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I'm interested in why Blackrock thinks it has the right to use my retirement funds to do anything other than maximize my gains. You want to drive social respon

I'm interested in why Blackrock thinks it has the right to use my retirement funds to do anything other than maximize my gains. You want to drive social responsibility from corporations, fine -- but do it on your own dime. As every honest banker is taught fairly early on in his or her career, OPM is sacred.

notacoward 9y ago
They have a right and an obligation to serve their clients' collective long term interest. That may include acceptance of the fact that letting the world burn (both literally and figuratively) for the sake of short-term externality-denying profit might not serve that interest. They even have a right to forego investments that their clients would find morally repugnant. As long as they're clear and honest about which strategies and ideals they're pursuing, your say is limited to investing with them or investing elsewhere. Your pittance of a retirement fund doesn't give you the right to dictate every detail of their activity. That would be denying that certain interests can be represented in the market, and that's not how free markets work.
- golergka 9y ago
  > They have a right and an obligation to serve their clients' collective long term interest. Two points: (1) they have a right and obligation to serve their client's financial interest, as regarded to the money invested in them. They don't have any obligation to serve any other form of their client's financial interest - if you talked to them on the phone in a sad and depressed manner and then they used your money to hire a psychologist to get you out of it, for example, it might be in your interest, but it certainly wouldn't be what you hired them for. (2) It's their obligation to serve their client's interest, not the society's. If the client would want to help the society as a whole is his decision to make, not this institution's. But sadly, any institution large enough inevitably forgets these two points and gets too big for it's constituents to enforce them, governments being first and foremost example.
  - Xylakant 9y ago
    > It's their obligation to serve their client's interest, not the society's. If the client would want to help the society as a whole is his decision to make, not this institution's. Not in Germany, for example. The german constitution specifically states this: Art 14, (2) Eigentum verpflichtet. Sein Gebrauch soll zugleich dem Wohle der Allgemeinheit dienen. It's absolutely fine if a company decides to use its market power to shift things towards community good. There are many investment funds and banks that among their goals have benefits to society (GLS Bank, as another german example). Companies are also not required to put clients short term interest before the companies long-term survival. You're not forced to be a client, you're welcome to move to a investment fund that doesn't have such a policy if you think they perform better.
    - golergka 9y ago
      > Art 14, (2) Eigentum verpflichtet. Sein Gebrauch soll zugleich dem Wohle der Allgemeinheit dienen. Can you please provide an accurate translation? I doubt that Google Translate is enough for such an important and meaning-dense thing. I'd like to argue about it, but first I want to understand it. > Companies are also not required to put clients short term interest before the companies long-term survival. You're not forced to be a client, you're welcome to move to a investment fund that doesn't have such a policy if you think they perform better. Well, this is a good point that they can do it - my point is that they shouldn't. Just like a single-purpose command line tools are more efficient than a full-blown combine, financial organizations should be dedicated to one single goal instead of trying to balance different points in their complicated mission statements - it just breeds internal politics and actions that serve public image first and real effect second. If you want to spend your resources on public good, find a good charity.
      - chopin 9y ago
        It's roughly: "Property is an obligation. It's use must also serve the general good."
        9y ago
- kchoudhu 9y ago
  They have an obligation to provide me the investments described in the prospectus I was given when I decided to invest with them. Nothing in those prospectuses says anything about handicapping returns based on social responsibility. The size of my investments with them is immaterial. Shifting the job of promoting social good to FMs also makes it impossible to compare them. They will all be able to excuse their shitty performance by saying that they earned their clients 22 Bonus Society Points this quarter. Finally: corporate responsibility of this variety is ephemeral. The correct avenue to obtain lasting change in corporate behavior is via government regulation. All private sector brouhaha about social responsibility does is give regulators a dodge: it allows them to say "look, they're self regulating!" and then sit on their hands.
cornyNetHandle 9y ago
If your retirement fund isn't leaving money on the table, then it is probably not going to be there when you retire.
gadders 9y ago
Yeah, I'm with the Friedman Doctrine: https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine
dharma1 9y ago
You are free to re-invest your retirement funds elsewhere if you disagree with them
- kchoudhu 9y ago
  You try getting a F500 company to change its retirement carrier.

