 As we have addressed earlier, our stock market is a business. It was a wonderfully effective business for those who initiated it, and it served to substantially support the development of corporate business in our economy. In the negative, it also proved to be a means to further separate business performance from both owner authority and accountability to owners. Our challenge in addressing this area is a massive support that has been given to economic privilege, promoting business model stability. It developed a funding system with leader reliance upon what people do in the stock market instead of what it is able to accomplish for us. The key, of course, is that we the people are the owners of our economy and the ultimate owners of everything in it. We the people are also the owners of government that it is able to manage the economy and it is to serve the welfare of the people. The stock market is not some bastion of privilege. It is just a part of our economy, a part of the economy that we own and that only exists to serve us. We have great interest in how it functions and what it does for us. The stock market was a business, a very good one. It was a very productive and successful support for our nation's recovery and reset in reaction to our industrial revolution. It was a business that brought corporate investors together with those who would own and operate corporate businesses. The need was for businesses to grow. We were shifting from family business and us and them venture to corporate business operations where everyone could benefit through business investments. Business was shifting from family to corporate concepts. Corporate business needed access to far more resources than were commonly available to any family. The stock market provided the connection between investors and corporate authorities. Corporations were one type of stock market customers. The stock market provided access to investor owner funds as a service receiving limited and shared ownership generally called securities as payment. This was a highly valued service to corporate customers. The other customers were the investors who purchased interest in corporate stocks and bonds through action of the stock market. This was accomplished through the market managing the transactions and it was an extremely effective business. Market activity has even been used to measure the success of our economy but this is a measure of what people do, not what they accomplish. Accomplishment is in terms of what is delivered to customers that they get to value. Performance approach provides a clearer understanding of value to us as people who own the economy. What does the operation of the stock market both deliver to us and that we get to value? We get to have limited ownership in corporate America. That is great value to us as investors. Investment is a way to accumulate our wealth, storing our prosperity for later use. It is a way for us as people to maintain wealth but then it also separates ownership from some of the benefits of ownership. It is impersonal ownership. It supports massive populations of investors so that our ownership is effectively reduced to a way to gain income from investments. Not support for the authority of ownership but a requirement to trust those who run corporations to see to our joint interests in corporate profits. The first warning bell goes off. Corporate leadership functions on privilege, not on earning profits. Modern leadership assumes that properly running the organization will best assure its performance. Of course the ultimate witness is the division between management and labor, a subject we have already addressed. Working together in coordinated effort is far more effective at performance than proper use of authority. Performance orientation provides a new understanding of the market, not that common to either the students of management or economics. We have value in establishing a new vision of the operation of the market and how it relates to operation and purpose of our economy. What we see in the operation of a business is that the real decision makers are the customers. They are the only ones who really determine what the business earns and they do it as individuals and in accord with how the product of the business, whether goods or services, satisfies their needs and wants at an acceptable price. They rarely even know whether the business is properly running or not. Let us take a new look at the business of the stock market with its commercial customers, the businesses that issue stocks and bonds for purchase by investors. These are like a government issue of money. They are tokens that have the promise of value. What then does the commercial business get for selling an interest in itself? They get investments. They get another type of token. Like money, the stocks or bonds pass through the market without being converted into anything. The stock market takes a cut of the transaction that passes those stocks and bonds to investors. It is performing a vending service. It is much like a temporary employment agency in this operation, but selling the interest in corporate America instead of the time and effort of workers. It is delivering a vending service to its corporate business customers, selling them profitable potentials. Where regular employment assures that workers are paid for their efforts, the stock market assures that these businesses are paid for the tokens they deliver for sale. Like a temporary employee, these businesses do not work for the stock market, but it markets their potential profitability for them. That is the service provided. On the other side, the stock market serves those who invest. They get to buy an interest in corporate America as token interest in businesses. The service the stock market provides is the sale of interest in businesses as a potential for earning income. It trades stocks and bonds, private tokens, for business ownership, for dollars which are government tokens of value. For a product, the stock market produces for investors is a vending of these tokens. There is no change on tokens as they pass through the market and the money that passes through it is unchanged. These are not part of the operation of the stock market business model. It is selling services only and collecting some of what passes through it to pay for its profitable operation. For our corporate business customer, the stock market is renting out its internal profitability and the price for this is a cut of that profitability. For the investor, it is passing that rental out to them as its service and maintaining the system of tokens for harvesting some of that profitability. The warning flag should go up for us. Tokens are sold to investors, tokens