Pension funds as progressive activists

William Greider:

The New Politics of Capital (or, finally some good news!)

The best evidence that the reform-minded pension funds are onto something--maybe something big--is the fierce and nasty counterattack launched by business and financial interests. Last spring, the Business Roundtable, the US Chamber of Commerce and the American Enterprise Institute began a simultaneous barrage of complaints and name-calling accusations (faithfully echoed by the Wall Street Journal and Forbes). State pension officials, they warned, are departing dangerously from their fiduciary duties, putting "social issues" first and becoming pawns of organized labor. AEI's economic-policy director claimed CalPERS (the mammoth California Public Employees' Retirement System) "is abusing the public trust in a manner as serious and grave as any I have seen. They have a pool of money controlled by politicians and they are using that pool to strong-arm changes in targeted companies."

CalPERS is the largest pension fund in the nation, holding $180 billion, and it is indeed trying to "strong-arm" companies--scores of them--into making reforms. Angelides has become a favorite target of the corporate critics--and a visible point man for pension-fund activism--because he sits on the boards of both CalPERS and CalSTRS (California State Teachers Retirement System), the country's second-largest, with holdings of another $125 billion. Angelides has pushed both funds to adopt a whirlwind of reforms--dumping tobacco stocks, blacklisting ten "emerging markets" that ignore international labor standards, redeploying capital to neglected sectors like inner-city redevelopment and innovative environmental technologies, and, above all, peppering scores of corporations, banks, brokerages, financial markets and federal regulators with critiques and demands for change.

Angelides has only one vote among the numerous board members at each pension fund, but he regularly prevails because his partner in reform is organized labor. Sean Harrigan, the regional director of the United Food and Commercial Workers, was, until very recently, the CalPERS board president. Alert elements in labor--unions led principally by the Service Employees (SEIU) and State, County and Municipal Employees (AFSCME)--are closely involved, mobilizing grassroots support and lobbying the policy-makers. Harrigan and Angelides have collected a lot of enemies, one might say, in all the right places. "The old holders of capital--the old status quo--are very nervous about this discussion of capital and the larger context of what's good for the economy," Angelides warns. "They don't want these questions asked. They don't want the old order to be changed. They want to control capital and they want to control it to their benefit, not to the larger economy's."