On his book The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon
Cover Interview of June 03, 2018
In a nutshell
The Rise of the Working-Class Shareholder tells the
story of labor’s unheralded shareholder activism. That activism weaponizes the
$3 trillion in labor’s capital, which is vested in the pensions of state and
local government workers and unionized private sector workers, to advance the
interests of their worker-contributors. The activists who do this work are
almost totally invisible. But it is crucial to tell their story now, in a bleak
time for labor unions and other working-class institutions. The purpose of the
book is not to cheer up otherwise depressed labor advocates, though it does
offer a rare glimpse into activists fighting and winning assorted
confrontations with companies, hedge funds, private equity funds—all, using
shareholder power. In telling their stories, my aim is to demonstrate how and
why shareholder activism is a critical tool for workers to advance their
interests in the twenty-first century. Workers should have more capital than
they do, more ownership than they do. But, at the same time, they already have
enough through their pension funds to meaningfully bend all-powerful global
capital markets in their direction. Three-quarters of the book are dedicated to
proving that proposition, primarily by telling the stories of these invisible
activists.
That said, the book also offers two critically important
legal and policy takeaways. The first relates to the question of what types of
factors these pension funds should consider in making investments. The second major
takeaway relates to pension reform. There is an extremely well-funded,
comprehensive, right-wing attack on public pension funds in particular that has
been going on for some time. That campaign, financed by the Koch Brothers, the
Arnold Foundation, and others, aims to break up these pension funds and convert
them into tens of millions of individually managed 401ks or the like. If
successful, that will kill the activism described in the book. Labor’s
shareholder activism is dependent on the existence of large, pooled sources of
workers’ capital, like the California Public Employees’ Retirement System ($350
billion in assets) or the California State Teachers’ Retirement System ($225
billion) or New York City’s pension funds ($190 billion). Convert those into
individually managed accounts, and these funds become like the rest of us 401k
holders, atomized and unable to protect ourselves. I analogize a pension fund to
a union, and a 401(k) to “right to work”. A pooled pension fund speaks with a
powerful collective voice. I believe the subversion of that voice is a key
aspect of pension reform. Such reform is not just about the question of
underfunding. It is a form of economic voter suppression designed to silence
working-class shareholder voice; voice that is critically dependent upon being
collective.
In making these arguments, I also aim to overcome the
objections of some ideological purists who view labor’s capital as inherently
compromising. Does labor’s capital occasionally lead labor to act against its
own interests? It certainly does. I offer examples of this and address them
squarely in the book. But to me, to abandon labor’s capital because of these
conflicts is like abandoning powerful unions because they grew too close to the
power structure, or, giving up on electoral politics because of its inevitable
compromises. The key is to master these problems through training and raising
awareness that can tip the balance in labor’s favor.
None of this means that labor’s capital is the solution to
all of labor’s problems. Traditional tools like legislation, litigation,
electoral politics, and organizing still matter. But in my view, capital
markets are the most powerful force on the planet. The facts on the ground are
often established there. By the time you’e getting to your election or
legislative drive, it is often too late. Worker voice needs to be heard in the
markets themselves, and these funds are the mechanism for projecting that
voice.
[T]he Holocaust transformed our whole way of thinking about war and heroism. War is no longer a proving ground for heroism in the same way it used to be. Instead, war now is something that we must avoid at all costs—because genocides often take place under the cover of war. We are no longer all potential soldiers (though we are that too), but we are all potential victims of the traumas war creates. This, at least, is one important development in the way Western populations envision war, even if it does not always predominate in the thinking of our political leaders.Carolyn J. Dean, Interview of February 01, 2011
The dominant premise in evolution and economics is that a person is being loyal to natural law if he or she attends to self’s interest and welfare before being concerned with the needs and demands of family or community. The public does not realize that this statement is not an established scientific principle but an ethical preference. Nonetheless, this belief has created a moral confusion among North Americans and Europeans because the evolution of our species was accompanied by the disposition to worry about kin and the collectives to which one belongs.Jerome Kagan, Interview of September 17, 2009
In a nutshell
The Rise of the Working-Class Shareholder tells the story of labor’s unheralded shareholder activism. That activism weaponizes the $3 trillion in labor’s capital, which is vested in the pensions of state and local government workers and unionized private sector workers, to advance the interests of their worker-contributors. The activists who do this work are almost totally invisible. But it is crucial to tell their story now, in a bleak time for labor unions and other working-class institutions. The purpose of the book is not to cheer up otherwise depressed labor advocates, though it does offer a rare glimpse into activists fighting and winning assorted confrontations with companies, hedge funds, private equity funds—all, using shareholder power. In telling their stories, my aim is to demonstrate how and why shareholder activism is a critical tool for workers to advance their interests in the twenty-first century. Workers should have more capital than they do, more ownership than they do. But, at the same time, they already have enough through their pension funds to meaningfully bend all-powerful global capital markets in their direction. Three-quarters of the book are dedicated to proving that proposition, primarily by telling the stories of these invisible activists.
That said, the book also offers two critically important legal and policy takeaways. The first relates to the question of what types of factors these pension funds should consider in making investments. The second major takeaway relates to pension reform. There is an extremely well-funded, comprehensive, right-wing attack on public pension funds in particular that has been going on for some time. That campaign, financed by the Koch Brothers, the Arnold Foundation, and others, aims to break up these pension funds and convert them into tens of millions of individually managed 401ks or the like. If successful, that will kill the activism described in the book. Labor’s shareholder activism is dependent on the existence of large, pooled sources of workers’ capital, like the California Public Employees’ Retirement System ($350 billion in assets) or the California State Teachers’ Retirement System ($225 billion) or New York City’s pension funds ($190 billion). Convert those into individually managed accounts, and these funds become like the rest of us 401k holders, atomized and unable to protect ourselves. I analogize a pension fund to a union, and a 401(k) to “right to work”. A pooled pension fund speaks with a powerful collective voice. I believe the subversion of that voice is a key aspect of pension reform. Such reform is not just about the question of underfunding. It is a form of economic voter suppression designed to silence working-class shareholder voice; voice that is critically dependent upon being collective.
In making these arguments, I also aim to overcome the objections of some ideological purists who view labor’s capital as inherently compromising. Does labor’s capital occasionally lead labor to act against its own interests? It certainly does. I offer examples of this and address them squarely in the book. But to me, to abandon labor’s capital because of these conflicts is like abandoning powerful unions because they grew too close to the power structure, or, giving up on electoral politics because of its inevitable compromises. The key is to master these problems through training and raising awareness that can tip the balance in labor’s favor.
None of this means that labor’s capital is the solution to all of labor’s problems. Traditional tools like legislation, litigation, electoral politics, and organizing still matter. But in my view, capital markets are the most powerful force on the planet. The facts on the ground are often established there. By the time you’e getting to your election or legislative drive, it is often too late. Worker voice needs to be heard in the markets themselves, and these funds are the mechanism for projecting that voice.