PS. Fidelity's vote on Caledonia

No surprise really I guess, but the TUC voting survey reveals that major Tory funder Fidelity Investments voted in favour of the resolution at Caledonia Investments' AGM last year seeking authority to... make donations to the Tories. I'm not surprised because Fidelity has numerous links to the Tories, but surely it must call into question the independence of their voting in respect of political donations?

I'll bung up an updated list of voting on the Caledonia resolution once I have all the TUC data at home.

TUC Fund Manager Voting Survey 2008

Press release below, actual text of the report is here, though no PDF yet.

Hard core of fund managers keep their votes secret

A hard core of investment fund managers still refuse to reveal how they voted at company AGMs and unless this changes soon, the Government must use its reserve power to force fund managers to disclose their voting records in a standard form, says a new TUC report out today (Friday).

Fewer than half the funds surveyed (23 out of 49) responded to the TUC's sixth annual survey of fund manager voting, published to coincide with Taking the Long View - the TUC Member Trustee conference 2008. The 45 per cent response rate is similar to last year, but considerably less than in previous years - 68 per cent responded in 2005. Before the TUC started its survey only the Co-operative Insurance Society published its voting record.

This secrecy defies both the Government, which took a reserve power in the most recent Companies Act to enforce disclosure, and the Institutional Shareholders Committee which says that 'public disclosure is generally desirable' and expects fund managers to 'comply or explain' with voluntary disclosure.

The survey reports some progress, with Baillie Gifford, Aberdeen Asset Management and Legal & General making comprehensive disclosures for the first time in the last year. But during the period under review, there was at least one resolution on political party donations and some fund managers refuse to say even how they voted on such an issue of public interest.

Further findings from the fund manager voting survey include:
• Only 18 fund managers provided responses on both sections of the survey - on voting records and policies and processes.
• A further three organisations provided voting records only, taking the total this year to 21. This compares to 25 last year, 26 in 2006, and 28 in 2005.
• A further two organisations provided responses on policies and processes only, bringing the total number this year to 20.
• Around three quarters of survey respondents now make some voting data publicly available.
• Half of the fund managers responding to the survey supported at least 80 per cent of the remuneration resolutions on which voting decision were sought.
• The majority of investment managers who responded are signatories to the United Nations Principles of Responsible Investment.

TUC General Secretary Brendan Barber said: 'There is now a hard core of fund managers who continue to keep their votes secret, despite pressure from the Government, consumer groups and even their own trade bodies. They should remember that this is not their own money, but that of ordinary pension scheme members and other savers.

'Even those companies that do disclose do so in different ways, making it hard to compare voting records. It is much easier to do this in the USA where there is mandatory disclosure.

'The voluntary approach has achieved some progress, but not enough. Unless the laggards get on board fast, the Government will need to use its reserve power and make disclosure compulsory.'

NOTES TO EDITORS:

- The TUC fund manager voting survey 2008 will be available from Friday 27 June 2008 at www.tuc.org.uk/pensionlawregulation. Embargoed copies are available from the press office.

- The poor response rate to the survey does not simply reflect a refusal to co-operate with the TUC survey. Of the 26 that did not respond or take part in the survey, data and information from just three further fund managers was obtained by looking at other sources such as fund websites.

- The response rate was similar to last year, although the target group was slightly smaller this year. Last year 28 investment organisations took part in the survey in some way, with 28 not responding. This year, we received full or part responses from 23 organisations, including two that were not part of the target group, while 26 failed to respond or take part.

- Overall, 45 per cent of the target group provided some sort of response. Last year 42 per cent provided some sort of response. The response is still significantly lower than previous years; 61 per cent provided some sort of information in 2006 and 68 per cent in 2005.

- Taking the Long View - The 2008 TUC Member Trustee Network annual conference takes place on Friday 27 June at TUC Congress House, London. Keynote speakers include: DWP Secretary of State James Purnell, Pensions Minister Mike O 'Brien, Founder of Hermes Equity Ownership Services and author of The New Capitalist David Pitt-Watson, TUC General Secretary Brendan Barber, and CWU Deputy General Secretary and Personal Accounts Delivery Authority Non-Executive Director Jeannie Drake.

- The TUC supports a network of 1,000 trade union trustees. It provides newsletters, events, briefings and training for members of the network and acts as a point of contact and advice for union trustees.

Left List left listless

Terrible pun but the SWP side of the Respect split (which ran as the Left List in the GLA and maoyral elections) has imploded. Its remaining councillors in Tower Hamlets have defected to Labour, along with one of the Galloway gang. I think I may make myself a cup of tea in celebration.

Will be interesting to see how the SWP tries to spin this to its members, and I expect a gracious, understanding post from Mr Gray on the subject...

Inside a union shareholder campaign

It struck me the other day that there isn't (to my knowledge) much info out there about how union-driven shareholder (or capital stewardship) campaigns work in practice, so I thought I'd post up a few thoughts based on my own experience of one such campaign. I'm not naming the company, though it will be obvious enough to anyone familiar with such campaigns in the UK.

The campaign was initiated by US unions to highlight and address the aggressive anti-union activity of the US subsidiary of a large UK-listed company. Representatives of the US unions came to the UK to talk to trade unionists and some key players in the SRI world. Following these discussions the decision was taken to file a shareholder resolution at the company's AGM calling on it to adopt a workplace human rights policy.

There are two things worth saying about this strategy right away. First, it was a slightly different approach to that taken in the US where often unions pair up resolutions - one on a pure governance issue, and another addressing a labour issue. Second, some in the SRI world argued against filing a resolution. Shareholder resolutions are still pretty rare in the UK and mainstream investor tend to see them as a very combative tactic.

I think this second point was mistaken for a number of reasons. Because resolutions are so rare filing one was guaranteed to draw attention to the campaign. Secondly, mainstream institutions that have a problem with resolutions in any case were hardly likely to come out swinging on behalf of trade unions. Thirdly, tying the campaign to a resolution meant it would focus investors' minds - they would have to vote one way or another. If the unions had just encouraged managers to engage with the company over the issue I have no doubt the campaign would have had less success.

Just as an aside it's worth pointing out that the company did try to frustrate the filing of the resolution, but was unsuccessful. In my experience this is not an uncommon tactic in the UK, and one to watch for.

Once the resolution was filed the requisitionists carried out a few different strands of work to push the campaign on. Meetings were held with most of the large investors in the company to set out why the resolution had been filed and what the unions were seeking to achieve. The tone of these meetings varied as you can imagine, with the mainstream houses less sympathetic than those with and SRI capability.

Separately a meeting was scheduled between the requisitionists and other interested investors and the company's senior management ahead of its AGM. It's notable that allthe big SRI houses attended the meeting when it took place. I think there is an important reputational issue here that is worth bearing mind. If SRI managers haave any point surely this is exactly the sort of initiative they should be involved with. They are vulnerable to exposure if they don't participate, and if they consistently vote against CSR-oriented resolutions (as some do...).

