The Credibility Gap

by Kun Luf on January 26, 2011

When the subject of the MCWB Club (and what it means to the average middle class folk [MCF] on the street) has come up in my conversations with people, I have been asked the following questions:

  • Who owns it?
  • Who runs it?
  • How am I sure someone is not planning to take my money and use it to live the good life?

These are good questions no doubt, and well justified – if your money is going to be at risk, you ought to know as much as possible before you jump in.

But let me try to change the frame of reference for a minute – because middle class folks (MCFs) will not be able to benefit until they view this concept from a different perspective.

Think, for a moment, of the various banks and financial institutions you do business with – the ones you trust and believe in. If you ask yourself the same questions, you will find that you don’t know the answers (nor would the answers matter for that matter). The only answer that you may know may be for the last question – there is a feeling of security based on regulatory oversight. But, other than insured bank deposits (which yield very paltry returns – usually below the inflation rate), more often than not (if you’re in the middle class), someone is taking your money and using it to live the good life.

Think of mutual fund managers (who charge fees every year – whether the market is up or down) or Wall Street (US)/Bay Street (Canada)/City of London (UK) financial institutions – can you think of a time, when these folks have not lived high? Even when your retirement savings or college education savings (for your kids) were hurting?

But let me address the questions above, and the issue of the credibility gap.

The MCWB Club is not about any one person or personality – it is not different from a church, community centre, association or other club. The members ultimately determine what the club will be – when you join, you have an opportunity to shape the club and move it in the direction you envision. The sponsors have laid down a set of values espoused in the Middle Class Bill of Rights, Operations Manual, Member Rights and so on – a foundation on which the membership can build. Obviously, if a member is pushing for an initiative that is discriminatory or restricts access to lucrative opportunities for everyone, it runs against the values of the club and would very likely fail to gain traction within the community. It is because the club transcends any person or personality that you won’t find any reference to sales of books, seminars, workshops and so on.

MCWS is the club sponsor and is responsible for running the club. Having said that, the sponsor is on a very short leash, and bound by stringent accountability rules – furthermore, members are free to propose ideas that strengthen accountability and other best practices. Just like an association, club or church, members are ultimately free to vote with their feet and dollars – if members cease being members, the club ceases to exist. This is the ultimate weapon of accountability. The club has explicitly stated that, with the exception of membership dues (which are subject to the accountability guidelines above), it will not accept funds directly from members. By placing an independent, third party trustee and/or custodian between us and members’ funds, members can have peace of mind that their funds are only going to be used as intended. For example, if the club had researched and concluded that this building was a worthwhile investment, and I am (as a member) willing to invest $10 (or $100 or $1,000) in the building, I will not be sending the $10 to the MCWB Club, but rather to an independent, reputable third-party trustee and/or custodian – who will ensure that my $10 either goes into the pool buying the property or is returned to me if the deal falls through. The trustee and/or custodian will also have the ongoing role of ensuring that the cash payments that accrue to me as a part owner get to me as agreed (monthly, quarterly, annually or held for reinvestment – whatever is agreed at the time of commitment).

At the end of the day, MCFs tend to trust wealthy elites and the financial institutions owned by them. They buy the various financial services and products peddled by the wealthy elite without (MCFs) asking questions – if MCFs asked questions, they would realize that the status quo leaves the middle class going round in circles, taking one step forward and two steps backwards, even as the wealthy elite are making accelerated progress by leaps and bounds. If a celebrity endorses an idea, MCFs are willing to throw caution to the wind to jump on board. I have nothing against celebrities or the wealthy elite but I urge you to stick to the facts and results. If the wealthy elite (or their financial institutions) endorse an idea as good for the middle class – reject it if the track record of that course of action is poor or negative. We (the middle class) should not continue to do things that enrich the wealthy at our expense ‘just because that’s the way it’s always been done around here’ – we need to evaluate the results of conventional wisdom over the last 20 – 30 years and change course if we know the current course is leading us nowhere good. Don’t wait for a celebrity endorsement before doing what is right for you – more often than not, what is right for the celebrity may not be right for you, and when celebrities get access to good deals, they are more likely to invite other celebrities along (not us in the middle class).

Leave a Comment

Previous post:

Next post: