Anders asked: >A friend asked me for cites re: the potential of pension funds for >investing in creating good jobs, putting pressure on corporations, etc. >Any suggestions? Among the info she's interested in: how large pension >funds are as a source of capital (she said in percentage terms, although >I'm not sure in relation to what), what's been tried in the U.S. or abroad >(anybody know much about CalPers?), and legal obstacles in the U.S. Any >cites would be greatly appreciated. Anders, I am right in the middle of finishing a project, so I can't give you a full list of readings yet. Once I get to Jan., I'll have more time. If your friend can wait that long for readings, let me know. Capitalists were very forward thinking and careful when they wrote the legislation governing pension funds. They correctly feared giving any power to workers. Thus, the laws state that pension fund managers have the fiduciary responsibility to MAXIMIZE THE RETURN ON INVESTMENT. If they do anything else, they are inviolation of law. Thus, while a firm may chose to not quite maximize profit in order to give a crumb to their workers, fund managers cannot make this choice. Specifically, if a fund decided to invest in firms that paid above market wages to their workers, or provided them with a better work environment, the fund would be violating the law if these practices in anyway reduced the return on shareholder equity. Since these practices WILL reduce the return on equity (profit), the fund cannot invest in that firm. With regard to CALPERS: CALPERS has been in the forefront of pension fund intervention in management decisions. They have been very active in trying to maximize shareholder returns. Thus, they have played a major role in forcing firms to downsize large numbers of workers, to replace full time workers with benefits with contingent workers with no benefits, to drive down wage rates. The business press then reports that CALPERS has taken an active stance IN THE INTEREST OF WORKERS!! Pensions DO hold a huge percentage* of total equity outstanding. If the laws were different, workers COULD use these holding to force concessions that would benefit workers. But given the current laws, worker's own wealth is being used against them. Doug Orr [EMAIL PROTECTED] * Somewhere in my piles, I have the percent of total equity held by pension funds. As soon as I come across it, I'll send it along. PS. In terms of readings, several years ago Peter Drucker wrote a book called Pension Fund Socialism, or something like that. It has info on equity holding by pension funds, but its basic premise is non-sense given the current legal limits on how fund investment decisions are made. Just one article lying on the top of a stack, discussion how fund investments are used against workers: Gregory Hayden, "Public Pension Power for Socioeconomic Investments," Journ. of Econ. Issues, V.23,N.4, pp1027-1045.
