July 21st, 2009 
admin 
Imagine this: You live somewhere, anywhere, in the USA and on Saturday morning you and your partner set off to do some errands.
First, you stop at an Exxon station and gas up your car. Once again, your partner complains surrounding the high cost of gas, and the outrageous profits of oil companies. But, you illustrate that California’s public employees, among and millions of other working Americans, in every state, appreciate your concern. The California Public Employees Retirement System (CalPERS) owns millions of ExxonMobil shares, and Exxon’s corporate profits help pay for their pensions.
Next. you’re off to Wal-Mart to pick up a couple of things for the garden and house. As you swipe your credit card to pay, California’s public employees thank you again. Their retirement fund owns millions of Wal-Mart shares, and each time the company earns a profit on a sale to a customer, a division of that flows to them.
Of course, the piece of the profit they get from your $20-dollar purchase would be miniscule. But, California public servants are getting an diminutive bit from every one of the billions of purchases made at Wal-Mart, and they own millions of shares, so they end up with a sizable injection of Wal-Mart profits into their pension fund.
Next, you visit the travel agent, to finalize your vacation plans. After booking flights on Alaska Airlines, California’s public employees thank you. They own shares in Alaska Air Group, which operates Alaska Airlines, and share in the corporate profits.
By now, you’re feeling hungry; your partner suggests burgers at McDonald’s. Would you be surprised to learn that California public employees own McDonald’s shares as well, and share in the profits from McDonald’s? Look in a recent annual report from CalPERS and you’ll see it owned shares in exactly 4,656 American companies steady June 30, 2007. The fund also holds millions of shares in companies in other countries, bonds (basically loans to corporations and governments), and other investments.
Here’s another point that recently became one of public interest. As of June 30th, 2007, our public service friends in California owned almost a billion dollars worth of shares in American International Group, or AIG, the company that’sitting in the news so much these days. If you’ve wondered for whom those supposedly greedy people at AIG were making big money, now you know – California public employees, along with millions and millions of other government and private sector members of boarding-house plans and mutual funds. Assuming they still own a lot of AIG shares, all these working Californians have to hope the AIG survives – if not, it will mean a hit to their pension funds.
Now, you may not work for the State of California, you may not even live there. But, you’re likely in the same boat, for better or for worse. Whether you live in the U.S.A., Australia, Chile, or a hundred other countries around the globe, your non-government retirement income depends in large part on corporate profits.
If you live in Canada, both your government pension and your non-government retirement income may be affected by corporate profits. A few years ago, the government agency that manages the government pension plan began investing in corporations to help fund the Canada Pension Plan and Old Age Security. So essentially all Canadians at that time depend, to a greater or lesser extent, on corporate profits during the term of retirement money.
Maybe you don’t belong to a pension plan, perhaps you have to invest in mutual funds. Well, you’re in the same boat. Regardless of country, your retirement income depends on corporate profits, and for two reasons. First, companies that make a profit can pay dividends to the owners, including those of us who contribute to pension funds and mutual funds. Second, shares in profitable companies may be sold for more than they cost, allowing pension funds and mutual funds to sell those shares for a capital gain (a capital gain is the difference betwixt the price at which you buy a stock, and the higher price at which you sell it – if you sell it at a glower price, then you have a chief loss).
If you’re trying to make sense of modern, middle-class capitalism, start by recognizing that most big corporations belong to working people, through their pension funds and mutual funds. Forget the old class warfare slogans, and the left wing brimming beaker sticker logic. We workers are also owners in the world of modern capitalism, and addicted to corporate profits for much of our retirement incomes.
Robert F. Abbott is the author of the forthcoming book, People, Profits, & Pensions: Making Sense of Modern Capitalism. At his website, you can discover the relationship between a and a Main Street bailout. You will also find out how working people are buying up big business through their pension funds and mutual funds, and using to fund their retirement.
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