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February 11, 2005

Greider on State Pension Fund Power

The always insightful Bill Greider has a great piece in The Nation looking at the new power used by state pension funds to discipline corporate wrong-doing. Their effectiveness can be measured by the rightwing assault to dismantle them. Arnold's proposal to dismantle the California state employees pension system, CALPERS, is just part of a nationwide campaign to take on the state pension leaders. And for good reason, since public pension funds control $2.7 trillion dollars (yes, trillion with a "t"), with union-managed pension funds bringing in another $400 billion for potential corporate accountability campaigns.

Ignored by many activists, progressives linked to labor have made gains in this area, electing new representatives to the boards of these pension funds around the country. In Ohio, unions helped elect a librarian to the state pension board, gaining a 5-4 majority on the $65 billion fund.

But conservatives don't want pension activists to be able to translate that power into corporations actually having to be accountable. Echoing a theme I made a few days ago, Greider argues that this highlights that Bush's ode to an "ownership society" is bunk:

While Bush calls for democracy worldwide, he is smothering the ownership rights of corporate shareowners at home. In behalf of business-financial elites, the White House has bullied Securities and Exchange Commission (SEC) chairman William Donaldson (a GOP financier himself) for favoring the proposal to allow major institutional investors like public pension funds to nominate independent directors to corporate boards.
The only weakness of the article is that Greider fails to tie his discussion of the power of collectively invested pensions to the debate on where the social security trust fund should be invested. Conservatives are horrified that social security could come to resemble these state pension funds, where public values actually matter for how public capital is deployed.

State pension funds should be a model for how social security could be used to build a new politics for democratic values in our financial markets.

Posted by Nathan at February 11, 2005 09:20 AM