And will Congress help them?
Yesterday in the NYT, a former Vanguard chairman stressed the necessity that shareholders, in the wake of Citizens United, really begin to assert themselves when it comes to corporate political speech.
It's not surprising this kind of comment comes from Vanguard -- it, unlike other private fund managers, operates more like a credit union than like your typical wall street investment bank. Not to do a corporate plug but, if you're lucky enough to have money to invest for retirement, Vanguard, unlike most money managers, is more likely to take your concerns seriously.
Anyway, institutional investors, using their new powers of proxy access, can submit bylaw proposals requiring, for example, that corporations seek the approval of a majority of shareholders before contributing corporate assets to political campaigns. This sort of reform pulls the rug out of under (at least partially) Citizens United -- in the end, it's the actual people who decide what kind of speech they make.
The problem is, of course, is that it's difficult to get your Fidelity Funds investment manager to get off his tush to represent shareholders actively. Either he doesn't care, has too short term of an an attitude, or is more worried about pissing off the same corporate management he relies upon to hire him to run its employees' retirement funds.
And, according to this NYT piece, these sorts of managers represent about 70% of American shareholdings.*
But not all institutional investors are so lazy. Public union pension funds regularly submit bylaw proposals to change corporate policy.
So what makes public union pension funds so different?
First: they're not governed by the part of Taft-Hartley that requires that employers get equal (or greater than equal) say on pension fund investment practices. Needless to say, this makes it a lot easier for public union funds to swing their weight around on the policies and practices of the companies in which they invest.
Second, public union employees tend to be more aware of where their collective money's going.
These observations give us some simple how-tos to encourage the shareholder franchise in American politics.
First: repeal that part of Taft Hartley.
Second: Promulgate more robust disclosure laws that require fund managers to reveal to their beneficiaries what they're doing about political spending -- and other investment policies. This movement is already well underway in Europe.
Third (and a little pie-in-the-sky): start educating people regarding the role corporations play in their life -- if they realize that their choices are equally, if not more constrained, by the actions of companies as they are by the actions of government, perhaps they'll take their franchise rights more seriously.
* Note: no one, as far as I can tell, has ever done a serious and comprehensive study on the type and size of various different kinds of investors, both institutional and individual, what kinds of companies they invest in, and what kind of policies they pursue in connection with their shareholdings. And I've already asked the folks at OECD. Any ambitious grad students out there???
