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What’s Green, White and Blue? American Jobs

9:13 am in Uncategorized by Leo W. Gerard

Red, as in furiously red, defined the day last fall when a consortium of companies announced it wanted $450 million in U.S. stimulus money to build a wind farm in Texas, creating 2,000 jobs in China and 300 in America.

Now, nine months later, things have cooled down and turned around. In a deal with the United Steelworkers (USW), two Chinese companies have agreed to build as much of the wind turbines as possible in America, using American-made steel, and creating perhaps 1,000 American jobs.

The deal is a result of white collar Chinese executives negotiating with blue collar union officers to create green collar jobs in the U.S. The agreement defies stereotypes about unions as constantly combative, excessively expensive and environmentally challenged. The USW has a track record of engaging with enlightened CEOs for mutual benefit. It has a long green history. And it has worked to return off-shored jobs to the U.S.

The USW, like the Democrats in the House and Senate with their Make It in America program, is devoted to preserving and creating family-supporting, prosperity-generating manufacturing jobs in America. And if they’re green, all the better.

Billionaire investor Wilbur Ross has first-hand experience negotiating with unions, including the USW, to sustain U.S. manufacturing. He describes it positively. Here he is on PBS’ Charlie Rose on Aug. 2:

“I have found the leaders of big industrial unions, the steelworkers, the auto workers, they understand dynamics of industry at least as well as the senior management of the companies.”

Ross talked to Rose about dealing with the USW during the time when he was buying LTV Steel:

“We worked out a contract that took 32 job classifications down to five, changed work rules to make it more flexible and most important of all, we put in a blue collar bonus system. . .We became the most efficient steel company in America. We were making steel with less than one man hour per ton. The Chinese at the time were using six man hours per ton. We were actually exporting some steel to China.”

Ross accomplished that while paying among the highest wages for manufacturing workers in America.

The USW approached the Chinese companies that planned the $1.5 billion Texas wind farm, A-Power Energy Generation Systems Ltd. and Shenyang Power Group, the same way it did Ross. The meetings occurred with the help of U.S. Renewable Energy Group, a private equity firm that facilitates international financing and investment in renewable energy projects. Jinxiang Lu, chairman and chief executive of Shenyang Power, said talking to the union enabled him to see its “vision for win-win relationships between manufacturers and workers.”

For the USW, this deal means the Chinese firms will initially buy approximately 50,000 tons of steel manufactured in unionized American mills to fabricate towers and rebar for the 615 megawatt wind farm in Texas, will employ Americans at a wind turbine assembly plant to be built in Nevada, and will employ more American workers in green jobs at plants constructing the blades, towers and thousands of other wind turbine parts.

For the Chinese companies, the USW, the largest manufacturing union in America, will use its long list of industry contacts to help construct an American supply chain essential to amass the approximately 8,000 components in a wind turbine. The idea is to collaboratively create a solid manufacturing, assembly, component sourcing, and distribution system so that this team – the Chinese companies, U.S. Renewable Energy Group and the USW — will build many more wind farms after the first in Texas.

Additional wind farms mean more renewable energy freeing the U.S. from reliance on foreign oil. As U.S. Sen. Sherrod Brown, D-Ohio, says, there’s no point in replacing imported foreign oil with imported wind turbines. For energy and economic independence, green manufacturing capacity and green jobs must be in the U.S.

This deal does that. And there’s nothing unusual about foreign companies employing Americans. Many Americans, including USW members, already work in factories owned by many different foreign national companies, including German, Russian, Japanese, Mexican, and Brazilian, with names like Bridgestone-Firestone, Arcelor-Mittal, Rio Tinto, Grupo Mexico, Svenska Cellulosa AB (SCA) and Severstal.