The meeting itself started off a little frosty but turned into a rather construction conversation, and the company ended up conceding a fair bit of ground. Although critical of the union campaign it agreed to review its policies and practices. I would say on the basis of the company's shift a number of investors in the room who would have otherwise voted for the resolution subsequently decided to abstain, although this arguably isn't that important in the long run.

At the AGM itself the resolution dominated proceedings. A number of workers from the US subsidiary got up to make statements about anti-union activity. It got a bit rowdy at one point. As much as I like a bit of knockabout campaigning this didn't actually go down well with sympathetic shareholders, and I think that's a message we need to acknowledge. I don't see any problem toning things down a bit to engender wider support.

Responding to the resolution, the company highlighted what it was doing to respond to the evidence of anti-union activity. The resolution itself didn't pass (no-one expected it to) but didn't do too badly, but in any case it had already played its part.

Fast forward a couple of years. I've recently been in touch with one of the unions active in the US subsidiary. They say things aren't perfect, but have got a lot better. The blatant anti-union stance the US side of the business previously took has been beaten back and the company now has procedures in place to address employee complaints about anti-union activity. There are still issues, but the union regards the campaign as a success and has put on members within the company since it started.

A few final thoughts on why the campaign was successful (in my view). Firstly I don't think the UK parent has any fundamental problem with unions, and so had no real opposition to having a relationship with them in the US. I think when they acquired the US business they inherited an anti-union culture that they had simply never sought to address. However this fed concern amongst some investors that the labour issue story was actually a symptom of the failure to properly integrate the US business. So perhaps the company felt it needed to demonstrate that it was in charge of the US operation, and dealing with the labour issue was one way to demonstrate this.

Secondly they probably realised that getting a reputation for being anti-union would probably put them at a disadvantage when pitching for business from organisations with some level of political control. And thirdly maybe they just didn't like the negative publicity and were willing to meet in the middle to make it go away.

Maybe I am wildly wrong, but what I don't think swung the argument at all was the belief on the company's part that they should listen to their owners, or that working with unions is inherently good (or otherwise) for shareholder value. I think this is a fairly fundamental point, since a lot of SRI activity (in the past at least) has been built on trying to find links between good behaviour and financial performance. Whilst I think this kind of work is interesting, it's not a route unions need to go down. You can achieve wins through capital stewardship campaigns without having to make these links.

Responsible contractor policies

A quick plug for John Gray's post on responsible contractor policies. I didn't realise this was on the agenda at Unison's NDC last week, but it's more evidence that Unison is gearing up its capital stewardship programme and all power to it.

This is an idea (like so many!) that was developed by the US unions in their pioneering work on capital stewardship. See the SEIU's explanation of the idea here.

More TUC bits

Firstly, hats off to John for his excellent photomosaic in support of Zimbabwean trade unionists.

Secondly here's the TUC response to the latest consultation on Myners. Sounds good to me:

The TUC is a strong supporter of the original Myners principles, and its submission says the terms of reference for the new IGG should include:

'a more explicit acknowledgement of the role of the IGG in promoting active and engaged ownership in line with the spirit of the original Myners principles. The group's mandate should include the promotion of good governance practice in encouraging shareholders to use their rights and duties as investors to engage with investee companies.'

Finally, the piece below is from today's FTFM. The voting survey should be out on Friday (to co-incide with the trustee conference).

TUC to call for voting records to be disclosed
By Ruth Sullivan

Published: June 23 2008 03:00 | Last updated: June 23 2008 03:00

The Trades Union Congress will renew its calls on the government this week to make it compulsory for UK fund managers to disclose how they cast votes in company meetings.

The call comes as the TUC reveals the findings of a report showing some investment fund managers still refuse to reveal their voting records despite pressure from government, consumer groups and trade bodies.

Fewer than half the 47 institutions surveyed responded. Non-respondents included leading fund managers that do not make any voting disclosures.

"The voluntary approach is not working effectively and unless this hard core of managers that refuse to disclose change their behaviour, the government should now consider using its reserve power and make disclosure compulsory," said Brendan Barber, TUC general secretary. "They should remember that this is not their own money but that of ordinary pension scheme members and other savers."

The companies that disclose do so in different ways, making comparison difficult.

Westminster Village -1 Blogosphere - 0 ?

I wonder whether, now the dust has settled a bit, some of the excitable blog chatter about the David Davis resignation looks a bit daft. Remember, the pitch was that it was the "Westminster Village"* that was out of touch with popular sentiment by reporting the resignation as a reckless act. Outside the Mainstream Media (or MSM in bloggertarian speak) the public was right behind DD in his heroic stance on civil liberties.

What was notable though was that the past week didn't see the Westminster Village change its version of events. We haven't seen the Tory leadership swinging behind Davis, and if you read the political gossip the story has continued to be one of other MPs (on both sides) continuing to paint DD's action as rather questionable. If Andy Burnham hadn't had a pointless dig I suspect that would have become the dominant version of the story this past week.

More notable still has been the reaction out on t'internet. I think the initial shock of the decision prevented immediate responses from critical voices, allowing the pro-DD crowd to dominate. But after a bit of time plenty of critical bloggers' voices have started to appear. This isn't surprising - even a quick glance at DD's record makes it extremely hard to view him as a staunch defender of liberal values.

Most striking has been the discussion of DD's resignation this week on a couple of messageboards I go on every now and then. Err... there hasn't been any. Although there was some initial positive commentary, I get the impression that people are confused and/or already bored by the DD campaign.

This makes sense to me. Although the resignation initially played to the generalised desire to land one on the Government (and the political 'establishment' in general) there are a number of forces acting in the opposite direction. One is the that polling repeatedly shows that the public (rightly or wrongly) isn't opposed to the government's plans. Another is that as soon as DD's other views have been examined in greater detail it becomes much harder to see what the big point of principle is (it's not easy to argue that locking up an innocent person for several months is worse than executing an innocent person). A third is the well-known argument about the nature of the contest. If DD romps home against the monster raving loonies what has he proved?

So as much as I am, like many bloggers, no fan of amateur kremlinologists (copyright Paulie) I wonder whether on this occasion their rather less excitable take on DD's campaign isn't going to prove to be the more accurate one. Maybe the blogosphere (or the right-leaning bit of it at least) called it wrong this time?

* Apparently this doesn't include blogs that are obsessed with political gossip by the way.

Will Hutton and reflexivity

I did wonder again today why I bother reading The Guardian and The Observer at the weekend since the few good bits (Philip French film reviews for example) are usually overwhelmed by navel-gazing interviews with their own writers, celeb blah I have no interest in and some awful hand-wringing reportage. And the business coverage is usually rubbish too.

