What great knowledge this group has on how the system currently operates and where the leverage points are to transition to a thriving world, for retirees and all of us.
It appears that the pension fund managers need other feedback and a broader context in order to perceive that their current investment strategy is causing harm in the near term, and potential devastation in the long term.
“ This isn’t about tearing down the existing financial system, but rather evolving it ”
The evolution we need begins with the fiduciary duty of pension trust fiduciaries to exercise the care, skill, prudence and diligence, under the circumstances then prevailing, of the prudent person familiar with such matters, acting in like capacity, of like character, with like aims.
There is a lot to unpack in that densely concise rule of law, but we can start with capacity: what powers do pension trustees derive from the character of the trust over which they exercise plenary authority, constrained only by fiduciary duties of prudence (see above) and undivided loyalty to the aims of the trust over which they exercise sole and exclusive control?
(A back-to-the-text restatement of the pension promise, and how that promise is provisioned by a social trust as a public good for a private benefit that is also a public good, is in order. But not here.)
Let’s look at the increasingly popular innovation coming out of the Asset Ownership view of the capacity of a pension fiduciary (as created by the character of the pension trust over which they exercise sole and exclusive control, constrained only by fiduciary duties of caring as prudent person familiar with such matters, and undivided loyalty to its chartered aims): Private Equity.
Private Equity uses financial engineering for value creation.
Financial engineering is when you use the technologies of spreadsheet math, desktop publishing and digital communication to negotiate the design of an enterprise: it’s core technology (suitability to the times); it’s social contract with popular choice (longevity over time); the protocols for how the business will do business (fairness all the time).
Value creation is highest possible purely pecuniary profit extraction maximization, through leverage (borrowing to pay fees and dividends) and as gain on sale to a buyer in the capital markets (the ultimate exit that shifts the risk onto some else [slice-and-dice before we pump-and-dump this "hot potato"), solely in the financial best interests of Private Equity.
Value creation through financial engineering for extraction maximization by Private Equity is only possible because of pensions (see Peter Drucker, Harvard Business Review 1991)
This indicates that the capacity of a pension fiduciary includes the power of financial engineering through negotiated agreements with enterprise, directly.
Why can't pension fiduciaries exercise that capacity directly, rather than only delegating it to Private Equity (that has a different aim [to maximize their own profits, through extraction] than a pension trust [to assure security and dignity to workers, directly, and to us all, consequently, through interaction]).
This is the transformational innovation in social choosing that we need for being human in society, through economy, using money on a planetary scale in the 21st Century, and beyond: where Private Equity engineers to maximize its own fees and profits through extraction, pension fiduciaries have the duty to engineer for their chartered aims, which are to invest money for income as well as safety to assure income security in a dignified retirement for evergreen populations of current and future retired workers, through interaction.
When pension fiduciaries do their duty to assure security and dignity to workers, as a private benefit, directly, they also, of necessity, deliver security and dignity to us all, as a public good, consequently.
This is because the sums of money aggregated for the benefit of so many workers, collectively, worldwide, are so large, that it is not possible to deliver security and dignity to so many, at such scale, directly, without also delivering security and dignity to us all, consequently.
Pensions are, de facto, a proxy for the public good.
As a stewards of a social trust for a private benefit that is also a public good, pension fiduciaries have to be accountable to the public’s sense of what makes sense as a prudent person.
Are you a prudent person?
If so, you have a say.
Which do you choose?
The status quo of extraction?
Or, the 21st Century modern innovation of interaction?
What great knowledge this group has on how the system currently operates and where the leverage points are to transition to a thriving world, for retirees and all of us.
It appears that the pension fund managers need other feedback and a broader context in order to perceive that their current investment strategy is causing harm in the near term, and potential devastation in the long term.
“ This isn’t about tearing down the existing financial system, but rather evolving it ”
The evolution we need begins with the fiduciary duty of pension trust fiduciaries to exercise the care, skill, prudence and diligence, under the circumstances then prevailing, of the prudent person familiar with such matters, acting in like capacity, of like character, with like aims.
There is a lot to unpack in that densely concise rule of law, but we can start with capacity: what powers do pension trustees derive from the character of the trust over which they exercise plenary authority, constrained only by fiduciary duties of prudence (see above) and undivided loyalty to the aims of the trust over which they exercise sole and exclusive control?
(A back-to-the-text restatement of the pension promise, and how that promise is provisioned by a social trust as a public good for a private benefit that is also a public good, is in order. But not here.)
Let’s look at the increasingly popular innovation coming out of the Asset Ownership view of the capacity of a pension fiduciary (as created by the character of the pension trust over which they exercise sole and exclusive control, constrained only by fiduciary duties of caring as prudent person familiar with such matters, and undivided loyalty to its chartered aims): Private Equity.
Private Equity uses financial engineering for value creation.
Financial engineering is when you use the technologies of spreadsheet math, desktop publishing and digital communication to negotiate the design of an enterprise: it’s core technology (suitability to the times); it’s social contract with popular choice (longevity over time); the protocols for how the business will do business (fairness all the time).
Value creation is highest possible purely pecuniary profit extraction maximization, through leverage (borrowing to pay fees and dividends) and as gain on sale to a buyer in the capital markets (the ultimate exit that shifts the risk onto some else [slice-and-dice before we pump-and-dump this "hot potato"), solely in the financial best interests of Private Equity.
Value creation through financial engineering for extraction maximization by Private Equity is only possible because of pensions (see Peter Drucker, Harvard Business Review 1991)
This indicates that the capacity of a pension fiduciary includes the power of financial engineering through negotiated agreements with enterprise, directly.
Why can't pension fiduciaries exercise that capacity directly, rather than only delegating it to Private Equity (that has a different aim [to maximize their own profits, through extraction] than a pension trust [to assure security and dignity to workers, directly, and to us all, consequently, through interaction]).
This is the transformational innovation in social choosing that we need for being human in society, through economy, using money on a planetary scale in the 21st Century, and beyond: where Private Equity engineers to maximize its own fees and profits through extraction, pension fiduciaries have the duty to engineer for their chartered aims, which are to invest money for income as well as safety to assure income security in a dignified retirement for evergreen populations of current and future retired workers, through interaction.
When pension fiduciaries do their duty to assure security and dignity to workers, as a private benefit, directly, they also, of necessity, deliver security and dignity to us all, as a public good, consequently.
This is because the sums of money aggregated for the benefit of so many workers, collectively, worldwide, are so large, that it is not possible to deliver security and dignity to so many, at such scale, directly, without also delivering security and dignity to us all, consequently.
Pensions are, de facto, a proxy for the public good.
As a stewards of a social trust for a private benefit that is also a public good, pension fiduciaries have to be accountable to the public’s sense of what makes sense as a prudent person.
Are you a prudent person?
If so, you have a say.
Which do you choose?
The status quo of extraction?
Or, the 21st Century modern innovation of interaction?
You cool with me being North America’s surgeon?