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The Conscience of American Capitalism


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Bogle does a good job of stating strongly-held beliefs without sounding as if he's lost track of a reality in which others disagree with him. It might be easy to say that he's stuck in the old mindset of a manufacturing or service economy, yet he has simple but compelling reasons as to how and why the so-called 'financial' economy actually subtracts value from society. That's the heart of what I heard him saying.

One annoyance: Bogle repeatedly refers to public and private equity/mutual funds 'owning' large numbers of companies, which is misleading. Whether it's a mutual fund or a private equity group, there are always investors who supply the real money to purchase the funds holdings in the first place. Thus the companies are still owned by some segment of the public.

The real problem is the disconnect between the operating company which is actually creating value, and the individual investor. This chain of disconnect can stretch through many levels; for example, a worker who contributes to a retirement plan, whose manager invests in another private equity group, which owns a number of corporations, one of which controls a company that actually produces a tangible product. The worker, who is in fact the "owner", has zero connection to the final company.

So you ladies and you gentlemen, pull your bloomers on...

-Joe Henry

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