Still at least today there was a fairly interesting bit in Will Hutton's column:

It is true that competition tends to deliver efficiency and generalised economic benefits. But competition between banks is different. The reason is that, unlike other industries, the soundness of what any one bank or building society does depends on the behaviour of all the others. If they all compete to lend aggressively without any regulatory constraint, that provides home-buyers the plentiful mortgages to buy homes whose prices go up. That in turn makes the original collateral even sounder. Thus emboldened, banks lend again and again.

The result is a credit boom and asset price bubble that no power on earth, except prohibitively high interest rates, can keep in check.

George Soros ought to be pleased since the highlighted bit is his concept of reflexivity in financial markets in a nutshell isn't it? Having ploughed through three of his books, it seems that his main objective in life now is to get the idea of reflexivity taken seriously. Looks like he is getting there.

PS. One other columnist I do like on The Observer is Jay Rayner. Although he's a foodie he's pretty honest about the fact that if we ALL want to eat properly Grauniad readers may have to get over snobbishness about supermarkets and organic produce.

Quick round-up

No time to post anything of length today, so I thought I'd point out some other bits and pieces worth a look.

The TUC has put in what looks to be a very sensible submission to the latest Pensions Regulation consultation. Pension buyouts don't have to be bad news, but they need monitoring.

There's a simple articulation of why shareholders shouldn't accept retention bonuses in the latest issue of Governance here (the article is 'recruit, retain and motivate').

There's an epic takedown of the argument that unions damage productivity here (which is sort of linked to my recent exchange with Going Private).

And the following great quote from Carl Icahn comes from this piece on FINalternatives:

“You go to a board meeting and there are people reading the papers, eating doughnuts and getting their checks for being board members,” he said. “Then the CFO comes out and no matter how badly the company is doing, he can always find some graph with a line pointing straight up and other graphs with red, green and yellow lines that nobody knows anything about. Then everybody packs up and goes to the airport.”

(Hat-tip: Corporate Governance)

GMB on oil speculation

This is a week old, but seeing as they have been mandated by congress to do some research it will be interesting to see what they come out with:

12 Jun 2008

GMB Congress today carried a motion which called upon the Union to expose the inner workings of the international oil market which has led to oil prices doubling in the last year. The Congress expressed concern that sky high fuel prices and increasing food prices was leading to a position where pensioners on the state pension would have to choose between ‘heating and eating’ over next winter unless action is taken to get fuel prices down.

The Congress called upon the Union to undertake detailed studies of how the international energy market is working and what interventions the British state can make to safeguard the interests of UK citizens in the face of unbridled speculation.

GMB Congress also called on the Labour government to ensure that the poorest pensioners have enough money to pay for fuel and food next winter.

Justin Bowden, GMB Senior Organiser for GMB London Region said, “The oil speculators claim that they are doing nothing illegal. That may well be the case but it should not be. In a single day the amount of paper barrels of oil traded can be three times the amount of actual barrels traded in a year. What is all this about? Oil is far too important to be left to the market.

Driving up fuel prices to double what they were last year will lead to pensioners having to choose between ‘heating or eating’. This means that the oil speculators are in effect ‘merchants of death’. This must not be allowed to continue. GMB will now act on this.”

UNI on financial regulation

I picked this up via Richard Murphy's Tax Research blog. UNI's suggested progamme us as follows:

1. Increase transparency
The balance sheet must show all the risks taken by a financial services company. This includes contingent liabilities. Moreover it should no longer be possible to do business via other businesses, for example via conduits, if they do not appear on the balance sheet.
It is important that all players on the financial market are subject to the same duties and controls. Hedge funds, sovereign wealth funds and private equity companies must be subject to the same rules on transparency as banks and insurance companies.

2. The financial sector must be subject to statutory regulation
Whilst every small regional bank or insurance company in Europe is subject to strict supervision, it does not apply, for example, to hedge funds, sovereign wealth funds or pension funds. This must change. A single regulatory system is needed for all players in the financial markets.
Financial transactions between European companies and companies with off-shore financial centres that are not subject to controls comparable to those in Europe must be made illegal.

3. Supervision of the financial sector
The supervisory authorities in different countries must enhance their international cooperation. At the same time they must not neglect their national responsibilities, as in the case of Société Générale. Within the European Union we must ensure that all companies are supervised according to the same criteria, wherever they are based. International supervision standards must be regularly updated to keep up with new requirements and with the innovativeness of the industry.

4. Rules on capital adequacy
All loans and credit liabilities must be backed by corresponding equity. The basis for this is the Solvency 2 and Basel 2 rules. These rules must be reviewed. High risks must be supported by higher capital adequacy ratios.

5. Pension funds and life assurance
Pension funds and life assurance companies have become a major part of people's pension provision. The acts of regulation on financial investment for these companies must prohibit high risk investments, for example in hedge funds or private equity funds.

6. Tax breaks for private equity
The tax concessions given to the private equity and hedge funds industry in many countries must stop. For example, in Germany private equity managers have a partial exemption on their income tax. This tax promotion of private equity, justified by alleged shortage of capital, is counter-productive. Private equity should be subject to the same tax regulation as other players in the financial industry.

7. Pay systems for executives
Incentive programs and remuneration policies for executives and investment bankers must be revised. Remuneration must be kept at reasonable levels, and must be properly linked to the revenues and results of the companies. Today consumers and ordinary workers suffer the consequences of bad management and excessive wages for high paid staff. Risk must never be disregarded just because remuneration levels remain the same regardless if you succeed or not.

8. Leveraged buyouts
Loans made to companies that are to be taken over for the purpose of funding the purchase price must be prohibited. Using this method, some hedge funds have in recent years driven flourishing companies to ruin and in so doing earned high profits for themselves.

9. Rating agencies
There must be an end to the current world oligopoly of rating agencies. Rating agencies should not work on the development of financial products and subsequently issue a creditworthiness rating for the same products. Such conflict of interest is damaging.

We need independent rating agencies that do not (cannot) carry out rating on the basis of economic interest. Within Europe at least one public rating agency should be established.

10. Tax havens
Tax havens must be put out of business. This requires international agreement and national tax laws that ensure that business done with tax havens is taxed according to national regulations if a certain minimum level of tax is not paid abroad.

11. Company takeovers - outsourcing - offshoring
Before companies or important divisions of companies can be bought or sold, the employees affected or their representatives must be informed and the consequences of the planned decisions discussed with the employees' representatives. If consultations do not take place, then it must be stated in law, for example via an EU-Directive, that the company takeover cannot go ahead.

