Market’s back, but people aren’t

Dow high
The Dow hit its highest point since December 2007 this week. (Image: Google)

By Daniel Wilcock

The American stock market, as measured by both the Dow Jones Industrial Average and the S&P 500, closed yesterday at its highest level since December 2007.

Ordinarily, as a low-cost index investor, I agree with market sages such as Burton Malkiel and John Bogle, who caution investors not to pay much attention to the daily soap opera of market fluctuations. But somehow this particular milestone means something to me.

In April of 2008, I relocated to the States from Japan, where I’d been living the previous two years. Luckily, I found a nice writing job at Georgetown University (a relatively safe harbor within stormy seas) shortly before the markets went to hell and employers started shedding their payrolls. When the Lehman collapse happened, I can clearly recall the indexes going down 5% each day for several consecutive days.

Those dark days always made me flash back to the summer of 2007, when my wife and I took a honeymoon in Finland and Denmark. Each day, I had the luxury of perusing the International Herald Tribune in a leisurely way. That splendid summer, the financial news was filled with warnings of a coming market catastrophe, evidenced by the failure of some mortgage-related funds at Bear Stearns.  Yet the market continued to go up in the following weeks.

We may be approaching a conclusion to those days of frozen credit and a hemorrhaging housing market. In my opinion (which I admit is quite different from Wall Street types), The Consumer Financial Protection Bureau is leading our housing and credit economies to a brighter future. In this regard America may be learning something from Canada, which didn’t have a mortgage crisis.

But what about the 8% of workers in America and more than 50% of young people in countries like Spain who wish to enter the workforce, but can’t find their way? I’m looking for ways to be optimistic about the future of labor in the new era we’ve entered. B corporations and the GIIRS index inspire me, as do companies and organizations that take environmental and community sustainability seriously.

The market’s return is an indicator of our collective wealth. The unemployment problem is an indicator of our collective poverty. My hope is that our markets will evolve and bring their productivity to bear on the social and environmental problems we face.

Idealistic, yes. Naive, perhaps. But optimists live better lives.

The high human cost of cheap sourcing

By Daniel Wilcock

This devastating New York Times story about last month’s factory fire in Bangladesh, in which 112 workers perished because they were trapped by both the flames and their managers, is a wake up call.

I think it’s time to purchase fewer “brand” goods produced in places where almost none of the high purchase price commanded by the brand makes it into workers’ hands.

Granted, it’s hard to tell these days which products are produced sustainably. I’d be very curious to know how the Nike running shoes I typically buy, which are made in China, break down in terms of who receives what. My guess is that if I’d like to live by the above axiom, I’d have to find some different sneaks.

The b corporation model is the way forward. Consumers can affect change incrementally with their choices.

My hope is that what happened at Tazreen Fashions Ltd. in Bangladesh is also wake up call for those with the power to make macro changes, from heads of state to brand CEOs.