Governments and businesses are letting people down left, right and centre. They have brought the world to the brink of utter financial disaster by unleashing virtually unregulated trading powers, motivated by greed, in the false belief that free markets know best.
They have written the bankers blank cheques drawn on the people’s money, allowing the bonus cultists to return to their casinos underpinned by bail-out guarantees they didn’t have before. Come the inevitable day their risk-taking causes the next collapse of the broken system, bankers can be safe in the knowledge that they won’t be allowed to go under. Meanwhile, not to be too far outdone, executives are awarding themselves massive remuneration packages and handing out golden parachutes right across the business world. With the wealth gap widening by the hour, the people – many now swimming in a sea of unemployment and insecurity – are being left to choke on their rage.
It is time for we, the people, to hit back. The next generation badly needs ideas that take power away from big business and governments and put it back where it belongs. If Wall Street and Whitehall cannot give us pensions we can live on, communities we can be secure in, or an environment our children can survive in, then we need to begin delivering these things ourselves.
Such a dream is far from impossible. Let me describe one idea in this family of thought. Imagine a company that exists to do only four things. First and foremost, it provides an ethical and reliable annual rate of return on money that is higher than the most generous bank savings or building-society accounts, and most current pensions. Second, it cuts conventional bankers and businesses out of the action completely, and their fees, bonuses and excessive profits with them. Third, it shows that there is a different way of doing business: that passionate and committed people of commerce can and will work for the community, in the community. Fourth, in this spirit, it provides a means for the poor – people unable to generate wealth worth having in ways this company does – to help themselves.
Such a company does not exist today, but it could easily be set up. We’ll call it a HopeCo. Here’s how it would work.
Rates of return far higher than any savings or building-society account are possible today because 43 governments now offer market-support programmes called feed-in tariffs, that allow solar electricity installations to yield a higher rate of return than 8% in many countries. These investments are safer than government bonds, because solar generators are given 20–25-year premium-pricing contracts by governments, and the investor owns the solar asset as well as the pricing contract. Pooled capital from HopeCo investors would be distributed among solar projects by a HopeCo commercial team who know how to invest in solar projects. Investments would be made for a minimum period of a few years, leaving plenty of time for cash flows from solar installations to begin before investors have the option of withdrawing cash. In the years ahead, other high rates of return would become available in other green areas, as traditional energy prices rise, clean energy prices fall and feed-in tariffs are phased out.
Bankers and other greedy traditional businesses would be cut out of the process as all transactions would be based on the HopeCo website, behind which the HopeCo business team would deal direct with solar installation companies who work on ethical principles.
The people behind the HopeCo would have investments of their own in the fund, and they would be legally committed never to take annual profits from their investments of more than 8%. Neither would they be able – by the terms under which the company was set up – to sell the company or float it on public markets. The HopeCo accounts, including remuneration of the business team, would be completely transparent, visible for all to see on the website. As for governance, the HopeCo could be set up as a mutual, with all investors owning a share.
As to how the HopeCo would help the poor: a cap would be set on the rate of return paid to investors. Most savers today would love to find a rate of return of 8%, let alone one that involves a little ethics. So let’s say we HopeCo investors place a reasonable ceiling on our expectations. Any profit exceeding 8% would be channelled to development and fuel-poverty charities. One would be SolarAid (solar-aid.org), a charity set up by Solarcentury that trains entrepreneurs in four African countries to sell solar lighting devices, facilitating light at night with all the benefits that entails.
This reform is key to so much that is wrong in the current broken system. The fiduciary responsibility of pension-fund trustees, as they are presently defined, allows pension-fund managers to invest the people’s money in high-return projects that are environmentally ruinous, such as unconventional oil and coal. If the HopeCo could begin diverting pension-fund money away from fossil fuels, it really would have struck a blow against the existing suicidal system. And why not? As the new organisation’s fiscal strength grew, so too would its campaigning power. A single letter to a minister goes a long way if written by a few thousand people. For this reason, we might want to call the HopeCo ‘Our Own Power’.
The HopeCo is an idea that really could change the world. And there are others like it out there. Watch jeremyleggett.net for more.