12. Consumer protection
Financial services are an indispensable intermediary for the functioning of society. The essential basis for this is a fundamental trust of customers in financial institutions. Therefore, a high level of consumer protection at national and international level is necessary. Statutory regulation must guarantee that any financial institution provides its customers with qualified and proper advice based on their interests.

13. Employees at the core
Finance sector employees are those that make the industry function. Regulators and companies must ensure that working conditions and pay incentives promote rather than hinder regulatory objectives and excellent customer service. Essential elements are training and lifelong learning schemes that provide employees with the necessary skills.

Hhmmmm.... not sure about some of these. Do we really want to ban pension fund sfrom investing in alternatives? And are PE and hedge funds necessarily 'high risk'?

Narrative rationality

Yep, narratives again. As I've said before, I'm a big fan of the narrative paradigm proposed by Walter Fisher. I've just got hold of this book, which includes his essay Narration, Knowledge and the Possibility of Wisdom. I think it's spot on. In a nutshell he argues that we assess things in terms of narrative rationality, 'good reasons' to believe/accept them or not.

To explain this in more detail, he argues that we determine these 'good reasons' by making assessments of the degree of coherence and fidelity within the proposition ('story'). Our assessment of coherence considers structural/argumentative coherence - does the argument hang together. We consider material coherence - comparing the 'story' with other relevant ones we can detect errors or omissions, does it fit with other 'true' accounts. And we consider characterological coherence - what do we think of the intelligence, intregrity and values of the author of the 'story'?

Turning to fidelity we consider both the reasons given, and the values conveyed. In the first case we test things such as whether the bits of the narratives claimed as facts are indeed facts, and whether the reasoning is sound. In the second instance we try to establish the explicit and implicit values in the story, and whether, for instance, they are validated by our own experience.

Apologies if that sounds a bit dry, but it's important to set the structure up before seeing how he applies it. You maybe thinking that narrative rationality may well apply in say the political field, but Wisher argues that it even applies in science. He demonstrates this by applying his model to an analysis of James Watson and Francis Crick's proposal of the double helix model of DNA.

This goes on for several pages so I'm just going to post up a chunk that gives you a good idea (apologies for typos, I am copying straight from the book):

What arguments do the authors offer to support the truthfulness of the double-helix model? Their first argument was that the structure proposed by Linus Pauling and R. B. Coring was "unsatisfactory". The underlying reason for th erejection was that the Pauling-Corey model was not truthful; it violated chemical "laws" and prior research. Their second argument was that the structure put forward by Fraser was too "ill-defined" to warrant comment. Clearly, precision is a value and lack of it is sufficent reason, a good reason, for rejecting ideas that are "ill-defined". After describing their model - verbally and in diagram - Watson and Crick present an intertwined argument to establish its conformity with the "laws" of chemistry and current research data. Here again, there is an implication of a good reason: Sound theory is in accord with prior knowledge. Each of these three lines of argument, it should be noted, is not a strict logical demonstration, either deductive or inductive. Each is, however, a proper deductive argument if one grants the premise on which it is founded: good theory is truthful (that of Pauling-Corey is not truthful; it should be rejected); good theory is precise (Fraser's theory is not precise; it should be rejected); good theory is confirmed by the best available theory and evidence (ours is; therefore, it should be accepted). The "reasons" for accepting Watson and Crick's proposal, then, are good reasons, reasons informed by by values: truthfulness, precision, conformity with the best that is known, and the promise of useful results in its application in further theory and research.

I read this and am both a bit ashamed and at the same enthused. Ashamed because thinking things through from Fisher's perspective, I can see how I have structured things in the past to ensure they have narrative rationality. I look back at a few policy papers I wrote and consider them to be collages rather than anything else. But because I think I am relatively good at structural/argumentative coherence I can make collages look more like analysis than they actually are.

On the other hand I also read this and realise that I can see people of different views (political in particular) doing exactly the same thing, and I think internalising this way of reading information can help sort the wheat from the chaff (if you believe that there is any wheat). This shouldn't be any surprise unless you believe that there is a correlation between proficiency in argument construction and political viewpoint.

It might cause me to kill some blog posts mid-composition too, as I can sometimes feel myself trying to give an argument coherence and fidelity that it may not deserve. Whether that's a good thing or not, I don't know.

ProxyDemocracy

Time to big up the rather marvellous ProxyDemocracy.org. This is a great initiative that is really trying to get under skin of how the agents we appoint to manage our money exercise voting rights. If you search for a particular fund you can see how it votes on different types of resolutions. They also get an activism score.

It's the latest example of online resources aimed at giving punters some info about how fund managers handle corporate governance issues. Another one that I've plugged before but which is worth a look is FundVotes.com.

The obvious drawback is that these are US sites, focusing on votes at US companies. We had a go at doing something similar for the UK market at the TUC while I was there - have a look at this. Unfortunately there simply isn't enough voting data in the public domain in the UK to do something directly comparable to ProxyDemocracy. That's why I still think we need mandatory disclosure, rather than the patchy voluntarist system we have now (and fund managers had to be dragged kicking and screaming to get this far).

Whilst I'm on my hobby horse about voting disclosure, some managers argue, with a bit of validity, that just looking at their votes doesn't tell the whole story - that their engagement with companies is more important. There is merit in this argument but there are a load of other points to be made in return.

1) trustees should at least be aware of how their managers value voting vs engagement, yet managers don't make this explicit (whereas disclosing voting would start to get there)

2) it's not clear that many fund managers record engagement activity so what can they actually report? At least voting has data.

3) what does engagement activity prove? does the fact that you met with a company before waving through a questionable remuneration package make that decision any better?

4) if you are a geek like me and look closely at voting data it is easy to see trends amongst managers. I would suggest that those who vote with management almost without fail probably aren't much trouble on engagement either. Again trustees, and other potential clients, should at least have access to this type of info.

Incoming!

Going Private has returned fire, in typically ruthless style. These private equity types have no mercy I tell you. Worth a read as always though.

Good stuff elsewhere

A few bits and bobs worth a nod...

David Aaronovitch on David Davis.
William Wright on bankers' pay in Financial News.
SHARE survey (PDF) on mutual fund voting in Canada (guess what, it's unimpressive)
And if you aren't feeling shy you can send a picture to the TUC to support two Zimbabweam trade unionists who are on trial for 'spreading falsehoods prejudicial to the state'.

Shareholders vs the public

One of my fave non-lefty blogs is the rather ace Going Private. But there's a section in this post that has me shaking my head. It's this bit:

There is a very dangerous modern trend to hold the corporation (usually by tasking the Board of Directors) accountable to the "stakeholders" (which is code for "shareholders plus." Usually, this starts off as "shareholders plus employees" but often progresses to "shareholders plus employees plus community" and eventually to "shareholders plus employees plus general public."

