Half of US-owned US equities are in the hands of retirement funds.  Does that change your perspective on the stock market?

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141 thoughts on “Forbes post, “Elizabeth Warren Wants To Cut The Value Of Your Retirement Account”

    1. I have to agree with Ms.Weintraub. For an actuary you have a zeal for hyperbole. This headline could have just as easily read: “Elizabeth Warren endorses Business Round Table’s new definition of purpose of corporation” which is advocating for a change in the no holds barred absolutist zero sum gain mentality which is justified by the singular goal of “Increasing Share Holder Value” The new statement by that organization, which states: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders,” – could itself be restated more clearly: “We have created a monster in pursuing greed at all costs, which threatens the stability of the Democratic/Capitalism model which has served the corporate entities created in the 19th and 20th Centuries so well as to create massive gaps in wealth distribution. We need everyone’s help in reigning in this monster, starting with Trump.”

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  1. I think anyone that votes for is just hanging themselves by the neck..Dont let her do this .they take that from our paychecks.its ours…cant barely live on what we Boomers get now

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    1. That would probably be due to your reliance on a 401K instead of a pension plan. Or the fact that you probably don’t have a 401 K…like the majority of working Americans.

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  2. Every decade at some point the stock market loses 30% + of its valuation anyway (twice in the last decade), let’s figure that into the equation before engaging in hypothetical gum gnashing about the fall of the markets because we would dare to have workers spoil the plutocrats party with some representation. The fact is since 1980, when the markets slowly began to disgard the restrictions that were put in place after the GD & Wall St Crash, they have been far more volatile anyway. God forbid you would have the average worker sitting on a board and questioning senior executives as they rewarded each other with massive stock option purchases, which have rewarded them far beyond anything they actually bring to the table and help them engage in short term thinking to boost SP at the expense sometimes of long term planning for the good of the company. The Dax in Germany maybe 25% less valuable but German workers are; better paid, have pensions unlike most US companies these days as well as investment plans, have 4 or 5 weeks paid vacation and generally have higher output because one assumes they are more contented.

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  3. This is shoddy work. Statistics show that most people don’t have a 401k, or have almost no money in it. So yes, there may be some unicorns who aren’t in the wealthiest 10% who are preparing a substantial portion of their retirement to come from a 401k. But overwhelmingly, this only affects people with so much money that it won’t affect their standard of living.
    It’s also shoddy because it doesn’t consider the effect on worker benefits if the workers – the very people the article tries to claim it is protecting by raising this issue in this way – have a voice in worker benefits, outsourcing, and other issues that directly affect the worker’s quality of life.
    But I guess if you have no real solutions of your own and you don’t really understand the issues – or if you are in the wealthiest 10% and you don’t care about the working class, then this article is fair and balanced… towards and for you.

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  4. Employees are employees for a reason. If employees had anything to contribute they wouldn’t be employees. Employees share of the profits come in their wages. Employees are paid in accordance to their value and contribution to the owners. Employees are expendable and can can be replaced at owners discretion. Employees can also leave by their own choice if they can benefit themselves more elsewhere.
    The Social Liberal Left wants to take away private ownership and control and put it in the hands of the Government. There would be so much Government regulation that employees would be the pawns of Government control. Elizabeth Warren wants to destroy Capitalism and replace with Communism under the disguise of giving something free to the working class.

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    1. “Employees are employees for a reason. If employees had anything to contribute they wouldn’t be employees.” Wow…Ever thought about a career in Human Resources….I hear that Koch Industries is looking for the skills you bring to the table.

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      1. Just because the answer doesn’t meet your standard of tactfulness doesn’t make it any less true. It always amazes me how people think business decisions should be made by anyone (employees, government, etc.) except the actual owner of the business.

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    2. An incredible number of fallacies in the original article and in this reply. To Dennis, you assume that the people actually doing the work in the company to generate the valued product or services are too ignorant to make decisions on sales that typically they purchase and consume in one fashion or another, given 75% of our economy is driven by consumption. Many board members and senior leaders are exceedingly out of touch with the people buying the services and could use a reality check. Have seen several examples of this firsthand up close. To all: Two, our companies are part of our society….we are not outside and apart from it, and our decisions impact all of us. We also benefit from our physical, governance, and communications infrastructures that the govt and Americans pay for, build, and maintain. To claim that we should only maximize the value to those who own stock directly in the company is shortsighted BS economic theory that we swallowed hook, line, and sinker….yet at the same time, decry economists for being out of touch. Three, the article focuses on a small sliver to roust readership and response. How about addressing the differences in US legal and fiscal policy that artificially inflate the worth of our firms through corporate stock buy-backs, extensive M&A, and tax evasion. Four, many of these US policies are geared toward (and by) large corporations, and we as a country have cyclically repeated the error of allowing too much power to consolidate in their hands. Our forefathers envisioned a system of govt checks and balances to minimize man’s natural tendency to overreach in search of power ..this common sense is what has been lacking for years when it comes to the beliefs upon which our current economic system rests.
      That in essence is what people are seeking…checks and balances and a focus on doing what is good for America and Americans, not just the uber wealthy and powerful.

