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Friday, August 29, 2014

"... the difference is simple. The political world relies on coercion. Most of the nation prefers cooperation."

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Vox Explanation Highlights Gap Between Political World and Everybody Else
By Scott Rasmussen, August 29, 2014

A recent column on Vox.com may have inadvertently highlighted the gap between the nation’s political elites and the rest of the nation. Vox is an “explanatory journalism” site founded by former Washington Post columnist and blogger Ezra Klein.

When Fox News’ parent company briefly flirted with buying Time Warner and CNN, Vox appropriately deemed it worthy of comment. They produced a nine-question Q&A feature by Matthew Yglesias.

At the time this feature was put together, Time Warner had already rejected the offer from Rupert Murdoch’s firm. One of the reasons they gave was that it would be a mistake for their shareholders to accept non-voting stock in the new company.

So, Vox included a question-and-answer attempting to explain why anyone would buy non-voting stock in a public company. “It’s a little mysterious,” according to Yglesias. The Vox blogger wrote that, “the value of a share of stock stems from the fact that owning it entitles you to a small slice of control over the enterprise.”

It’s understandable that a political junkie would think of stock ownership in terms of control. That’s especially true of a left-leaning blogger writing about a merger story involving Fox and CNN.

However, most people who invest don’t buy stocks with hopes of controlling the company. They do so because they want to make money. For some, it might be part of their retirement planning. Others are trading for shorter-term goals. But, with only rare exceptions, investors buy stocks in hopes of making financial gains.

Seen from this perspective, the value of a share of stock has nothing to do with voting rights.

The real value of a share of stock depends upon how much cash it will generate for the owner. The theoretical value of a share of stock is easy to define. It’s worth the present value of future dividends and the eventual sale price of the company. When a company announces some exciting new product, expectations go up, and so does the share price.

While that definition is fine in theory, nobody can predict the future. As a result, the price of stock moves up and down. When people think a stock is undervalued, they buy it. If something happens to change their perception, they sell it.

More important than the value of a share of stock are the attitudes revealed by these different views.

The political world thinks of using their influence to control others. Whether it’s prohibiting pot or mandating specific health insurance requirements, the political process is about telling others what to do. Nothing else matters. Yglesias even writes that if you own stock without the ability to exercise, “You don’t really own anything of real value.”

While political types think of controlling others, that’s not something most Americans value.

Most think of what they can do every day to make life just a little bit better for themselves and their families. If they invest wisely, they prepare for the future. If they work together with others in their community, they make their community stronger.

At the end of the day, the difference is simple. The political world relies on coercion. Most of the nation prefers cooperation. 
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