10 trillion of liquidity by governments and central banks that would fuel a surge of inflation in 2022. While it was intended to avoid an economic collapse around the world, liquidity sought refuge in the equity market, making shareholders wealthier while the population was suffering.  

The purpose of this book is to examine how the international financial market can reform themselves to reduce their inequalities and threaten democracy. It is neither a populist nor a capitalist book. Its underlying philosophy is humanism: The economy must be at the service of the people and the communities, not the markets or shareholders. Inequalities became obscene.  

With global indebtedness exceeding $ 300 trillion in 2022, -of which one quarter issued by sovereign borrowers- financial stability is at risk. In order to rebalance these inequalities, it is the mindset that needs to change. Recent events have demonstrated that a set of reforms are needed to reduce inequalities and improve democracy. It is not a coincidence that, even within democracies, we see the dangerous emergence of elements of dictatorship and autocracy.

The corporate world obtained a halving of the corporate tax rate; in the OECD, corporate tax income represented less than 10% of the budget revenues. It fueled returns to shareholders and bondholders. The correlation of the remuneration of the corporate executives with the stock price of their company created a bias towards the increase of the stock price, sometimes to the detriment of financial stability. Until interest rates increased under inflationary pressure, dividends became an ever-growing revenue and were yielding more than long-term bonds. Capital markets became the place to boost capital without any equivalent for salaries.  It is purely and simply unsustainable.

The book presents twelve realistic, yet challenging, reforms that will improve capital markets and reduce their ability to exacerbate inequalities. They include the reduction of collusion between governments, corporations and central banks, a drastic review of corporate governance but also the introduction of ethical standards in the management of capital markets.  Hopefully, it will feed the debate that has already started by providing practical suggestions and robust reforms. It should make our democracies more robust.