Friday, February 25, 2005

 

Creeping Socialism

About a month ago, Oberon at Manifest Destiny Brewing hit us with a post that asks, "Does Bush's Social Security Plan amount to public governance of the top 100 publicly held companies?" It's actually a very good question, and one that I've not seen raised elsewhere.

So with my eyes now opened to the threat, I noticed in the past week that we're already seeing of bit of this:

The California Public Employees Retirement System, or CALPERS, is planning to put new "green" pressure on automakers, particularly General Motors Corp. and the Ford Motor Co. CALPERS now says it will confront the automakers publicly through shareholder resolutions that challenge whether the auto giants are serious about helping reduce the threat of global warming.

Does that sound scary? It should. What you're seeing is the exertion of government policy on corporate behavior via means outside of traditional legislation. Effectively, you've got a group of 13 people trying to dictate the policy of multinational corporations. That's a far cry from, say, the typical Washington regulatory agency, which is in theory somewhat connected to the intentions of the American public.

How are the members of CalPERS board selected? Beats me. I hit their website and couldn't really get a clear answer:

CalPERS is administered by a 13-member Board of Administration. Members are either elected by members of the System, appointed, or are designated by law to be on the Board.

All I get from that statement is that I didn't have any say in the matter.

Interestingly enough, previous criticism of CalPERS focused on their bias towards unions:

Eleven of CalPERS' 13 board members are union members, union officials or government officials who received or solicited contributions from unions. Ironically, CalPERS, through its vote-withholding strategy, has been a leading proponent for more independent directors on corporate boards.

Their support of independent BoDs isn't the only piece of irony in this story. Who's been one of the strongest forces keeping the Democrats from pushing forward with stricter CAFE requirements? That's right - the UAW. Current conventional wisdom has the American OEMs building less-efficient vehicles than the import competition* Since CalPERS is interesting in addressing global warming via a decrease in carbon dioxide emissions, and since a reduction in CO2 is a de facto increase in fuel economy, in essense CalPERS is coming in direct conflict with the stated wishes of the UAW - a rather influential union, even in its current state.

It's my opinion that this effort by CalPERS to sway the actions of the companies that they invest in is not far removed from fascist socialism, and that scares the hell out of me no matter how good their intentions may be. And it's only going to get worse if we see a widespread movement towards "personal savings accounts". If the government is picking which stocks you'll be allowed to invest in, do you really think they'll be able to keep their hands out of the affairs of those companies "lucky" enough to make the cut? The answer should be obvious - and scary.

*There's two complicating factors here. In terms of passenger-car fuel efficiency, it's unlikely that the American OEMs are actually at a significant disadvantage. It is definitely a factor when looking at truck economy, however. Also keep in mind that the issue doesn't really come down to domestic vs. import, but rather union vs. non-union shops. Even if a car is built in the US with heavy domestic content, the UAW primarly cares whether it was built with union labor or not.

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