5 April 2023
When you think of the financial system, what comes to mind? A neutral system that simplifies facilitates financial flows? A darker system designed to exacerbate inequality intentionally? Or perhaps something in between – a system where there has been a divergence in incentives between workers, executives, asset managers and more – which has resulted in inequality in a way that was not necessarily anticipated.
This week we have a thought-provoking conversation that might challenge you to think differently about the financial system. We’re speaking to Delilah Rothenberg who spent a career in private markets investing before founding The Predistribution Initiative to examine and change the inbuilt incentives in the financial system to work toward a more equitable society.
- Why inequality should matter to all investors.
- The impact of the financial system on inequality - particularly the consequences of concentration of capital with small numbers of managers or companies.
- The problematic implications of excessive debt and leverage on companies’ ability to operate sustainably eg in offering quality jobs and products.
- And of course, some practical changes taking place, including more permanent capital vehicles and structures for employee ownership.
What’s one thing you would like listeners to take away from this?
That the way the industry is structured works against sustainability / that it is possible to re-image these structures / and that asset owners have real power in terms of how they structure contracts with asset managers and how they incentivise them.
What is the most underappreciated thing about investing?
How most people in investing are good people they are just working in a particular system with particular incentives that point them in a certain way. But it is possible to reimagine the system.
- The Myth of Capitalism: Monopolies and the Death of Competition - Jonathan Tepper
- Moving Beyond Modern Portfolio Theory: Investing That Matters - Jon Lukomnik and James P. Hawley
- 21st Century Investing: Redirecting Financial Strategies to Drive Systems Change - William Burckart and Steve Lydenberg
- Private Equity Laid Bare - Ludovic Phalippou
Our podcast episode with Ludovic
- Responsible Asset Allocator Initiative
- Andrew Parry at JO Hambro – Organising the Future podcast
- John McCormick podcast – American Economic Liberties
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