John K. Taber
jktaber at onramp.net
Fri Jul 31 15:10:45 PDT 1998
Doug Henwood wrote:
> Seth Ackerman wrote:
> >I can accept that there might be undesirable consequences from pouring
> >billions into the stock market, and that there would be no boon to real
> >investment, but I don't see why there would be commissions (presumably
> >the trust fund would hire its own managers) and I think it's a little
> >dogmatic to oppose it because it's "giving something up." As long as
> >Wall Street doesn't get its mitts on the loot, isn't that better than
> >raising the most regressive tax? (Of course, doing nothing would be best
> >of all).
> >Do I gather that Doug and some others see equity purchases by the trust
> >fund as unacceptable? True, there's no urgent need for reform. But isn't
> >that a more palatable one than tax increases/benefit cuts?
> I oppose stock purchases for several reasons. One, it'd be a vast subsidy
> to Wall Street. Sure the fund would hire its own managers, but even index
> fund managers don't come cheap, and you can't buy stocks for free. Two,
> what stocks would the fund buy? Index the S&P 500? But what about the small
> stocks, whose neglect issuers and holders would whine endlessly about.
> Every stock? Would they manage the portfolio actively? What about social
> screening criteria? Arms-makers yes, tobacco no? Three, how would they vote
> the stock? With management? With the Council of Institutional Investors?
> Four, why should public money go into the stock market? On the basis of
> historical returns, which economic theory still can't explain? To promote
> "capital formation," which the stock market has nothing to do with? And
> five, it would further the ideological legitimation of the stock market,
> and make supporting prices a matter of national policy. The government's
> material interests would fall even further in line with those of big
> capital than they already are.
> The only reason to buy stock with public funds would be to socialize the
> enterprises, but that didn't work in Sweden.
But there could be a plus to the Gov investing the trust funds in
equities too, although mind you, I've already said I prefer not.
Just as Calpers and Fidelity have been forced to prod corporate
management to perform, the Government might be forced to take a
strong role in overseeing corporate governance.
Would I love to see assholes like John Roach of the Tandy Corp,
or Charles Wang who paid himself a half billion dollars for less
than mediocre performance, answer to an angry congressional
Man, that would be something!
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