It won’t be a surprise to hear that I disagree with this, but it's the assumptions about 'shareholders' that I'm bothered about. At the bottom of it is the same old question - who are the shareholders? A quick look at the UK's share-ownership (see table on page 9 in this PDF) shows that the biggest class of domestic investors are actually insurance companies and pension funds. Both are in the business of investing other people's money. In other words, there is a rather significant overlap between 'shareholders' and the public.

Incidentally the biggest owners of UK shares are overseas investors (accounting for about 40%). A lot of noise has been made about sovereign wealth funds, but actually when you look down the share register of a UK company the big foreign investors tend to be public sector pension funds, not SWFs. In other words it's a block of another country’s public.

The idea that the public are the shareholders is not new – Peter Drucker spotted the issue over 20 years ago. And it has seen various iterations since, most recently in The New Capitalists, co-authored by almost Labour GS David Pitt Watson. So why do we still see this rather false divide between 'shareholders' and 'the public'?

I can understand some lefties getting it wrong. The desire for a "fat cat" scapegoat means that many conflate shareholders with fund managers, fund managers with the City, and the City with the rich. So attacking "shareholders" is arguably really a way of having a pop at "the rich". And the desire to see things this way is very strong. It presents a simple moral story of the rich squeezing the workers. (But, as I keeping banging on, I think that completely overlooks the opportunities for the Left to be to be far more active in this area).

But what’s the excuse of Righties? They are supposed to understand this financial stuff, surely they must realize who the ultimate shareholders are?

I think there are at least two trends at play. One is the mirror of the Left ideological antipathy towards 'shareholders'. To ideological Righties, 'shareholders' appear to be cool-headed, rational self-maximisers who are shorn of any 'values' besides returning a profit. Hence leaving 'shareholders' in charge of companies must be the right thing to do because they have the self-interested drive to keep them on the right track. It's an elegantly simple idea, but rather messed up by the reality. Hence the identity of shareholders is usually left vague.

On the other hand, I suspect some of the more cunning Righties out there recognise that shareholder 'control' of companies is weak. In effect 'ownership' is delegated down the food chain to the fund managers, who, as agents, don't necessarily have the incentives (or ability) to address governance and social responsibility questions. So by saying 'leave it to shareholders to decide' in policy debates they are really saying 'let management get on with it', and I think this maybe behind Ruth Lea's recent comments.

Personally I think this tendency to kick difficult issues around corporate governance and social responsibility into the long grass by saying 'it’s up to the shareholders' (see Kitty Ussher's comments on exec pay) needs serious revision. The 'real' shareholders – those whose economic interests are tied up with those of the investee company – barely feature. With the shift to defined contribution pension provision, which will dominate the UK in future, individual punters have an even more direct stake in the success of UK PLC. But where are they represented?

It might even be the case that, if they were ever offered a choice, ordinary punters might accept the free-market pitch - we think it's broadly beneficial if you leave it up to companies (and fund managers) to do what they want as you will ultimately benefit, 'invisible hand' style. But at the moment they are barely even acknowledged as having an economic interest, and instead are typically relegated to 'stakeholder' class as in the text above.

City people funding the Tories

Just spotted this piece from Money Marketing a couple of weeks back. Guess which City firm tops the list?

Re-reading Going Off The Rails

In order to get up to speed for a project I'm about to start working on, I thought I would re-read a few books I found useful over the past few years. One of them is Going Off The Rails by John Plender.

Here's a great bit on the conflicted role of fund managers:

Too little attention is paid to the carrots and sticks that influence human behaviour. This is true for everyone in the system, including the moguls who invest the money. The biggest chunk of money in the US and the UK is in defined benefit pension schemes that are, in effect, controlled by the management and run largely according to management's requirements. Where investors do have a direct stake in the stock market, as in mutual funds, they have only a limited say in how their money is run. Meantime the elite of corporate managers and fund managers who are in charge are only weakly accountable and their incentives are not well aligned with those of the ultimate investors...

[M]any professional fund managers are more concerned with managing their own business risk than those of the ultimate investors. They pursue relative rather than absolute returns on a short-term basis because it is their performance relative to their competitors that determines whether they retain their pension fund clients. Such behaviour... contributed to the stockmarket bubble. And because the absolute returns generated by such professional investors have been unimpressive, the field has been left wide open for hedge funds that pursue absolute returns, but on an even more short-term basis. This is as true of the US as the UK, despite tougher legislative requirements on US fund managers to observe their fiduciary obligations to pension scheme members. The concept of responsible ownership, meantime, is alien to hedge funds. Most have no interest in playing a role in corporate governance.

The market has changed a bit since then, for example funds have generally moved away from peer group benchmarks. But to be honest I don't think the pressures on fund managers to deliver short-term returns have significantly changed. And hedge funds still appear to have little interest in governance.

And on a separate point here's a bit on fixing management incentives to share price:

The bizarre irony here is that the shareholder value movement has ended up replicating the errors of socialist planners in the old Soviet Union who imposed targets on industrial managers that were frequently met by fiddling the figures or doing damage to some other aspect of the business. By fixing on a single managerial incentive – the share price – the Anglo-American system has encouraged management to maximize short-term profits at the expense of longer term growth. When managers found that they could not generate enough short-term profit to satisfy investors and stock market analysts in the bubble period, they resorted to takeovers as a means of keeping one step ahead of the baying hounds of the financial community. And when takeovers became more difficult to pull off in the depressed stock market conditions that followed the bubble, they took to window-dressing the figures either within the rules or fraudulently as at WorldCom.

Tagged...

Paulie at Never Trust A Hippy has tagged me with one of them blog meme things.

"Which three bloggers do you agree with on almost everything? Pick one that most closely mirrors your own personal philosophy, one that most closely mirrors your politics and one that offers the most consistently attractive analysis."

This is actually really difficult, as I like quite a lot of different blogs for different reasons. Quite few of them I read because I don't agree with them. But I'll have a go.

Politics: Probably Snowflake5. I can't think of much she has written that I disagree with, plus one of the few Labour supporting bloggers who understands why Polly Toynbee is wrong on executive pay.

Analysis: Stumbling And Mumbling. To be honest I'm going to be receptive to a blog that is comfortable with and informed about markets, but comes at issues from the Left.

Philosophy: I honestly can't think of one here. If there is a blog out there that consistently argues that much/most of our 'knowledge' is narrative-based, that our psychological make-up probably significantly affects the type of ideas we are attracted to, that our deep-rooted biases make the idea that we can or even want to be objective rather questionable, and that given all the above it is amazing that anything involving humans ever works properly, then I vote for that one.


And in turn I'm going to tag:

Tom Freeman
Snowflake5
Nick Drew at Capitalists @ Work

Short stuff

There are two rather different perspectives on the FSA's intervention in respect of shorting out there on t'interweb. Chris Dillow is critical, whereas Robert Peston is broadly supportive.