      If the best argument you can summon is to beat the fearmongerers’ drum, that “those people” want the govt to own everything, you are blinding yourself to cogent issues even senior US business leaders now recognize.

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    3. I am an Engineer/employee with 8 patents that have yielded over $10 M to my employer. I don’t feel like a replaceable pawn. I appreciate it that my company contributes generously to the communities where employees work. I have a 6-figure income and have no need for a 7 figure income. Yet, I see forces at work that are driving corporate management toward less expense and more profit despite a near 100 % increase in stock value over the past two years. I believe the CEO finger needs to be on the pulse of ALL stakeholders. Maybe not 40% of the BoD, but certainly a proportionate consideration.

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  5. “if 40% of board members no longer represent the shareholders”

    This might be the biggest flaw in the article. It assumes, wrongly, that employees are themselves not vested in the company they work for and/or do not have any interest in the financial health of the company. At best, the author is taking a huge swipe at employees in order to suggest that the only people who could possibly have the company’s and shareholders’ interests at heart are corporate board members.

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    1. Yes the employees on the board have an interest in the company but it would set up a big conflict of interest for them. A short sighted employee board member might make decisions that have immediate benefits for the employees while harming the long term prospects for the company.

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      1. This presumes that employees are all alike, Stepford Wives, if you will. Employees are no more fungible than African Americans, women or even men, for that matter.

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  6. “if 40% of board members no longer represent the shareholders”

    This might be the biggest flaw in the article. It assumes, wrongly, that employees are themselves not vested in the company they work for and/or do not have any interest in the financial health of the company. At best, the author is taking a huge swipe at employees in order to suggest that the only people who could possibly have the company’s and shareholders’ interests at heart are corporate board members.

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  7. What retirement account?

    Only the rich or those who had jobs have retirement accounts. The rest of us poor and middle class are working until we drop. It’s been that way since capitalism found out economic slavery was more effective than direct slavery – when you didn’t need your slaves any more or want to feed them, you could fire them back into the pool of slaves for others to pick up and continue to exploit.

    No, sorry, the poor are going to vote for anyone who can deliver on a BASIC INCOME and ends this nonsense of living like we’re still in the middle ages or wild west, where it’s every man for themselves and the state only exploits and punishes you, but does not take care of the members of it’s own soceity.

    The rich have nothing to worry about. The rich have so much gob stopping money any dent they experience won’t impact their “lifestyle” at all.

    I’ve lived on less than $500 a year for as long as I can remember, and mostly it was credit cards that kept me alive.

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  8. W. Edwards Deming (father of the quality movement) cited in his ‘7 deadly diseases’ ‘short-term thinking,’ from CEOs & boards only looking 3 months out. Many of the USA’s current predicaments have resulted from this. B Corps get it. CEOs are legally obligated to shareholders… not customers or employees. That has proved to be a deadly disease for the USA.

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  9. I think Warren is on the right track, but the move to include the rank and file should be more carrot than stick. Enron never would have happened with employee knowledge before the fact.

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    1. Yes but Enron is kind of a Black Swan. Their fraud and deception was so thorough that some of the brightest minds in business and finance did not figure it out for an eon.

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  10. The concept of serving the public interest is hardly a new one. At the outset of the industrial age, US trade law required that ANY business that wished to incorporate, had to first establish and prove that it’s esrablishment would in fact serve the public good. As for the shareholders losing a portion of their control over the company, I would take strong exception to that concern as well. The stockholders have the right to their dividends, nothing more. And with regard to the net effect on workers retirement stocks (401k’s), the notion that their values will fall by 25% is speculative conjecture at best, and economic dog whistle fearmongering at worst. This piece was written by this “Actuarial” as a hit piece on Elizabeth Warren, and as such should be treated with the scrutiny that we would apply to any other claims of such a dubious nature. I’m not saying it’s outright propaganda, but I do know that the math involved is shaky at best.

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  11. I’d gladly trade a 25% of my retirement account value at the end of my life for the quality of life improvement German workers seem to enjoy during their prime years building their families.

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  12. It seems like the entire crux of the headline is based on this one sentence: “Based on these differences, Yglesias writes, “share prices could fall by 25 percent.”
    That doesn’t seem like much evidence with which to condemn Warren’s plan. As others have pointed out, it ignores many other factors.

