Monday, 18 February 2008

No more "greedy shareholders"

If there is one term that is routinely used by many lefties that I really hate it is "greedy shareholders". It annoys me for a number of reasons.

1. It's usually symptomatic of a complete failure (or reluctance?) to grasp the real nature of share-ownership in the UK. Rich individuals only count for a relatively small slice of share-ownership in the UK these days, and this has been the case for quite some time. Most shares are held by institutional investors like pension funds and insurance companies which are investing our money, not their own. So "greedy shareholders" include, for example, local authority pension funds.

2. As a result of the above it leads to a failure to understand who does what in the investment world, and as such how we might be able to organise it better. When lefties have a pop at "greedy shareholders" they are usually trying to attack fund managers or more recently hedge funds. But when fund managers or hedge funds are acting "greedily", who are they doing it for? Often pension funds - typically with TU members as trustees - who have said to them "go and get us X% return" without saying "but don't generate that return by doing/allowing/encouraging [insert chosen unethical practice here]".

3. I dislike the use of emotive terminology when trying to explain something, though I fall into the trap myself sometimes. This isn't just the moralistic element of it, I actually think it lets people off the hook. If your stated view of "shareholders" is that they are "greedy" you are making a criticism of their motives, not their thinking. They are simply "bad" people. But if you engage with what they are doing, rather than simply having a pop over your moralistic assumption why they are doing it, you have, in my view, more chance of tackling them head on.

I guess the last point is the most important. Although we on the Left are very quick to take the p*** out of the black and white worldview of, for example, the War on Terror (can we still call it that?) we often exhibit exactly the same tendency when discussing business and finance. The term "greedy shareholders" is demonstrative of mindset where there is an obvious and inherent "wrongness" on the part of an opponent. If only it were so simple that those of other viewpoints were clearly and objectively "wrong" and that their persistance in advocating an obviously flawed position was the result of a personal moral failing.


Charlie Marks said...

I can't say I've ever used the term "greedy shareholders" - for exactly the reasons you outline. I can't recall having heard it said, maybe i don't pay attention to these things.

As for wrongness - I do think it is wrong to be a shareholder in something you don't contribute labour towards. But the biggest sinners are the ones that concern us as socialists. I know a few working people who in retirement were instructed to invest in a share portfolio but didn't get anything out of it.

Tom P said...

I've seen more than one general secretary use the term over the past year or so I'm afraid!

I can't agree with you on the second bit. I think it would be very risky to insist that people only held shares in companies that they work for. Unfortunately that was the case at Enron where the company pension scheme was stuffed with the company's own shares. Hence they lost their jobs and their pensions.

More broadly I think diverse share-ownership is actually a good way to ensure that everyone can benefit from economic growth.