The rigger's log

Corporate managers act as if they’ve forgotten sometimes, but shareholders are the owners of companies. As owners, they directly select the the Boards of Directors who hire and oversee management. Shareholders may want to give management orders about corporate behavior. In practice, shareholders are a diffuse power, with indirect control, and management usually follows their own agenda.

Shareholder resolutions provide a way for a group of shareholders (owners) to put a directive to a vote by all the shareholders.
Among other uses, this is one of the ways that Socially Responsible Investors push management to make the companies behave more responsibly.

Ceres leads a national coalition of investors, environmental organizations and other public interest groups working with companies to address sustainability challenges. Part of their effort is to organize shareholder resolutions. Some pass, some don’t, but they all send a message to management about shareholders’ desires.

Click here to read the article:
Ceres Shines a Light on the Power of Shareholder Proxy Votes

Bill Moyers interviews super-bright Pulitzer Prize-winning New York Times reporter and columnist Gretchen Morgenson on the banking crisis and flaccid congressional response.

“When I was living through it, watching it in terror literally at my desk at The New York Times because it really was on the precipice, there we were, I thought to myself, “We will address this because this is so frightening and so scary and so damaging to this country.” And I thought we will address it because this is the big one.

This is the big crisis that we’ve been leading up to. Long-Term Capital Management didn’t really destabilize the system, the internet bubble didn’t really destabilize the system, this was the big one. And yet the response was so lame and so ineffectual that it absolutely will happen again.”

Gretchen Morgenson on Industry Influence from BillMoyers.com on Vimeo.

You can read the transcript here.

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If you’re exposed to political economic discussions at all, you’ve probably heard the dispute about whether government spending can create jobs. The policy implication is whether government should spend more to boost the economy out of recession.

Studying the Great Depression, economist John Keynes proposed that during a deep recession with high unemployment government could speed the recovery by a fiscal (budgetary) policy of borrowing and spending. When the economy is down, the government is still a trusted borrower, while individuals and most companies are not. Further, the government can invest in infrastructure and other long-term projects, while workers are likely pinching pennies or worse, and companies are rationally holding back from investment while their existing factories are partly idle.
During several recessions, this fiscal policy of government deficit spending has been tried, and for many cycles over many years was considered successful.

In recent years, the political discussion has been re-focused more on shrinking government, shrinking taxes, and limiting government recession response to monetary (central bank) action, if that. One pivotal argument against Keynes’ theory was that government borrowing for stimulus would compete with private borrowing for productive investment.
Particularly in this most recent recession, which we entered in 2007 with an unprecedented large government debt and annual deficit, one political faction has called for deficit cutting (fiscal consolidation) above all other economic goals. This theory explicitly contradicts Keynes.

Jonathan Portes, Director of Britain’s National Institute of Economic and Social Research, and previously Britain’s Chief Economist at the Cabinet Office, has written an excellent summary of the interpretation and application of Keynes’ ideas today. It’s very well written and only a little bit technical, so if you’ve read anything about economics you should enjoy it.

A quote, itself quoted from recent comments from the International Monetary Fund:
‘”Fiscal consolidation typically lowers growth in the short term. …[A]fter two years, a budget deficit cut of 1% of GDP tends to lower output by about 0.5% and raise the unemployment rate by one third of a percentage point.” … “[fiscal consolidation] is clearly a drag on demand, it is a drag on growth”‘

Click here to see the whole article:
Fiscal policy: What does ‘Keynesian’ mean?

Joseph E. Stiglitz, Nobel Laureate and Columbia University economics professor, wrote a thought-provoking article for Vanity Fair magazine. He looks at our recent recession and ongoing recovery from a different angle:

quote:
“The fact is the economy in the years before the current crisis was fundamentally weak, with the bubble, and the unsustainable consumption to which it gave rise, acting as life support. Without these, unemployment would have been high. It was absurd to think that fixing the banking system could by itself restore the economy to health. Bringing the economy back to ‘where it was’ does nothing to address the underlying problems.”

“The good news (in a sense) is that the United States has under-invested in infrastructure, technology, and education for decades, so the return on additional investment is high, while the cost of capital is at an unprecedented low. If we borrow today to finance high-return investments, our debt-to-G.D.P. ratio—the usual measure of debt sustainability—will be markedly improved.”

Click here to see the whole article: The Book of Jobs