of ownership, but not the ownership itself. And between the ownership that is sold to the investors and the business that rents a part of itself out, there is this vending business. It is ownership stripped of most of the natural authority that is common to being an owner of something. There is essentially zero accountability of the corporate business to the investors. Separation of authority and responsibility is a known bad management practice. It leads to problems of abuse and waste. In the case of stocks and bonds, it was a disconnect between the value of the business as an operating entity and the value of its tokens. That value was speculative. The value of the tokens was not the value of the business. Enter the initially puzzling differences between the price of these tokens and what they were supposedly worth. It was soon recognized that the value was what investors were willing to pay for them. They could be bought for one price as sold for another. All it took was change in opinion as to what customers expected them to be worth. It wasn't their current worth, but their speculative worth in the future. Enter a new type of player, the freighters. These were professional gamblers intent on buying tokens at one price and selling them at a higher price. It is here that the true economic waste is uncovered. The trader does not produce anything that is valued by the business that issues the stocks and bonds. There is also no product for investors, nothing that they get to receive and value from the activities of traders. There is no valuable product for the stock market itself beyond increased sales activities from which they can harvest their income. The effect achieved by professional gamblers and stocks and bonds is waste. It is intentional harvest of wealth as a market product from the operation of the stock market itself. It is waste that returns no goods or services to the market's customers, but rather takes a cut from the value of stocks and bonds that are bought and sold. Due to the speculative nature of the stock market, traders get to harvest wealth from the earnings of those who would invest in corporate businesses. Their harvest devalues the stocks and bonds for the investors. The more successful the traders become, the lower the return on investment becomes for those who would invest. This is not good for our economy. Gambling and stocks and bonds has become so lucrative that it has all but forced those who would invest to purchase their own professional gambler help as a way to preserve wealth in this investment arena. It has all but removed banks, those highly regulated, as to their investments from major participation, eliminating a large part of their former business, which further limits the dollars that are available to invest. So let us summarize this situation. First, the corporate leadership is intent on running their businesses and delivery of stock and bond tokens to the stock market for sale is an effective way to gain working assets for the businesses they run. The market separates them from those who buy at interest so that the leaders are able to run their businesses without the inconvenience of owner demands or directions. It serves privileged corporate leaders, giving them unregulated access to investor assets. It gives those who operate the stock market as a business by having traders significantly increase the buy and sell activity, which is the service that earns income for the stock market. It serves the traders who gain a living and a profit from their gambling with what investors would put into corporate America. And what about the investors? The investor is the only one who is putting money into investments. The others are harvesting from the investments that are made. This arrangement was like that in feudal England. It was where only the ones who earned anything were the peasants who worked the landfished or had businesses that could be taxed to support the aristocracy. It was where a class of privileged people could live well off the productivity of others. But original feudalism recognized the value of the peasants as the source of all wealth. The landed barons were pretty much aware that they needed to protect their peasants, they needed to maintain their satisfaction as peasants, or they might abandon the feudal land and serve other barons. With the stock market, the traders prospered from a temporary stake in the market with the intent to just sell it back for a profit. It was a new type of privilege. If investors lost what they invested, it was perhaps a concern, but not a great one. If businesses lost the value of their resource base, that was their problem. These were professional gamblers. They were not functioning as an effective part of the economy. Once again, we have support for the nature of privilege. It creates structure and stability, not performance. It discourages change. In this case, it promoted corporate businesses that were inherently stable. The greater the speculation as to the future of a specific stock or bond, the greater the harvest for gamblers. It discouraged investments in business startups. It discouraged investment in businesses that had fluctuations in value. The stock market favored large corporate businesses where there was little product change and therefore little advancement. It attracted investors to utility providers and mining companies. It attracted people to invest in banks and publicly supported or highly regulated businesses. It favored businesses like the automobile, whose products would continue to sell strongly because it had effective capture over its customer base. These are businesses with securities that are less likely to suffer from gambler harvests. It is in the nature of privilege that it spreads. The ability to harvest income without having to earn it by productive effort was obviously valuable to common investors. There was a new class of traders, investment houses. They could sell a trading service to investors, optimizing what they could earn by competing with the traders. The investment houses would gamble just like the traders but on behalf of investors. They would gain the same sort of expertise that was exhibited by the traders but would exercise it to support their customers. In our performance perspective, this is just another business that harvests from what the investors would put into stocks and bonds. It is one more flow of value out of the stock market business. It promotes wealth for the people who return no product to the market's customers. It is another version of selling protection but this time from trader activities. The threat is one of gamblers taking the value out of investments. It is truly amazing with all these privileged parties