Being a fence-sitting type, I can see logic in both arguments. Shorting ought to have the potential to make markets less prone to overvaluation. As Chris points out, some investors (index trackers) have to buy certain stock which can falsely inflate the price, for example when a stock enters an index. In addition maybe he's right to argue that a bit more shorting might have prevented the TMT bubble expanding as it did.

On the other hand Robert Peston makes the point that shorting can be bad news for those that facilitate it - the stock-lenders. Pension funds and insurers lend stock for the fee income they derive from it, but what if the shorting that takes place depresses the share price significantly, and thus pushes up the cost of capital for the investee business? Is that really in their long-term interest?

Two more points swing me more in Peston's favour. First, does shorting really make prices more 'efficient', or does it just push them in a certain direction (if it works)? Surely shorting can push prices to an unreasonably low level, especially if it triggers further selling? That's no more efficent than overvaluation.

Secondly I have a broader concern about the impact of stock-lending - it can be a negative in terms of corporate governance. Not all institutions recall stock in order to vote for example, even when there are contentious issues at stake. As an example I came across a pension fund that wasn't able to vote on James Murdoch's appointment at BSkyB a few years back - a huge governance issue at the time - because it couldn't recall its stock.

In fact, as I posted last year, stock-lenders get the message that recalling stock for voting can make them a less favoured option. So there is commercial incentive not to recall in order to vote. Of course these are criticisms of stock-lending rather than shorting, but it's another factor to consider.

Top Tune

My People by The Presets. Mad video too on YouTube here.

Dumbest quote of yesterday

"Markets don't fail, it's the humans in them who do."

From Jeff Randall's column in the Telegraph yesterday. I know it is in the context of Eamonn Butler's book on markets, but it's still fair game!

Markets aren't some mechanical system that exist separately to their participants, they only exist because of those participants. People are flawed (because of biases, lack of information, skill etc) and therefore markets are flawed, fundamentally. No more flawed than any other type of human activity/organisation, but flawed nonetheless. "Out of the crooked timber...." and all that.

The column overall says nothing new. "Larry Elliot is right when he says Labour is terrible. He is wrong when he says markets are terrible."

Chickens march on...

Well, I was wrong about Hugh Thingummy-Whatsit's resolution at Tesco, it is going ahead according to reports today. After enlisting the help of supporters such as rock bores Keane, he was able to raise the money to cover the £86k costs demanded by Tesco.

I still think the system for filing resolutions needs an overhaul though. Simply lowering the ownership threshold required to file would do it - why not stick it at 1%?

Elsewhere The Scotsman has run an excellent comment piece reacting to Kitty Ussher's speech yestersay. I couldn't have put it better myself.

Two missing words

Here's an interesting little snippet. The version of Kitty Ussher's speech to the BBA available on the Treasury website is slightly different from the version in the FT.

Treasury version:

But I’m clear that executive pay is a matter for Boards and shareholders – not for Governments.

FT version:

I'm clear that executive pay is a matter for boards and shareholders, not for governments and regulators.

The key difference being, of course, the missing "and regulators". Hector Sants has of course said that the FSA will consider pay as part of their assessment of financial institutions. So the implication could be that the Government has told the FSA to back off.

So why two versions? Did the speechwriter not realise the implications of "and regulators" in this context, hence it was subsequently dropped? Was it a shot across the bows that it was decided needed to be dropped? Or was it just a minor tweak to the final version of the speech? Insert your own conspiracy theory in the comments section below...

Supply and demand

One of the other books I bought recently was The New Paradigm for Financial Markets by George Soros. I've always quite liked what I have read of his stuff, and his conception of reflexivity is an interesting one.

Anyway I just finished a good bit in the new book where he gets stuck into the idea of equilibrium in markets. There's a taster below, apologies for any typos.

The shape of supply and demand curves cannot be taken as independently given because both of them incorporate the participants' expectations about events that are shaped by their own expectations. Nowhere is the role of expectations more clearly visible than in financial markets. Buy and sell decisions are based on expectations about future prices, and future prices, in turn, are contingent on future buy and sell decisions.

...Anyone who trades in financial markets where prices are continuously changing knows that participants are very much influenced by market developments. Rising proces often attract buyers and vice versa. How could self-reinforcing trends persist if supply and demand were independent of market prices? Yet, even a cursory look at commodity, stock and currency markets confirms that such trends are the rule rather than the exception.

The very idea that events in the marketplace may affect the shape of the demand and supply curves seems incongruous to those who have been reared on classical economics. The demand and supply curves are supposed to determine the market price. If they were themselves subject to market influences, prices would cease to be independently determined. Instead of equilibrium we would be faced with fluctuating prices. This would be a devastating state of affairs. All the conclusions of economic theory would lose their relevance to the real world...

Oh no...

I know the arguments about not scaring the horses, I know it is important to not spook the City, I know we have to approach executive pay carefully. But this is terrible (from FT article here):

"We will resist the calls that have been made for direct regulation of executive pay," Ms Ussher will say in her speech. "Of course, remuneration packages should be strongly linked to effective performance, and incentives should be aligned with the long-term interests of the business and shareholders, and we don't support rewards for failure."

But she adds: "I'm clear that executive pay is a matter for boards and shareholders, not for governments and regulators."

Aside from the obvious point that the only reason that shareholders even have a vote on pay is because of Government intervention, I think this is a disastrous thing to say. It makes the enormous assumption that 'shareholders' have the incentive and resource to make sure that management acts with restraint when setting pay. So behold my regularly repeated arguments for why this is wrong.

First, there's an argument articulated by Tim Harford in his recent book that even if self-motivated shareholders are thinking rationally they won't consider high pay to be too much of a problem (because to each shareholder the 'cost' of inflated pay is small). But we aren't even in that ideal world because the principal-agent problem is present not only in the company-shareholder relationship, but also in the fund manager-pension fund or insurance company-policyholder relationship. Given that fund managers are paid to generate returns, not police pay, why do it to any serious extent?

And what about the conflicts and biases at play on the part of fund managers? Why get stroppy with a company whose pension fund might be tendering a mandate? What about fund managers that are also part of listed companies themselves? How much restraint is there in their own pay packages. And the fund management world isn't too shabby on the pay front either. Is asking people who are well paid themselves to judge the pay of others a smart idea?

Instead of simply trying to kill off this debate, why doesn't the Government simply review how the vote on pay has worked in practice. They can still kick the findings into the long grass if need be, but at least we could have a proper debate about whether 'shareholders' can deal with executive pay effectively.

Passing on the blogging batton

For the past few weeks I have been the featured blog on Labour Outlook, which was very flattering. Now they have moved on to Politics for People, which is a Co-operative Party aligned blog, and looks rather good, so go and have a look!

