4 ms·

I think massive endowments (foundations, trusts, universities, etc) are pretty clear effects of a large wealth divide

dmix 9y ago
Most of those endowments are pension funds for teachers and other non-wealthy jobs... The majority of the stock market is owned by a few funds as well. Both are individually poor examples of the wealth inequality as a driver of trends in the capitalization of tech businesses... One is an alternative to the other. And typically the biggest investors/funds/endowments do both as a diversification strategy.
- psadri 9y ago
  Wondering if these funds may be obligated to work in the interest of their investors vs just maximize dollar value. For example, should a factory worker retirement fund invest in robotic companies that automate workers out of a job? I suppose the argument is that if they don’t someone else will.
  - chatmasta 9y ago
    What you’re referring to is activist investing, or what is more descriptively known in most cases as activist divesting. Activist groups put pressure on funds to invest in, or divest from, certain assets. For example, my college’s endowment was invested to varying degrees in the oil/energy industries. A bunch of forestry school grad students organized a “divestment campaign” to pressure the investment office to divest from anti-environment assets. I’m not sure how effective they were in the end, but they sure made a lot of noise. So yes, endowments/pensions/sovereign wealth funds are certainly obligated to listen to their “constituents” if you will, but only by societal contract. A big enough PR storm should be sufficient to drive investment or divestment, if enough people are emotional and aggressive in marketing their argument.
closeparen 9y ago
The interest on university endowments funds financial aid.
- marnett 9y ago
  He is not arguing usage but existence. The existence of large endowments surely displays wealth inequality, regardless of the utilitarian nature that may result as the outcome.
  - closeparen 9y ago
    Large institutions are wealthier than individuals? Large institutions are wealthier than small institutions? Neither of these realities are surprising or concerning in any of the ways that wealth disparity between individuals is.
- Chathamization 9y ago
  > Schools spend an average of a little more than 4 percent of their endowment funds annually. --- > “Endowments aren’t generally used to lower tuition,” said Richard Vedder, an economist at Ohio University, testified before the House Ways and Means Committee last year. “Typically less than 20 cents of every dollar of endowment income is used for scholarships to lower fees for students. Making college more affordable is not the dominant use of endowment resources.” --- > Critics note that a lot of endowment money goes toward glitzy student centers, athletic fields and pricey academic buildings. From here: http://wfae.org/post/colleges-pressured-spend-more-endowment-funds-student-aid#stream/0 http://wfae.org/post/colleges-pressured-spend-more-endowment...
  - closeparen 9y ago
    An endowment is there to provide investment income over tens/hundreds of years. Spending even 100% of that year's capital gains would be grossly irresponsible. The article you linked is calling for 5% vs. 4%... sure there are probably some institutions being too stingy, but on the whole, taking small distributions is the point.
  - 9y ago

dmix 9y ago

Most of those endowments are pension funds for teachers and other non-wealthy jobs... The majority of the stock market is owned by a few funds as well. Both are individually poor examples of the wealth inequality as a driver of trends in the capitalization of tech businesses... One is an alternative to the other. And typically the biggest investors/funds/endowments do both as a diversification strategy.

psadri 9y ago
Wondering if these funds may be obligated to work in the interest of their investors vs just maximize dollar value. For example, should a factory worker retirement fund invest in robotic companies that automate workers out of a job? I suppose the argument is that if they don’t someone else will.
- chatmasta 9y ago
  What you’re referring to is activist investing, or what is more descriptively known in most cases as activist divesting. Activist groups put pressure on funds to invest in, or divest from, certain assets. For example, my college’s endowment was invested to varying degrees in the oil/energy industries. A bunch of forestry school grad students organized a “divestment campaign” to pressure the investment office to divest from anti-environment assets. I’m not sure how effective they were in the end, but they sure made a lot of noise. So yes, endowments/pensions/sovereign wealth funds are certainly obligated to listen to their “constituents” if you will, but only by societal contract. A big enough PR storm should be sufficient to drive investment or divestment, if enough people are emotional and aggressive in marketing their argument.

closeparen 9y ago

The interest on university endowments funds financial aid.

marnett 9y ago
He is not arguing usage but existence. The existence of large endowments surely displays wealth inequality, regardless of the utilitarian nature that may result as the outcome.
- closeparen 9y ago
  Large institutions are wealthier than individuals? Large institutions are wealthier than small institutions? Neither of these realities are surprising or concerning in any of the ways that wealth disparity between individuals is.
Chathamization 9y ago
> Schools spend an average of a little more than 4 percent of their endowment funds annually. --- > “Endowments aren’t generally used to lower tuition,” said Richard Vedder, an economist at Ohio University, testified before the House Ways and Means Committee last year. “Typically less than 20 cents of every dollar of endowment income is used for scholarships to lower fees for students. Making college more affordable is not the dominant use of endowment resources.” --- > Critics note that a lot of endowment money goes toward glitzy student centers, athletic fields and pricey academic buildings. From here: http://wfae.org/post/colleges-pressured-spend-more-endowment-funds-student-aid#stream/0 http://wfae.org/post/colleges-pressured-spend-more-endowment...
- closeparen 9y ago
  An endowment is there to provide investment income over tens/hundreds of years. Spending even 100% of that year's capital gains would be grossly irresponsible. The article you linked is calling for 5% vs. 4%... sure there are probably some institutions being too stingy, but on the whole, taking small distributions is the point.
- 9y ago