In at least one other case, action by the USW forced the hand of a Chinese company to move jobs to the U.S. Tianjin Pipe, the world’s largest manufacturer of steel pipe, said it could not export profitably to the United States if tariffs rose above 20 percent. This was after the USW and seven steel manufacturers filed a petition with U.S. trade agencies in April of 2009 accusing China of illegally dumping and subsidizing the type of pipe used in the oil and gas industry. The union won that case this past April, and the U.S. Commerce Department imposed import duties ranging from 30 to 100 percent to give the domestic industry relief from the unfair trade practices. To continue selling in the U.S., Tianjin Pipe had no choice but to build an American pipe mill. Construction is expected to begin in Texas this fall on the $1 billion plant to employ 600 by 2010.

Although the USW is cooperating with A-Power and Shenyang Power, it will not back off its trade cases involving exported Chinese steel, pipe, tires, paper and other manufactured products. The stakes for U.S. jobs are just too high.

Back in 1990, when green was not as trendy, the USW recognized that the environment would be among the most important issues of the era and issued the report, “Our Children’s World.” Since then, it has steadily promoted green — became a founding member of the BlueGreen Alliance and Apollo Alliance, which promote renewable energy and renewable energy jobs.

Good, green American manufacturing jobs. Establishing American energy independence. It is win-win. And it’s getting a green light now.

Q&A with Veteran Labor Organizer Stewart J. Acuff

12:44 pm in Uncategorized by Leo W. Gerard

Leo W. Gerard: Stewart, you talk about power in a book you’ve written with economist Dr. Richard A. Levins. You called the manual, “Getting America Back to Work.” What’s the relationship between power and getting people back to work?

Stewart J. Acuff: A big part of the problem we have with this economy or the biggest problem is that most of the money has gone to the Financial Elite — and the power as well. To get America back to work we have to reinvest in our country and our workers. That necessarily means that the Financial Elite get less of the wealth generated by the economy and workers will get more. If you intend to take wealth from the richest people in the history of the world, you have to have enough power to do so.

Gerard: You say in the introduction that there are two kinds of power: “The first is lots of organized money. That is the kind of power the Financial Elite have used to bring the rest of us to our knees. The other source and form of power is lots of people: organized, mobilized, united, and taking action.” Do you really think that organized people can succeed in a wrangle with the financial elites?

Acuff: Absolutely! The economic history of the twentieth century is crystal clear. When unions were strong, working people had the lion’s share of income and the economy worked well. When unions were weakened, we have seen the Financial Elite take over and run the economy into the ground.

That’s why passing the Employees Free Choice Act is more important than ever. When we strengthen unions, we strengthen the economy.

Gerard: Now, Stewart, you sound like some kind of Socialist talking about the fact that at times in the nation’s history the financial elite received collectively as little as 9 percent of the total income earned by Americans but at other times – like right now and right before the Great Depression – the financial elite grabbed more than 23 percent of all income. I mean, aren’t you afraid the likes of Rush Limbaugh and Glenn Beck will accuse you of opposing just rewards earned by the barons of capitalism?

Acuff: Well, my friend, those aren’t just rewards. As my friend Jim Hightower said, members of the Financial Elite were born on third base and say they hit a triple. It’s beyond comprehension that the trading of phony financial instruments like derivatives produces rewards. What produces just rewards is manufacturing and producing goods and services that people need and want. The person who needs just rewards today is the hotel maid who cleans rooms for a living or the overstressed nurse who can’t get to all her patients or the skilled but out-of-work construction worker waiting for the chance to earn an honest day’s pay.

Gerard: Okay, but then you start talking about income tax rates. Are you really suggesting that the current maximum of 35 percent be raised to the 90 percent that it was during the 1950s? Would that not just enrage the financial elite?

Acuff: Yes, it would enrage the Financial Elite and Dr. Levins and I haven’t made that case in this book. Certainly the income tax rate for the richest among us is far too low. When Warren Buffet himself says he pays a lower percentage of his income in taxes than does his secretary, that’s a problem.

We wouldn’t need to rely on taxes to redistribute income if we had the right mix of union power and corporate power. Instead of a few massive fortunes, we would have millions of working people being productive and using fair wages to stimulate economic growth.

Gerard: Since the days of Reagan, Republicans have told us that taxes on the financial elite should be cut because they need all that money to “re-invest” in the system. That way, the GOP line goes, wealth will trickle down on the “little people.” This hasn’t really worked, has it?