Happy chickens will cost investors £86k

This story on the Beeb is interesting, as it demonstrates the limited nature of shareholder 'democracy' in the UK. TV chef Hugh Fearnley-Whittingstall is trying to file a shareholder resolution st Tesco's AGM, but the company is trying to make him pay £86,000 for printing and distribution costs.

It's already difficult enough for investors to file a resolution in the UK. If you haven't got 5% of the issued share capital you have to have 100 shareholders holding an average of £100 each to be able to file. Not many investors get up to the 5% threshold in any company, and the ones that do are mainstream asset managers who are extremely unlikely to file a resolution, ever. Even a large group of pension funds would struggle to get a resolution filed, so that means you have to go down the 100 individual shareholders route.

Even then the company can make you pay for printing and distribution costs relating to your resolutions if you file after the end of the financial year. But what if the issue you want to address has occured after the end of the financial year? Or what if you want to engage with the company before filing? The whole system is set up in a way that does not enfranchise shareholders who want to file a resolution, and it ought to be reformed. Why not simply drop the ownership threshold to say 1%?

I hope the Tescos resolution goes ahead, but I wouldn't bet £86K on it happening to be honest.

Corporate Governance: An issue ripe for the Left

Just stumbled across this paper (PDF) whilst trying to find out what the Left Economic Advisory Panel is/does. The article 'Corporate Governance: An issue ripe for the Left' by Prem Sikka (pages 4 & 5) contains the following paragraph:

A favourite myth is that shareholders regulate corporations. In fact, they are too weak to call corporate barons to account. Institutional investors are more focused on short-term returns and churning the markets. The people ultimately own the pension funds, but their managers ignore the concerns of members. Far from being a solution, many institutional investors are a source of problems by generating pressures for the quick buck brought in by mergers, take-overs, job shedding, financial massaging, closures and tax avoidance. None is concerned with representing the interests of employees and local communities.

It's almost right, but misses a fundamental point. Fund managers do what their clients pay them to do - deliver returns under the threat of being sacked if they don't generate the numbers over 3 years - hence the fixation on short-term numbers. And because most clients don't pay fund managers to represent the interests of employees and local communities they don't do that. We can't really blame managers for doing what we pay them to do, and for not doing what we haven't asked them to do.

TUC Member Trustee News

A quick plug for the latest issue of Member Trustee News which you can download as a PDF here. It's been given a redesign and now comes with at least 25% more snazz.

Contents include: TUC trustee conference 2008, Treasury to update Myners Principles , DWP sets out new work on risk-sharing, Pensions and private equity Accounting Standards Board (ASB) discussion paper issued, Progress to 1/3 MNTs and beyond: TUC research project, Investors launch climate change adaptation project, Diversity and Pension Trusteeship - research project, Guidance and consultations published by the Regulator

WaMu - another union investor activism success?

I missed this earlier in the week, but Washington Mutual has agreed to appoint an independent chair after presuure from shareholders. The shareholder campaign at WaMu was led by the Change To Win Investment Group, the investor activist wing of one of the US labour federations. The announcement follows the earlier ousting of one of WaMu's directors after pressure from CTW.

The release below is available here (PDF).

Washington DC: The CtW Investment Group responded to Washington Mutual’s (NYSE:WM) announcement today that the board of directors has decided to accede to the will of the majority of shareholders and name an independent Chairman. “It’s the right response to a strong shareholder vote,” said CtW Investment Group Research Director Richard Clayton, “and it’s the right approach to governance. Too much power concentrated in Kerry Killinger’s hands has not served Washington Mutual shareholders well, and it’s clear that more boards are now getting the message that stronger checks and balances are necessary.”

CtW Investment Group also noted, however, that Washington Mutual continues to resist shareholders’ demand that only directors who received a majority of votes cast by actual shareholders should continue to serve on the board: “It’s distressing that this board continues to apply a double standard to shareholder votes. The vote to name an independent Chairman excluded uninstructed broker votes, but the disputed re-election of directors James H. Stever and Charles Lillis may have resulted from the inclusion of these phantom votes. The board needs to disclose whether Stever and Lillis received a majority of votes cast by shareholders and to request the resignation of any director who did not.”

The CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 6 million members. These funds hold an estimated 4.6 million shares of Washington Mutual common stock. Citing extensive failures in overseeing risk management, earlier this year CtW Investment Group recommended that Washington Mutual shareholders withhold support from former director and prior Finance Committee Chair Mary E. Pugh and current Human Resources Committee Chair James H. Stever.

First they came for the bankers...

Work means I'm too short of time for big posts at present. So here is a quote from Tom Congdon's article in Standpoint to chew over in the meantime.

"[G]overnment regulation over the pay of individuals — individuals who respect the law, pay taxes and honour contracts — is an abomination in a free society. To point a finger at a particular profession (like ‘bankers’, whatever the word means) is potentially as dangerous as stigmatising racial or religious minorities."

What do you reckon?

TUAC/ETUC warning over industry lobbying against PE/hedge funds report

This is from the TUAC site. The Rasmussen report can be downloaded here (scroll down to 18th April).

On the eve of the Organisation for Economic Co-operation and Development (OECD) Ministerial Council meeting in Paris, trade union leaders from across the industrialised countries expressed deep concern at intense lobbying activities to undermine a draft European Parliament Committee's report on private equity and hedge funds [1].

Meeting under the auspice of the Trade Union Advisory Committee (TUAC) to the OECD, trade union leaders from OECD countries, including representatives of major European trade union confederations, declared their support for recommendations laid down in a report on hedge funds and private equity. The report was prepared by MEP Poul Nyrup Rasmussen and is said to be under attack by private equity and hedge funds lobbying groups.

Among others, the report calls for new regulations:

to establish EU-wide registration and authorisation of hedge fund and private equity managers;
to work on appropriate leverage levels for private equity and hedge funds, including by eliminating tax-distortive regulations;
to extend to private equity existing EU regulation on information, consultation and continuing of employment conditions of workers;
to prevent conflicts of interest in private equity takeovers by enforcing disclosure of fees and other incentives received by the target company’s directors.

A critical Left view of socially responsible investment

Prompted by a comment a few days back I thought I would post up a short extract from Doug Henwood's Wall Street on social investing. Doug also runs Left Business Observer. Anyway, here's a quick quote.

"A contradiction no social screen can address is that investment profits originate ultimately, no matter how you dress them up, in the uncompensated labor of workers, and that they depend on a social order in which some people have money to spare and others don’t. When asked to comment on this, the former radical academic turned social broker Michael Moffitt conceded, “It’s a problem.” Moffitt’s past makes him aware of “the problem,” but most social investors don’t even think about it.

