David D. Perlmutter

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To jump-starting the market, the animals need to be re-trained

http://www.NewsAndOpinion.com | I am not a zoologist by training, but I want to announce to the world the discovery of a new animal.

This creature was born during the Internet frenzy of the late 1990s, nurtured in the Internet bust of the new millennium and grew to addled adolescence during the post-Sept. 11, Enron and K-mart era of uncertainty.

I obviously am not referring to an optimistic bull or a prudent bear. I speak of the ignoble fraidy-cat, and millions of investors and prospective retirees, including myself, are members of this fraternity of skittishness.

What does it mean to be a fraidy-cat?

We aren't greedy by nature. Any hopes that we will discover some sort of super stock that will go from 1 to 1,000 were extinguished long ago. We have very simple goals: We would like to retire on a reasonable income that allows us a little pleasure, some charitable works and freedom from burdening our children or society. We would like to send those children off into the world with a good education and perhaps a modest starter nest egg.

Fraidy-cats aren't stupid, either. We understand that markets can go up and down. We also know that just because some talking head on television or some columnist in a financial magazine squawks that a stock is "hot" doesn't mean we should don oven mitts to e-mail our broker.

But fraidy-cats, as their signature title suggests, share one negative trait: We are scared and have no idea whom to trust or where to put our money. Unlike our grandparents in the Depression, we don't consider the mattress an option. And we know that earning a few hundredths of a point above inflation in a money market fund or CD is no way to achieve our lifetime financial goals.

Another reason we are scared is that we have been scarred. Forget Enron and half of the Internet capitalizations; so many old, safe blue chips have proved to be ghosts of opportunity. We have no idea anymore what truly is a solid blue chip vs. a rickety Ponzi scheme.

And whom do we trust to tell us the truth? The accountants? Remember when that profession attracted conservative, risk-averse people? The brokers? They make money only when we trade, whether we lose or gain. And the church-and-state division between the advising arm of brokerage houses and the marketing divisions hawking stocks is porous.

So the slinking, jittery legions of fraidy-cats grow day by day. And that is dangerous for America, because no economic system thrives or fails simply due to impersonal forces. Capitalism is the aggregate trust of millions of individuals that insiders won't steal the whole pie.

That is why we need an ethical revolution in the workplace, where companies appoint "integrity executives" to match their chief executive officers. Such "chief honesty officers" should have a roaming mandate to make sure their corporations are keeping the public trust and giving their clients and customers a fair deal. Perhaps, too, analysts should rate companies on scales of integrity.

A renewed emphasis on ethics might bring some of us fraidy-cats out from underneath the floorboards and back into the market. And -- who knows -- that could be good for business.

JWR contributor David Perlmutter is an associate professor of mass communication at Louisiana State University and a senior fellow at the Reilly Center for Media & Public Affairs. He is the author of, among others, Visions of War : Picturing Warfare from the Stone Age to the Cyber Age. Comment by clicking here.