feeding at the trough that there was still a good flow of investor dollars into the system. Perhaps the best vision for this is that there is little good alternative, even starting up a new and productive business is discouraged as funding is hard to come by when funding for startups is subject to gambler manipulations. And then we have to include the interference of government. For public management, it interferes to prevent openly criminal behaviors by traders but otherwise supports them as a matter of privileged earners. The government collects its taxes from everyone. For government action, we also have to include the support of modern economics. It is there measuring the activity of moving money. Every increase in waste is addressed as an economic improvement. We have the performance vision that puts this into a working perspective. What the government takes out through taxation is funding that does not flow to the investors and what the investors are able to harvest is also taxed. We have an incredible performance potential for wealth generation in our economic system. Even with all these people harvesting their own income from the investments of common people, it still is able to provide some income. The true potential is staggering. The potential benefit from eliminating investment system waste is likewise incredible. It just needs the vision to gather people to effective change efforts. Are there things in here where we can identify specific sources of waste? Places where we have a good basis for bringing people together to benefit us all by actions to eliminate it? Our most immediate need is recognizing that we are not alone. We are not some other group of customers who are trying to find their own way to get ahead at the expense of others. We, as we the people, are the owners of the economy. It is we the people who are looking at how best to handle the public purposes that we recognize in having our economy serve us. Having special people harvest from this system at the expense of others is a challenge rather than something to be preserved. What is the value for us, for all of us? We value a way to both preserve our personal wealth and a way to support the economy that will serve our purposes. First we need to kick out the idea that this is some sort of private business that can do what it wants with its customers. Preserving wealth is a matter of public concern and even those who have no money to invest today are looking for where to invest what we will earn through our future economic commitments. Our personal potential for investment is what we can all value. It is not just a place for private citizens to invest. It is a place for our banks and other financial businesses to invest our funds. It is a place for our retirement systems and unions to invest our funds. It is a way to fund corporate America to better serve us as owners of this economy. The stock market may well have been initiated as a private enterprise but its function has become an endemic part of our economy. Our general direction of change will be to establish citizen-based management of the entire stock market business. We the people of the only real party in interest. If we find our agreement and set a demand upon it, the stock market will respond. Our general challenge is investment waste. It is some people who are privileged to harvest from potential returns on our personal investments. It is people finding wealth by taking it from us by people in businesses who do not deliver us any value goods or services from what they do. It is actioned by those who believe they are privileged to use our investments for generating their personal or business income. The rule is both simple and consistent. Those things that do not come to us as customers or as owners, and we are both, are of no value. The fact that there are also people relying upon or receiving that waste and working for it is of no consequence. If they are not investors who decide to commit their resources to earn a return on their investment, it is waste. Consider the stock market indexes. A look at the value of stocks in terms of what our professional gamblers can get for reselling their holdings. The current selling price of securities has little to do with the value of the business that we choose these securities, or the return on investment that these businesses commit to secure base of investors. This is where we start with government now regulating what is an effective corporate casino. Government is harvesting its share from the operation and is unlikely to support any changes based on seeing to the welfare of investors or corporate America. The government that should be serving us has become a leech upon the market. Suck in the life out of it. We all, with government leaders intentionally included, see the wonderful potential for benefit that is not being supported by current political interference. That is part of the benefits that are available to us to initiate effective improvements. We need to start with a new and more effective vision. For government, we common citizens are the only real party in interest. Our potential direction of change is what we learned in our history, setting up an alternative government investment service where business investments are only available for long-term purchases, probably only being brought back by the company that issued them. Should the government initiate competition with a private business? The answer, of course, is that we the people are the nation. There is no competition. There is no us and them to be served. The challenge is serving someone other than we the people. The government has a constitutional purpose in serving the welfare of we the people and no basis for protecting some specific business as its operation harvests wealth for privileged traders. In our current environment, the change costs associated with our directing this would be very high. It would be especially high as there is a large population of heavily rewarded traders who have special access to government leaders. We do have a far less expensive change alternative through harvesting the conflict of purpose inherent in our current operation. The foundation for change was encapsulated and, I quote, attributed to President Ronald Reagan. You tax what you want to go away. We have a fairly simple picture for the operation of the stock market. You should note that I have annotated the investors as citizens when the investment in our American economy is primarily through buying an interest in corporate America. It behooves us to recognize that there is very much a public interest in addressing systemic waste. Waste is a flow of value out of the performance cycle without returning anything that has value. What