>On Behalf Of Doug Henwood
> Calpers' innovation - partly
> under the influence of modern porfolio theory, which claims, not
> unpersuasively, that it's nearly impossible to beat the market
> through active buying and selling - was to hold onto underperforming
> stocks and lobby managers to boost profits. And we know how
> corporations boost profits: downsizing, outsourcing, etc.
"And we know" is the crucial, deceptive phrase here-- I am no proponent of "high road" rhetoric around the profit-boosting win-win situation where companies can do best treating their workers well, but it is equally silly to argue that downsizing and outsourcing are the only roads to profit. In fact, they are often inefficient, since less workers often means less production and more bureacracy managing suppliers is not always the best route to profits.
In fact, CALPERS most public campaign to increase shareholder profits has been to fight excessive executive compensation. There has been a lot of argument that excessive executive pay and distorted incentives have undermined profits for shareholders, not just in the left press but in the mainstream portfolio style theory Doug alludes to.
And CALPERS has specifically signed onto prevailing wages in their real estate investments, a very public commitment to higher wages that few other investment funds have agreed to.
Now, I have no doubt that Seth or Doug can find an actual example of CALPERS supporting a policy that hurt workers, but after all this rhetoric and "and we know" proof-by-assertion, it might be nice to give a concrete example to look at what an actual "avatar of financial market socialism" does in practice. Part of left analysis should be looking at the pros and cons of the praxis of actually existing institutions in order to analyze how to create better alternatives. But that's hard to do when comparing actual examples that I have noted to airy rhetoric from the critics.
And as for Doug's original argument agaisnt the Swedish funds, one of the problems was obviously a lack of active involvement by the funds in management of the firms -- remember the "lack of interest" by the workers that Doug bemoaned. Well, if CALPERS is pioneering active involvement under the constraints of fiduciary duty, it is quite reasonable to argue that under more socially conscious rules for worker-owned investment funds, they could be actively involved for more worker and society-oriented management of their social capital.
Even given its limits, CALPERS has been actively involved in low-income housing, seeking to punish racist executives at Texaco, challenging clearcutting in the Headwaters forests, and supporting prevailing wages in the construction industry. These seem like quite good acts derived from the worker-base of CALPERS nature, so why is this not a valuable model to be studied - whatever its limits under present corporate laws - to understanding where we would take control of capital if we could mobilize the power for alternative rules and institutions?
-- Nathan Newman