Acuff: No! Not at all! Since the days of Reagan workers wages have stagnated and declined while our productivity has increased. Wealth does not trickle down. Have you seen any of the TARP billions trickling into your pocket lately? I sure haven’t. All I saw was obscene bonus payments to those who caused the mess in the first place.

Gerard: Halfway through the book, you suggest working people can have it all – family-supporting jobs, health insurance, even Social Security. Those on the radical right tell us daily that’s impossible because of the national debt. How can you justify such a vision?

Acuff: More income means more tax revenue, more economic growth and economic activity. We lift the economy from the bottom, not from the top.

Gerard: Then you have the audacity to quote some old economists claiming, “An efficient and humane society requires both halves of the mixed system – market and government.” We know, because the right-wing has told us repeatedly, that government is bad, that it should be shrunk and drowned in a bathtub. Where did you and Professor Levins come up with this new-fangled idea that government could help?

Acuff: It’s not a new idea. It says right in the ECON 101 text that Dr. Levins used in his classes that "markets without government is just one hand clapping." From the destruction of 2 trillion dollars of America’s wealth by Wall Street to the incessant pouring of oil from BP’s hole in the bottom of the Gulf, we know that capitalism must be regulated and constrained for the sake of everyone.

Gerard: Which brings us to organized labor. You quote President Kennedy saying, “Those who would destroy or further limit the rights of organized labor – those who would cripple collective bargaining or prevent organization – do a disservice to the cause of democracy.” Isn’t that exactly what has happened since the days of Kennedy, a slow destruction of the labor movement with corporations, union-busters and sometimes government regulators all working together to rob labor unions of the power they built between the 1930s and 1950s?

Acuff: Yes, you’re absolutely right. The results are the mal-distribution of wealth and power and massive recession, a shrinking middle class, a starved consumer demand, and a weaker America.

Gerard: The book was written and published before the explosion on the Deepwater Horizon rig that was drilling for BP in the Gulf of Mexico. Is it somewhat prophetic, then, that you discuss the need to move from a fossil fuel-based economy to one that creates jobs with renewable energy sources?

Acuff: I can’t speak to prophecy though I am a huge fan or both Isaiah and Jeremiah. We’ve long known that America needs to generate its own free energy from free resources like the wind that never stops blowing on Great Plains, the sun that never stops shining in the deserts of Arizona, and incessant pull of the ocean’s tide.

Gerard: I was glad to see the chapter discussing the importance of maintaining and supporting manufacturing in America. For those still unconvinced, why is that so important?

Acuff: Well, we don’t need to maintain just current manufacturing capacity. We need to increase manufacturing capacity. That is how to generate wealth. We create wealth by making things that other people want to buy and that is the best way to build a sound economy.

You sound a little bit like a preacher at the end where you state the four values that Americans can believe in. Do you think America can organize around those values and take on the financial elite?

Acuff: Yes, I do! I think what we need is a reinforcement of fundamental human values. We’re all in this together; there is a common good; we are our sisters’ and brothers’ keepers, and workers win and have always won by exercising collective power against the individual power of the Financial Elite.


Stewart Acuff is chief of staff for the Utility Workers Union of America. He has organized for 30 years, beginning in 1982 with the SEIU. In 1990, he became president of the Atlanta AFL-CIO. There he led the campaign to organize the 1996 Olympics. A decade later, he went to work for the national AFL-CIO, serving as organizing director from 2001 to 2008. He led the AFL-CIO campaign to pass the Employee Free Choice Act.


Dr. Richard Levins is professor emeritus of applied economics at the University of Minnesota. He is an award-winning author of books about policy and market power.

Q&A With Responsible Pension Investment Expert Thomas Croft

11:31 am in Uncategorized by Leo W. Gerard

Leo W. Gerard: Tom, your new book, Up From Wall Street: The Responsible Investment Alternative, provides both cautionary tales for those responsible for investing workers’ pension funds and a field guide of practical assistance for institutional investors who want to use responsible investing (RI) techniques. Let’s start with the caution. Why should workers care how their pension funds are invested?