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    1. The statement about ownership of stock being the wealthiest people is intentionally misleading. Retired public employees retirement systems, at state and local levels, are heavily invested in stock market, and, due to states, cities, counties, and other government entities often not contributing the monies mandated by legislation, some of these retirement systems are barely solvent. A 25% loss would bankrupt many of them.

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  13. I find Jane’s critique of the Warren proposals regarding proposed public policy action as it relates to corporate governance and retirement accounts to be almost entirely ignorant of or willfully dismissive of some very important facts and questions. So I will provide a list of these here.
    When speaking about the role labor should play in corporate governance and its possible impact on shareholder value one Jane ignores some very important facts:
    1. US economic productivity has increased dramatically over the past 30 years, yet wages for labor have remained relatively flat. Are we to accept that labor has had little or no role to play in these productivity gains and therefore the hand of the free market is right not to have had wages increase. I would like to hear the argument here.
    2. Public policy over the past 20 years has limited and restricted the power of unions and labor. Is Jane in favor of policies that strengthen and expand the hand of labor in the market? If not increasing labors influence on the boards of corporation seems like an approach worth considering.
    3. Labor has made many an array of concessions relating to total compensation in many industries (see auto, steel and coal) and yet when business improves these corporations seem unwilling to pass on a portion of these increased profits to labor (see current auto strike). This would seem to indicate an imbalance in the “free” marker where investors, management, labor and consumer are all supposed to exert real influence.
    4. I am curious to know what Jane’s position is/was on TARP and the auto bailouts in 2007-2008. Should we as a country socialize corporate losses and privatize profits. Remember that although all the TARP money was paid back the loss in home equity and salary to labor who were caught in this fraud induced housing downturn was never paid back and today countless numbers of labor have not been made whole with respect to these losses. Do the banks and corporate america get a pass on this vert negative impact on net worth of labor.
    5. Does Jane think it is good public policy for the penalties coporations pay for having an under funded pension plan, if they have one at all, costs more than the cost of borrowing money against the pension plan….thereby providing an incentive to borrow against and bankrupt guaranteed pension plans as been done repeatedly in corporate america without the knowledge of labor until it is too late? Maybe labor representation on the borad of directors would be of use in these cases.
    6. Does Jane agree with a regression social security tax system that due to a cap at approximately $130000.00 we have a situation where labor pays up 3% of their wages in SS tax while those that make an income of 260000 pay only 1.5% with the % of tax getting smaller as your income increases?
    7. Due to a separation in wealth and more of the economic gains going to top wage earners, is it good public policy to have SS tax capturing only 78-80@ of all income, because of the cap, or should we modify the cap to at least allow SS tax to capture 93% of all income as was the case in the 1970’s?
    8 Jane refers to the German system as an example of where corporate boards have labor at the table. Where is the data showing this is bad. Are retirees in Germany worse of better off on average compared to the US? Last I checked Germany had the strongest economy in western Europe, this would seem to indicate including labor on corporate boards is not destructive of share holder value.
    9. Should we continue to tax investment income at a lower rate tan we tax earned income? Is investment income of greater societal value than earned income? If the answer is yes, and since Corporations in the US have literally free access to public paid for infrastructure, public paid for courts that uphold the rule of law in the market place, a publicly funded best in the world University Research System that serves as an innovation engine for money making ideas that flow relatively freely between the public and private sector compared to most other 1st world economies, should we provide every citizen some equity stake in the private profits of corporate america, (see Alaska and pay back to Alaskans potion of oil and gas revenue, see publics role in corporate bailouts).

    The main point being that the proposals put forth by Elizabeth Warren, may in fact slow the growth of investment income, however to focus entirely on this effect is quite myopic when one considers the at time grotesque structural inequalities in the US economy and their demonstrably negative impact on the wealth and well being of labor working or retired in the current system. I would assert, public policy debates in this area need to take a larger and longer term view of how we structure the US economy, including corporate governance and tax policy on investment income in a way that expands the growth of wealth of as many people as possible over time, rewards and values labor as much as the investor class and uses metrics that do not just measure stock market growth as the only endpoint, but considers the considerable cost to the system when labor cannot afford proper healthcare, cannot afford advanced education, cannot provide for basic needs in retirement and seemingly are the hardest hit and least compensated during times of economic downturn, Not everyone can or will own a “McDonalds”, in fact as an economy we don’t want everyone to be a buisness owner or entrepreneur, we need people to “flip the burgers” so that business can operate, compete and thrive if they are innovative enough and well managed. Labor plays a large role in this positive outcome and it is way past time we think creatively about how to compensate labor for the value add.

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  14. This is pure speculation ! Probably another capitalist trying to scare people into believing anything that holds the uber rich accountable and levels the playing field is going to hurt the little guy

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  15. With Government intervention, regulation and political correctness the boardrooms would be so restricted it would put most corporations out of business or in full control of Government is what their intention is to start. Communism.

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