Working Capital: The Power of Labor's Pensions (ILR Press books) (Hardcover)

by Leo W. Gerard (Foreword), Archon Fung (Editor), Tessa Hebb (Editor), Joel Rogers (Editor) "At $7 trillion (Anand 1998), pension funds are the primary drivers of today's financial markets in the United States and around the world..." (more)
Key Phrases: United States, Solidarity Fund, South Africa (more...)

Product Details

• Hardcover: 273 pages
• Publisher: Cornell University Press (April 2001)
• Language: English
• ISBN-10: 0801439019
• ISBN-13: 978-0801439018
• Product Dimensions: 9.3 x 6.4 x 1.1 inches
• Shipping Weight: 1 pounds (View shipping rates and policies)
• Average Customer Review: 3.5 out of 5 stars See all reviews (4 customer reviews)
• Amazon.com Sales Rank: #1,406,718 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

1 of 1 people found the following review helpful:

5.0 out of 5 stars Very pro-shareholder analysis of a potential better future, October 19, 2001

By A Customer

I wonder if the reviewer from Illinois read the same book I did. If so, I think that he must have read it exclusively to knock it down. He takes things completely out of context. I found this book to be very interesting, and very pro-shareholder power. It raises significant questions on who makes the money decisions and how they make them, and offers some intriguing possibilities for the future.

Sometimes it seems like companies have become focused on "shareholder value" as if shareholders weren't human beings with many interests. For example, "shareholders" want airlines to keep prices down, to pay security checkpoint staff the bare minimum ... unless, of course, the shareholder is also flying on the airplane, in which case, they might feel that security is a more important value than thrift.

Some of these articles are a tad dry and academic, but the points they raise are really important. If you're a pension fund trustee, or a pension recipient, I urge you to read this book.

5 of 7 people found the following review helpful:

5.0 out of 5 stars Do Pension Funds Benefit Workers?, May 28, 2001

By A Customer

Imagine your own money being used to throw you out of a job and deny you a decent living. Millions of workers don't have to imagine this, it is a reality, as the pension funds they have bargained for in union contracts can be used to buy up their firms and throw them out of jobs.

Most people, including workers with defined benefit pension plans, don't realize how little control workers have over their pension money. This is an important issue, since pension funds currently have more than $4 trillion in assets. Pension funds are powerful actors in current financial markets.

However, the control of pension fund assets rests, not with the workers, but rather with the same sort of financial managers who run other types of funds. These financial managers often use pension fund assets to finance the type of speculative short-term investments that they make with other funds. The impact that this behavior might have on the jobs of workers for whom they are investing is not a concern for pension fund managers.

As the papers in this book make clear, this lack of concern is partially for legal reasons - the law requires that pension fund managers act in the interest of the pension plans participants and beneficiaries. But part of the failure of pension fund managers to consider the impact of investments on workers is due to fears and prejudices that go beyond the legal requirements implied by this responsibility.

For example, many funds engage in extremely risky investments at present. Investing in East Asia earlier in the nineties was extremely risky, although many pension fund managers did not become aware of this fact until after the East Asian financial crisis. Similarly, buying stock on the NASDAQ in the late nineties was also quite risky. In spite of the risks involved, hundreds of billions of dollars in pension fund money flowed into East Asia in the early and mid-nineties, and into the NASDAQ in the late nineties.

As this money flowed out of the country or into the tech economy, thousands of smaller and medium sized manufacturing businesses were being starved of capital. The pension funds offered these firms no help. Even though many of these businesses employ unionized workers at decent wage rates, the managers of pension funds had no inclination to use the resources under their control to try to save workers jobs.

Pension funds have also done little to prevent the top executives of major corporations from raiding the companies they manage to pay themselves salaries far out of line with what executives receive elsewhere in the world. The representatives of shareholders, including pension fund managers, have looked the other way as top corporate executives decided to bless themselves with salaries running into the tens, or even hundreds, of millions of dollars annually. These salaries bear no obvious relationship to performance by any measure. As one of the articles in this book notes, exorbitant executive salaries can be viewed as a tax out of workers' paychecks - the impact is the same, less money for wages.

Alternatively, these salaries can be seen as taking money which rightfully belongs to the shareholders. But, for some reason, the $50 million salaries of CEOs never seem to raise as much ire among investors as the concern that autoworkers or steel workers may be overpaid by $1-$2 and hour.

This book shows both how pension funds have failed workers and also how some innovative managers are trying to use pension fund assets to create good paying jobs. It gives examples of success stories, where pension funds have been invested ways that build communities and also provide high returns. These success stories could provide a model for pension fund management in the future.

3.0 out of 5 stars Interesting, January 17, 2003

By	Don D'Cruz (Melbourne, Australia) - See all my reviews (REAL NAME)

Although I do disagree with the direction that contributors' conclusion, this is an interesting and important little text and well worth a read.