Thomas Croft: As we discovered when we pulled together the original Heartland Labor/Capital Working Group in 1995, it’s incredible how much we don’t know when it comes to the investment practices and trends that affect workers’ retirement assets and other institutional savings. Before the crash, workers owned over $9 trillion in pension trusts, and, if we added it all up, working families owned $24 trillion in all institutional savings. So, steelworkers, teachers, insurance holders, students and college endowments, and the vast majority of our population have an interest in how these funds are invested.

Since these funds control a majority of public stocks, we have an interest in how those corporations are governed. In terms of the general economy, we have an interest in the general direction of investment flows. The historian Kevin Phillips has written about the growing power of the financial services industry. In the 1970s, manufacturing led financial services by a two-to-one margin. By 2006, goods production had shrunk to just 12% of GDP while financial services jumped to a “swollen 20-21% of GDP.” So, financial sector profits, as a percent of domestic corporate profits, rose from 16% in 1973 to 41% in 2000s. That means that vast waves of our savings and assets—our money—has increasingly disappeared into a dark hole called financialization. I’ll come back to financialization.

So, what it means in terms of the economy is that the country doesn’t build things anymore. Remember Allentown, and the song by Billy Joel that described the shutdown of Beth Steel? Bethlehem Steel was originally constructed to build the nation’s rail systems. And those workers helped build the skyscrapers in New York City, and they helped win WWII. After the Beth Plant was closed, a new Las Vegas Casino was to be built on the former steel site. Well, the casino couldn’t find the structural steel, at first, to build the casino. Kind of ironic, but also tragic

If we can’t find enough steel to build casinos today, how in the world will we build the green jobs industries of the future? We need steel to build the Obama administration’s proposed new high-speed rail system, right? And how will the Allentowns and Homesteads and Youngstowns and Flints of this country, and all of our other rust-towns ever fully recover? We can’t depend on casino jobs, eds and meds, tourist and service jobs alone to replace the lost manufacturing jobs. We need a robust domestic manufacturing economy if we are going to benefit from the green jobs boom.

As Lynn Williams once said, “The pension savings of American workers should not only guarantee good pensions. They should guarantee American workers jobs to retire from.” Beyond that, pension trusts were collectively bargained benefits that are long-term promises to workers so that they can retire with comfort and dignity. People gave up wage increases and other current benefits to pay for that promise. Before pensions, and before FDR created Social Security, older workers might be found scrounging through trash bins in the alley or living in poor houses. Along with Social Security, pension funds are part of a three-legged stool, as it’s called, so that workers can retire without the constant fear of deprivation. Do we want to go back to the days of the poor house?

Gerard: You documented here, and in your earlier work, Working Capital: The Power of Labor’s Pensions, that workers’ pension money could cruelly be used to injure them. Isn’t that investment practice perverse?

Croft: It’s not only perverse, it should be illegal. First, as our colleagues put it, there is a gigantic pension industrial complex that is centered on Wall Street that takes hundreds of billions of dollars in fees out of pension funds just to manage our pension funds. Then, time after time, our money have been sucked and suckered into risky financial schemes that are unsustainable, and eventually crash, destroying the hard-earned savings of tens of millions of workers and their families. As you have pointed out, before this crash, the country suffered through the savings and loans debacle and the dot-com bust, and similar made-on-Wall-Street catastrophes. When we come to learn that the CEOs and other financial geniuses who devised these crash schemes all made off with billions in CEO compensation and bonuses, then it’s apparent that we are putting the wrong kind of people in jail.

