Equity investment has been a big deal for the last twenty years. Particularly with the large privatisations of the 1980's early 1990's. But it is contended that investment simply on the basis of expected share value is fundamentally wrong.
Surely the purpose of a company investment, is that you would expect some return on an investment based on the performance of the company. And more to the point, that the company will benefit from an individuals investment by the provision of funding?
But in the UK equity market, share dealing is carried out simply on the basis of the share value, and without any benefit to the company concerned. This is an extremely simplistic system. I suspect it of severe blindness leading to share price instability and company collapse.
I contend that the buying and selling of shares for such speculative reasons is hugely destabilising and benefits companies very little - I accept that it benefits financial institutions and brokers hugely.
How crazy is a commodities market that the majority of futures trading is carried out with no intent to ever take possession of the goods "traded"? How amusing it would be for such an investor to be forced to accept supply of the 500 bushels of corn, rather than being able to "short" the contract to some other investor.
The result of the futures market - in the way it operates today - must be that the resulting commodity costs more for the final buyer, and returns less to the original producer.
The vast majority of share dealing and commodities trading is simply gambling, or since it can be considered that analysis is involved maybe "betting" is more appropriate.
But, unlike betting on horses or other external events, in this market, the bets themselves effect the market on which they bet. This is a crazy feedback system.
That in any share transaction, some percentage - say two percent for example - should be paid to the company whose share is traded. This will help stabilise a company, providing resources to pay dividends to share owners, reduce the need for new rights issues diluting share value and also provide for continued development of the company.
Fine, but the company "share" tax would prevent you using the "real" shares for this kind of speculative dealing.
Instead, share "bookies" might enable bets on the outcome of real share movements.
This would be a wholly more honest system.
Similar mechanisms could be introduced to avoid speculative transactions destabilising currencies. It is not necessary to regulate fixed exchange rates, simply that some inertia is added to the system by making a currency tax payable to some "owning" institution - however this might be defined.
Of course, this would also provide an excellent reason for Britain joining the Euro.