notacoward 9y ago

They have a right and an obligation to serve their clients' collective long term interest. That may include acceptance of the fact that letting the world burn (both literally and figuratively) for the sake of short-term externality-denying profit might not serve that interest. They even have a right to forego investments that their clients would find morally repugnant. As long as they're clear and honest about which strategies and ideals they're pursuing, your say is limited to investing with them or investing elsewhere. Your pittance of a retirement fund doesn't give you the right to dictate every detail of their activity. That would be denying that certain interests can be represented in the market, and that's not how free markets work.

golergka 9y ago
> They have a right and an obligation to serve their clients' collective long term interest. Two points: (1) they have a right and obligation to serve their client's financial interest, as regarded to the money invested in them. They don't have any obligation to serve any other form of their client's financial interest - if you talked to them on the phone in a sad and depressed manner and then they used your money to hire a psychologist to get you out of it, for example, it might be in your interest, but it certainly wouldn't be what you hired them for. (2) It's their obligation to serve their client's interest, not the society's. If the client would want to help the society as a whole is his decision to make, not this institution's. But sadly, any institution large enough inevitably forgets these two points and gets too big for it's constituents to enforce them, governments being first and foremost example.
- Xylakant 9y ago
  > It's their obligation to serve their client's interest, not the society's. If the client would want to help the society as a whole is his decision to make, not this institution's. Not in Germany, for example. The german constitution specifically states this: Art 14, (2) Eigentum verpflichtet. Sein Gebrauch soll zugleich dem Wohle der Allgemeinheit dienen. It's absolutely fine if a company decides to use its market power to shift things towards community good. There are many investment funds and banks that among their goals have benefits to society (GLS Bank, as another german example). Companies are also not required to put clients short term interest before the companies long-term survival. You're not forced to be a client, you're welcome to move to a investment fund that doesn't have such a policy if you think they perform better.
  - golergka 9y ago
    > Art 14, (2) Eigentum verpflichtet. Sein Gebrauch soll zugleich dem Wohle der Allgemeinheit dienen. Can you please provide an accurate translation? I doubt that Google Translate is enough for such an important and meaning-dense thing. I'd like to argue about it, but first I want to understand it. > Companies are also not required to put clients short term interest before the companies long-term survival. You're not forced to be a client, you're welcome to move to a investment fund that doesn't have such a policy if you think they perform better. Well, this is a good point that they can do it - my point is that they shouldn't. Just like a single-purpose command line tools are more efficient than a full-blown combine, financial organizations should be dedicated to one single goal instead of trying to balance different points in their complicated mission statements - it just breeds internal politics and actions that serve public image first and real effect second. If you want to spend your resources on public good, find a good charity.
    - chopin 9y ago
      It's roughly: "Property is an obligation. It's use must also serve the general good."
      - 9y ago
kchoudhu 9y ago
They have an obligation to provide me the investments described in the prospectus I was given when I decided to invest with them. Nothing in those prospectuses says anything about handicapping returns based on social responsibility. The size of my investments with them is immaterial. Shifting the job of promoting social good to FMs also makes it impossible to compare them. They will all be able to excuse their shitty performance by saying that they earned their clients 22 Bonus Society Points this quarter. Finally: corporate responsibility of this variety is ephemeral. The correct avenue to obtain lasting change in corporate behavior is via government regulation. All private sector brouhaha about social responsibility does is give regulators a dodge: it allows them to say "look, they're self regulating!" and then sit on their hands.

cornyNetHandle 9y ago

If your retirement fund isn't leaving money on the table, then it is probably not going to be there when you retire.

gadders 9y ago

Yeah, I'm with the Friedman Doctrine: https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine

dharma1 9y ago

You are free to re-invest your retirement funds elsewhere if you disagree with them

kchoudhu 9y ago
You try getting a F500 company to change its retirement carrier.