There’s something immoral about sitting on your butt and making a lot of money as against working your socks off and making less money. I find it difficult to reconcile to this.
The Indian stock market has exploded in the last five months. Its gone up by 50%. Popular perception is that its because of the euphoria of the elections throwing up a stable government, which was unexpected. But as Swaminathan Anklesaria Aiyar notes in his very well written article in the Times of India, the rise has little to do with the elections. Global money which had retreated shellshocked into US gilts is pouring out again into stock markets. Some $ 20 bn has gone into emerging markets since April. China’s stock market has gone up by 57%, Russia by 63%, Brazil by 60%, Argentina by 45%. India is not alone, by any means. And no wonder, the rupee is strengthening again, if there’s so much dollar inflow.
I think, as a society, we have learnt little from the financial crisis, we are right in the middle of. We are feeding the same boom and bust again – I am sure Madras maamis are sitting in front of CNBC in India and day trading again.
It is quite likely that if you have any decent investments in the stock market, you would have made much more money these 5 months than by working hard at whatever job you are doing. In fact if you have some significant investments in the stock market, its very likely that you made much more money doing nothing with it than in virtually any year of your working life, where you slave unthinkable hours. This just cannot be morally right.
This is the problem with the financial sector. It rewards ridiculously for resting your backside (and calling it risk taking). An honest day’s toil, whatever your job might be, is far less rewarding than sitting idle and gambling. What is true for the individual, is true of corporates as well. An investor who does nothing more tiring than pressing a button to buy a share, can make more money than the company he buys the shares of makes by producing and selling a real product or service. Sure he can lose his shirt as well. But then governments are there to bail him out.
I am not a hard core leftist. On the contrary, I am a rabid fan of capitalism. Financial markets have an incredibly important role to play in raising capital and without these markets, we would be back to stone age. But that doesn’t prevent me from having some moral issues with it.
The reward equation for passive investment, or worse gambling, is completely wonky. What does it say of our society that rewards passive investment many times over productive work.
Can somebody shed light on the morality of all this please.