With South Africa no longer an issue, the most popular social screens reflect the concerns of upscale liberals: tobacco, women in the boardroom, animal testing, and the grosser environmental crimes. Concerns like women on the assembly line, unionization, and workplace injuries rarely appear. One of the favorite stocks of mainstream SI has been that of the Washington Post Co., a fiercely anti-union firm that publishes the daily journal of record for the DC branch of the status quo."

I would make a couple of counterpoints. Since this was written engagement has supplanted screening as an approach to SRI amongst mamy institutional investors (though screened funds still dominate the retail market). Secondly, although it is still the case that labour issues feature far less often than environmental or other factors, they have started making an appearance (FirstGroup being a good recent example). And I still believe that investor activism is a tool that unions should be using more often.

However I do agree that SRI as a distinct investment market/product often does little to address the underlying questions the labour movement is concerned about, and is often instead an exercise in feeling good about yourself (not necessarily a bad thing).

Derelict London

I've plugged the website before, which is ace, but now there's a book too. A must for anyone who shares a geeky interest in disused stuff.

Cruddas n Taleb

These two pieces are from/about two people who are saying some fairly interesting things. The piece by Jon Cruddas is a week old and has been done to death elsewhere, but I thought I'd plant my flag here and say I think he might be talking a bit of sense. I've seen him speak once or twice (for example in support of the Living Wage campaign) and been fairly impressed.

There is still a big hole in Labour's strategic thinking, demonstrated by the way we are polarised between More New Labour and Tack To The Left as the way out of our current position. Cruddas has correctly argued that this is a false choice. I still think some of his arguments - "Labour can enforce fairer prices" - haven't been properly thought through, but he strikes me as one of the Labour MPs more likely to come out with some decent ideas given a chance.

Meanwhile this weekend the Sunday Times ran an interview with Naseem Nicholas Taleb that is worth a read. It's set up in a bit of a false way. He didn't 'predict' the credit crunch, for example, and as he himself points out that was not a Black Swan since it was widely anticipated. As I've said before, anyone with a good grasp of probability probably finds Taleb's stuff a bit underwhelming, and his writing style obviously annoys a fair few writers. But I like a bit of iconoclasm, and I struggle with all that Bayesian type stuff, so I like the bloke.

There's votes in pensions says Unite

Just a lift from the Unite website. Not sure if we haven't missed the boat somewhat in terms of making pensions a campaigning issue. The Government doesn't have a bad record overall, despite the "£5bn a year tax raid" arguments regularly trotted out against it. But The good bits - PPF, FAS, clearing up the mis-selling scandal etc - aren't easy ones to play. And it's too early to claim anything in respect of Personal Accounts.

New survey reveals that votes can be won or lost on pensions
02/06/2008

Unite, Britain's biggest union is urging the Government to act to make occupational pension schemes compulsory, as a survey of voters in key marginal seats reveals that action on pensions will influence their voting preferences in the next general election.

In a survey of constituents in the twenty most marginal Labour seats in the UK, conducted on behalf of Unite, half of those surveyed stated that action by a political party to protect occupational pension schemes would influence their voting intentions. 34% of voters in these critical constituencies have yet to decide which party best represents their interests.

The survey also revealed that 83% of respondents said they would support Government action to increase the spread of occupational pensions and 78% believed that pensions have not been high enough on the Government's agenda.

65% believed that striking to protect pensions was justified and 55% reported that they would be prepared to take strike action to protect their own pension. 78% considered pensions to be an essential part of wages. The survey was conducted immediately following the high profile dispute with Ineos over pensions. The results of the survey indicates that the majority of the general public believed the action of Ineos workers was justifiable.

Derek Simpson, Unite Joint General Secretary says,

"Pensions are an electoral issue and votes can be won or lost depending if Labour chooses to act or not to act. This survey reveals that Labour can win the next general election but only if they work hard to re-connect with working people's real concerns. In key marginal seats, voters say that the protection and extension of occupational pensions would be an electoral asset. The CBI don't want it but they don't vote Labour anyway."

"Recently 1,200 workers at Ineos' petro-chemical site in Scotland took strike action over plans to end the final salary pension scheme for new entrants. Encouragingly voters overwhelmingly support workers taking action to protect their pension scheme and the majority are prepared to take strike action themselves. This is a clear indication that the public believed the action that Ineos workers took to protect their pension scheme was justifiable."

The survey also revealed that a significant 40% of respondents did not have an occupational pension scheme but 76% believed that employees should receive a final salary pension scheme.

Roland Barthes and bad writing

This is a bit off-topic. I've just ordered my latest stack of books from Amazon, and in amongst some work-oriented reading I thought I would take a punt on Mythologies by Roland Barthes. I read a fairly incomprehensible intro to semiotics last year, and his name cropped up a bit, plus the idea of 'myths' seems close to the concept of narratives so I thought I'd probably quite like it.

And I do, sort of. The essay on wrestling is apparently pretty famous and I can see why. It does really nail what watching wrestling is all about (not suprisingly it's not about sport). I also enjoyed the piece about the Blue Blood Cruise, which reminded me of the time the royals did It's A Knockout. Here's an excerpt:

"[K]ings have a superhuman essence, and when they temporarily borrow certain forms of democratic life, it can only be through an incarnation which goes against nature, made possible through condescension alone. To flaunt the fact that kings are capable of prosaic actions is to recognize that this status is no more natural to them than angelism is to mere mortals, it is to acknowledge that the king is still king by divine right."

Spot on Ro-land.

Other bits of it are less convincing, and seem to be more about Barthes identifying his own message in an event/product/trend. Still, overall it seems like quite an interesting look at the messages within culture. And somehow I was reminded of this when I was reading Janet Daley's latest opinion piece in the Telegraph. It's this section that really stuck out:

The notion that Big Government (whether in the central or the local form) could solve all social problems, and through its interventions achieve absolute justice and harmony, is collapsing. And in its last moments, in its disbelief and agony at its own failure, it is lashing out in every direction: if the earlier measures haven't dealt with crime/public disorder/anti-social behaviour/under-performing hospitals/insufficient recycling, we must add yet more layers of official interference.

It's the second sentence that is the key one. The alarm bells always go off when I read someone trying to personify an idea. In more subtle versions of this people try and associate ideas with particular types of people. But the version above is great because it actually suggests that an idea itself can have some sort of physical manifestation - one that can feel 'disbelief' and 'agony' and is capable of 'lashing out'. No doubt lots of people will read the column without giving this a second thought, and may even perhaps imagine terrified, confused, theoreticians/bureaucrats to be the ones feeling the agony and doing the lashing out. But in the article itself it is clearly an idea doing this, something which is obviously impossible.

I'm never quite sure with examples like this which way the influence runs. Is the writer seeking to attach negative imagery to the idea deliberately? Or is their resistance to or dislike of the idea so great that they imagine it as a 'bad' person? Either way it is a poor way to write/think.