Mike had to make a decision. He finally got to the point where he didn’t want his retirement savings going to support Wall Street banking.
After moving to Cedar City and discovering George Wythe College, Mike took a class in political economy. He started reading classics on economics such as Economic Harmonies written in the 1850′s by French economist Fredrick Bastiat and Wealth of Nations written in 1776 by Scottish philosopher Adam Smith.
His paradigm was totally altered, and he began thinking the difference between wealth and prosperity: wealth is accumulated and concentrates, whereas prosperity is used and spreads. I pondered this too, as he shared all his thoughts with me.
Mike was stewing at last year’s bailouts of wall street CEOs and big business at the tax payers’ expense. He even wrote a post about it. We had many discussions about different models of business. We came to the understanding that when profit is the only goal of a company- usually any means, fair or foul will be used to accomplish that end. Business is almost always end driven.
Bailout Spoof, starring our 3 youngest, Joel, Lily and Seth. I couldn’t resist sharing this while we’re on the topic. We’ve laughed over it so many times! (There’s a tiny iffy part, so don’t watch if you’re easily offended.)
There are definitely exceptions to this rule. Google is an example of a company that has been means driven. Their first goal was to satisfy their users. Their customer was truly their priority. When this is the case, products and services won’t be corrupted by greed for profits.
Mike says that a great business model has a 3 fold mission.
- Provide for customer
- Make a profit
- Care for employees
Of course, there are many other great things businesses can do and do do, but when profit becomes the priority, customers and employee concerns will be sacrificed.
Anyway, Mike’s been depositing money in an IRA for the past 5 years. He has slowly become disenchanted with the idea of his personal money supporting business that sacrifices ethics and morals to generate a greater profit. He finally started looking for other options (besides Wall Street) for investing his money.
We have had a few investment opportunities come our way in which we really wanted to participate. One opportunity involved helping our dear friends launch a new business. Unfortunately, the IRS slaps strict and hefty penalties on those who prematurely withdraw their money from the established system.
Though the IRS makes it somewhat complicated, Mike found some possibilities with a self-directed IRA. It scared us at first, but we got tired of feeling limited by government and banking establishments, we went ahead and took the leap.
With the help of an investment company, Guidant Financial (there are numerous companies that do this kind of thing), Mike set up the additional IRA account and transferred half of his retirement savings.
He’s purchasing some precious metals and planning some real estate investing. He’s excited about this new found freedom.
There are still enough rules and hoops to jump through with the new IRA that we may not continue putting our retirement savings into tax-deferred vehicles. We are planning to pay off our debt and build an investment account of our own that we can do with whatever we want. We’ll pay more in taxes up front, but have more freedom in the long run.
Businesses that are smaller and local and affect our own communities are much better places to invest. Those that have a morality and a social purpose are better long-term investments. They promote the well-being of the community and the prosperity of the whole, instead of the concentrated wealth of the few.
We never realized how controlling our retirement banking system was until we tried to buck it. It’s frustrating that the only way to save in a tax-deferred status is to send the money to Wall Street and large corporations. But the more of us that refuse to submit to the status quo or put up with the amorality of unaccountable leaders and businesses, the greater the possibility is that things will change.
Sometimes it takes a leap of faith.
Here’s a hilarious piece by one of my favorite musicians, Tom Chapin, that echos our sentiments after the bailouts (this has scenes from “Night of the Living Dead” so if zombies gross you out, please don’t watch).
It’s only by letting inefficient organizations fail that better ones will be created in their stead.