traders or investment businesses are able to harvest reduces the investors' return on their investments. The management technique would be to tax short-term trades so heavily that professional traders and investment houses can no longer earn effective income. The securities would have to be held for perhaps two to five years to avoid the tax. There would, of course, be exceptions for court-ordered actions and heritances or the like, but turning off the manipulation would quickly change the very nature of the securities markets. It would stabilize the price for stocks and bonds and assure that the return on investment goes to the people who invest to own a piece of their national economy. As to what happens to the investors when some businesses fail and all their value is gone, we have the obvious answer, and it is common insurance. It is selling a service of spreading the risk that something goes wrong with some specific investment. The business of stock market is sales, and these would drop dramatically with the absence of manipulation. With that, we have identified who it is who can sell investment insurance. Insurance for investors is a potential business product for the stock market itself, and it could replace much of the loss of vending income when short-term trades were abandoned. What about the people who have been making a very good living? Are we just going to abandon them, kick them out of the only employment they know? The economic answer is that ceasing to pay people who do nothing for you is not some interruption in their entitlements. Perhaps the government can use some of the tax income from short-term trades to establish retraining opportunities. The simple truth is that these traders produced value only as their efforts are valued by investors. If the investor gets the return on investment without their involvement, why would investors maintain them? One option is offered in the government providing an investment support service, a public service alternative to the private stock market. Another is taxation of waste and active discouragement to the business of investment as a casino effort. Either of these will strengthen and support investor ownership in corporate America. Those who invest to own will be the ones most benefited by the change, and we see the owner investment as beneficial to citizens in general. Also, where the investors become more effective owners, there is encouragement for those investors to act to secure their own benefits through exercise of that ownership, taking a personal interest in the operation and profitability of the corporate entities they own. Where the welfare of the investor is less determined by manipulation and more by actual value of the corporate business, there is increased potential for investors coming together to assure that value. Wasteful practices by corporate management could well become an issue that would bring the investors to find agreement. Political donations of the like would be seen as reducing the pool of funds that would otherwise flow to the investors, encouraging their interference with leader privileges. The change benefits would likely be immediately limited to the value of securities, but would almost certainly have long-term value effects in both investor wealth and corporate operations. We have another lesson to be learned, and it is in communication rather than performance itself. Our common reaction to this level of improvement potential, a reaction that is trained into our general behavior, is that eliminating waste is somehow damaging. That is privilege-based thinking at its worst. That loss of stability is a threat that justifies continuation of waste. The way to get beyond it is to make it personal. If you have been hiring a local youth to mow your lawn, but find that more than half of what you thought was your lawn is actually owned by your neighbors, they are the ones who are responsible for mowing it. You would farm your lawn mowing youth that you are no longer going to pay him to mow that lawn, only what actually belongs to you. You suggest that he address this also with the one who really is responsible for its maintenance. Have you shorted this young man? Should you continue to pay him for a time because you have lowered his income from no fault of his own? The harsh answer is that you have others who depend upon you, taking from them to continue supporting this neighborhood youth just makes no sense. The change in your priorities may affect other people, but the choice is still your own. If he complains that he was able to buy many good and useful things, even helping his parents out by paying for his own clothes, and you are cutting him down without good reason, what is your response? If he and his friends decide to pick at your house and let everyone else know what you have done to him, does this change your mind? The answer is that the decision of what you do with what is yours is not even his concern. If anything, his creation of additional costs by how he acts is likely to convince you that ceasing to support him was a good decision. What we are suggesting is taxing away the waste or replacing what we have with a public service. Either is just a choice, as is not making any changes at all. They have different values and they incur different costs in terms of the commitment of citizen time and effort to bring them about. They face different challenges to change actions. Decisions on whether to take action or simply support action or to let things continue is a matter of personal commitment to a benefit that all can see. Having that choice is empowerment. My presentation of the options and focus on costs and benefits is just my technical support for your decision. In this lesson, we have addressed a single, very important, semi-public institution. We have looked not only at how it operates, but the impact it has on our economy. Still more to our purpose, we have identified areas of significant waste that can be addressed for their elimination. It is also instructive that this is just one institution. It is not the larger economy. While it is most certainly an important aspect of our economy, it is still just one little piece of the larger effort. If there is this much waste in this one piece, consider how much opportunity awaits our larger examination of our commercial environment. In our next lesson, we will expand upon the role of our government in seeing to our needs and wants through its impact on our various elements of its larger economy. Instead of just looking at the good and proper operation of government, we will shift to the impact that we can have on government operations with recognition of the common value that can bring us together to have that effect.