I’d like to return to the concept of financialization. A large driver of financialization is the shadow bank system. The shadow banks include the large banks and investment houses that utilize un-regulated trading and derivative schemes to make immense profits. They also include the largely unregulated investment funds that invest in the private economy, such as real estate funds, the mega-private equity funds and hedge funds. These systems became so inter-related that the collapse of one sector then brought down many others. For instance, when Lehman Brothers went under, the credit default insurance plans that theoretically insured the hedge funds vanished, and the hedge fund market tanked. After AIG was nationalized, its business continued cratering due to its business selling these default swaps to Lehman and others. And the pension funds that had invested in these massive hedge funds and the AIGs, etc., then lost tons

Our pension funds were siphoned into these shadow bank markets. When pensions invest in alternative investments—not stocks and bonds—there is a term for the ancillary benefits that might result from the investment. For instance, if a pension fund invests in affordable or workforce housing, the main reason is to achieve a good return on the investment. But the housing that is also built might be called a collateral benefit. In Working Capital, Dean Baker and a co-author discovered how hundreds of billions of our trust funds were invested in schemes that caused “collateral damages” for pension beneficiaries, other workers and our society. For example, our pensions were invested in off-shore sweat-shop corporations—many American owned — that not only exploited third-world workers but also then shipped cheap products back into the country, causing jobs to be ultimately lost here. And the lure of investing in the dot-coms that never had realistic business plans contributed to the last crash.

There’s lots of examples, but collateral damage investing continued after the crash. We all know about the sub-prime mortgage and the housing bubble disasters. Well, CalPERS, the California public employees pension fund, along with many other state pensions, lost $1 trillion in one case alone by investing in securities backed by sub-prime mortgages.

A lot of my research went into hedge funds and mega-buyout funds. Hedge funds were originally designed as an investment program for wealthy investors. Then hedge assets boomed over the last decade, growing ten-fold from 1998 to 2008 (to over $2 trillion). From 2002 to 2007, the share of dollars in hedge assets coughed up by institutional investors—including pensions, university endowments, foundations, and insurance funds, etc.–jumped from 2% to 50%. That’s a lot of money for what became, in essence, a Wall Street game to short markets and firms.

And the money pouring into private equity, climbing by 2006-2007 to $301 billion, came disproportionately from institutional investors. In the case of the mega-private equity funds—which in reality looked like the large LBO funds in the 1980s—there’s ample evidence that many of the funds over-leveraged their portfolio firms, leading to firm failures and bankruptcies. Or worse, they stripped and flipped their acquisitions. That includes Simmons Bedding, a Steelworker-represented company that just filed for bankruptcy and closed plants. That includes Mervyn’s, Linens ‘n Things, and many others. The money that the Boston mega-fund used to destroy Simmons came from pension funds. Why?

In addition, they have been privatizing many our longest-standing companies—firms that often had good labor relations. These new Wall Street barons—like KKR, Blackstone Partners and Apollo Partners–now own many of the largest employers in America and Europe; in essence, they have achieved a new stage in corporate ownership. What does that mean for those workers, communities and our economies? We should be investing our money to build up companies, not tear them down.

They’ve also damaged many of our civic institutions. I don’t have to look far to see the damage. Here in Pittsburgh, CMU and the University of Pittsburgh recently filed fraud lawsuits against Westwood Capital —ostensibly a hedge fund– after their $114 million investment vanished. And the Pennsylvania public pension fund lost an additional $2.5 billion (than they would have otherwise, according to some estimates) by betting on an extremely large hedge fund gamble (almost 1/3 of total portfolio). Colleges, states and municipal pension funds are cash-strapped. That’s no reason to bet the farm.

Worse, Congress and the White House have not passed meaningful financial reforms that might have prevented or moderated the 2008 crash and the ones before it. The author Tom Wolfe dubbed these new corporate owners the “New Masters of the Universe.” I call them the Shadow Bank Robbers. Not only should government and institutional investors force transparency, reasonable fees and prohibitions against practices that harm workers, companies and communities, we should re-regulate, bring back the New Deal protections that were discarded. And it wouldn’t hurt if we put the shadow bank robbers behind bars. Bernie Madoff got caught running what he called a hedge fund; thousands of uber-financiers are making off with billions running an even larger ponzi scheme that is perfectly legal. It’s crack finance, and it should be illegal.

Gerard: What struck me in your book is these two sentences:

“This book tells the story of a group of responsible enterprise and real estate investors who are profitably investing pension and similar assets in good jobs, affordable housing, and a green future. This book shows how workers’ capital, endowments, and other institutional investors, through responsible investment principles, can do well and do good at the same time.”

My emphasis added because I think most people would not believe you could do both. They would think that if you made socially-correct investments, you would lose money. What did your research show?

Croft: When I started writing the book, I traveled to towns and cities all over North America. I came to know some remarkable and innovative stewards of our capital…worker-friendly investors who have built projects and invested in ventures and companies in ways that make you proud. These investors were managing about $35 billion. And, in fund after fund, investment after investment, these responsible fund managers have been—for the most part–financially successful.

None of the real estate funds that I surveyed in this field guide were investing in sub-prime scams. And none of the private enterprise investors were investing, as far as I know, in the LBO over-leveraging strategies that failed so dramatically. So, the book shows you can do well and do good. How? They’re making honest profits (for our pension funds) but also treating workers with respect, investing in affordable and multi-family housing, advanced manufacturing and green jobs.

In Pittsburgh, for example, pensions invested some $3/4 billion in worker-friendly real estate funds that successfully built multi-family housing, revitalized brownfields and re-built new commercial workplaces all over the region. And worker-friendly enterprise funds have, in fact, saved steelworker jobs of two manufacturing firms that were bankrupt. So, thousands of jobs were created or saved just in this area. And these investments were the tip of the iceberg, as I’m sure many of the large redevelopment investors in the region were capitalized by institutional investors.

So, my book shows that worker-friendly investment funds have indeed had singular and significant impacts on the regions, economic sectors, companies and projects in which they invest. Most of the funds met or bested their respective investment benchmarks. The portfolio investments showcased in the field guide yielded not just good returns-on-investment, but also collateral benefits for working people and the environment.

Gerard: So that is terrific news for workers. You’ve given me the big numbers. In the book, though, you provide specific examples where these investments worked out both for the investors and workers. Would you give one here?

Croft: There are so many important examples.The AFL-CIO Investment Trusts worked on efforts to rebuild New Orleans, including a factory making sustainable manufactured housing. The MEPT Fund rebuilt a burned down hospital on the north tip of Roosevelt Island, New York, and converted it into an award-winning green housing community with 500 units, plus a daycare center and essential amenities. The KPS Capital Partners Fund restructured a bankrupt transportation company with factories in towns like St. Cloud and Crookston, Minnesota, and Winnipeg, Manitoba, now employing 1,800 union workers making hybrid busses.

And, let’s take a really big case that helped Steelworkers. On May 14, 1999, in the largest union-led buyout in the country since 1994, KPS Special Situations Fund partnered with other investors and a minority ESOP formed by employees to buy a pulp and paper mill, an extruding plant, and five converting plants from Champion International (for $200 million), which was distressed. The new company, Blue Ridge Paper Products, was launched with 2,200 new employee owners. Blue Ridge is a leading integrated manufacturer of liquid packaging, envelope paper and coated bleachboard used in food service packaging. The Company also produces specialty uncoated and extrusion coated papers.

The Company had eight manufacturing facilities located in seven states, including the paper mill in Canton, North Carolina, the extruding mill in Waynesville, North Carolina, and in five Dairy Pak converting plants in Georgia, Iowa, Texas, New Jersey & Olmsted Falls, Ohio. Blue Ridge subsequently acquired another Dairy Pak plant in Richmond, Virginia from MeadWestvaco.

And, this company became greener. The Canton mill became a charter member of the EPA National Achievement Track Program in 1999. Due to a $400 million investment in new technology over a decade, the facility is one of the most efficient and environmentally-friendly pulp mills in the world.

In July 2007, Blue Ridge was sold to Packaging Holdings Corp. KPS returned approximately 2.5 times its invested capital to its investors—including pension funds– and employee-stockholders had approximately $30 million of cash deposited into their ESOP accounts. What a huge success!

Gerard: Let me press you a little bit, though, because everyone will be asking this question when pension funds have suffered so badly during this downturn in the economy. Would responsible investing have made a differenc

Croft: In my travels, I watched as great states and communities buckled from the weight of the Great Recession: Downstate New York. The auto towns of the Great Lakes states. The strapped communities of California. From years of working in Pennsylvania, I’ve come to understand what happens when investment markets red-line communities. Boom towns go bust, and rust towns take their place. When the economy falls as rapidly as it did, most sectors of the economy get dragged down.

This was the largest market crash and recession since the 1930s. So, many of the investments by even good investors were bound to be weighed down. But my point has been that irresponsible investment practices—using our money—were a large factor in the crash, as they have been over and over.

Some of the worker-friendly investors will inevitably suffer because the firms they’ve invested in are now having a hard time. Some of the real estate funds have suffered redemptions from pension funds having to re-balance their assets (since pension funds lost so much in the general markets). But as I said, the responsible funds did more due diligence, so their investments were not as risky. If they’ve had trouble, they’ll likely recover quickly. And some funds have actually done pretty well since the downturn started.

So, we also know that it’s time that our assets are put to work for the long-term, and not in ways to destroy our economy. With the Obama Administration’s help and guarantees, for instance, we could co-invest real money to re-build our cities and towns, and re-grow and re-shape this economy. And our money should be invested so that markets serve society—community, in other words– and not the other way around. We indeed have the capacity to construct infrastructure, reinvigorate our cities, and create those highly-anticipated green jobs for our children. We just have to re-claim control of our money.

Gerard: Well, let’s talk for a minute about California Public Employees Retirement System, then, the nation’s largest pension fund. CalPERS did engage in some responsible investing, as noted in your book. But it has suffered terribly and is expected to fire some of its real estate investment managers. Is that simply a result of the market and could not have been avoided? Or should they really, in your estimation, have been doing something else.

Croft: For all the things thatCalPERS did right in terms of double-bottom line investing, as it’s called—investing in green housing and buildings, urban investments, and clean technology– it may have been overly aggressive in alternative investments. And CalPERS was caught up in the sub-prime and real estate bubble markets. CalPERS is, in fact, suing Moody’s and other ratings agencies because the pension fund claims that it did not know that a $1 trillion investment in securities (that I mentioned earlier) were in fact backed by sub-prime mortgages. And some of their high profile investments in large real estate projects and overly-risky private equity have been slammed. But CalPERS has recovered to the $200 billion level, and, given the fiscal crisis in California, we’re all hopeful that recovery will continue. Some of my labor friends are now concerned that CalPERS is going back into the “dark pool,” doubling down in hedge funds and the mega-LBO funds to make up for the losses.

Gerard: What kind of response have you gotten to the book and what do you hope will happen as a result.

Croft: It’s really been great. We’ve started to get a lot of coverage, and the book is making the rounds. I’d like to see Heartland be able to create an ongoing “Center for Responsible Capital” so that we can continue to push responsible investments and act as a watchdog for union members and communities against investment abuses.

Your earlier support and that of the union has allowed me to write this book. And, your leadership in capital strategies, rebuilding manufacturing, and kicking off the green economy has provided a lot of inspiration for the book, and we actually quoted you a couple of times—simply because it could not have been stated better. We’ve now come to understand that responsible investors have been, profitably, creating hundreds of thousands of good jobs, building hundreds of thousands of living spaces, and helping to rebuild cities and communities. So, as you said, our capital stewards can indeed invest in a responsible future—our future, and that of our children—and invest in a vision of the economy that’s more humane and sustainable.


Thomas Croft is an international expert on innovative capital strategies and jobs-oriented economic revitalization policies. He serves as executive director of the Steel Valley Authority, a regional economic development organization for Pittsburgh and 11 municipalities in the Mon Valley. The authority uses creative techniques to preserve and revitalize companies in crisis. Croft also is director of the Heartland Network, a working group of responsible pension investment advocates in the U.S. and Canada. Croft was commissioned by the Heinz Endowments to write Up From Wall Street.