January 31, 2008

Couldn’t Help But Notice (013108)

Filed under: Economy,Soc. Sec. & Retirement,Taxes & Government — Tom @ 7:44 am

Breaking through some of the backlog …..

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In case you missed it, North Korea is corrupt and has abused the UN aid provided to it:

North Korea used the bank accounts of a U.N. agency for deceptive cash transfers, among a wide range of abuses of that organization’s presence in the communist state, a U.S. Senate panel reported on Wednesday.

The United Nations Development Program deviated from its standard practices in the way it hired local North Koreans and paid their salaries, but was not complicit in — or aware of — the host government’s improper financial transactions, said the U.S. Senate Permanent Subcommittee on Investigations.

I know, the shock must be overwhelming. The press coverage, of course, has been underwhelming.

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Last week in the Wall Street Journal, Eugene Scalia, who formerly served as general counsel of the U.S. Department of Labor, made some important points about how shareholder activism by union pension funds violates ERISA (bold is mine):

….. “union pension funds” do not belong to unions. The funds are managed by trustees — half appointed by the union and half by the companies that contribute to the fund pursuant to their collective-bargaining agreements. Under the federal employee benefits law (ERISA), which is administered by the Department of Labor, these trustees are to act “solely in the interest of the plan’s participants and beneficiaries, and for the exclusive purpose of paying benefits and defraying reasonable administrative expenses” ……

Before undertaking “to monitor or influence the management of corporations,” the department said, fiduciaries “must first take into account the cost of such action and the role of the investment in the plan’s portfolio, and cannot act unless they conclude that the action is reasonably likely to enhance the value of the plan’s investments.”

Most shareholder actions undertaken by retirement/health and welfare funds managing union members’ money are actions that are, by any reasonable benchmark, more likely to reduce shareholder value than to enhance it — which is why Scalia’s conclusion is absolutely correct:

In a word, unions are not entitled to use retirement funds to raise costs at the companies where the funds are invested. And unionized corporations are not required to permit this. Rather, management trustees and the Labor Department are obligated to prevent it.

These retirement/health and welfare funds managing union members’ money have sometimes gone even further from their mission — illegally — in their attempts to influence Social Security reform legislation, as noted here almost three years ago (first item at link). They have no right to do this — none.

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John Stossel had a great column last week on continued growth in the worldwide economy:

This week’s newspapers are full of predictions of an impending recession, and maybe they’re right. But the great untold story is the good news: the worldwide boom in economic growth.

“I think one of the best kept secrets is that the world is in the midst of an economic boom, and it is largely driven by increases in economic freedom,” says economics professor James Gwartney, director of the Stavros Center for the Advancement of Free Enterprise and Economic Education at Florida State University. “The world has become more free, and, at the same time, growth is soaring to new highs. During 1995 to 2005, the growth rate of per capita GDP in99 countries for which data are available has increased to 2.2 percent, nearly twice the rate of recent decades. Since 2000, the annual growth rate of per capita GDP has been even more rapid, 3.2 percent.”

….. The story the index tells couldn’t be clearer: Economic freedom produces high living standards.

Read the whole thing.

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Rich Karlgaard didn’t know it at the time, but the opening of his Forbes column last week turned out to be a fitting epitaph for the now-ended John Edwards campaign:

Gallup poll taken in December says Americans are, surprisingly, not as angry as politicians and pundits want us to be. From Gallup’s Web site: “More than eight in ten Americans say they are satisfied with their personal lives at this time, including a solid majority who say they are ‘very satisfied.’ This personal satisfaction level contrasts sharply with the low level of satisfaction Americans express with the way things are going ‘in the U.S. at this time.’”

Now you know why the John Edwards presidential candidacy has flamed out. The rags-to-riches trial lawyer and onetime hedge fund adviser ran as the angry man. While most normal people might have accepted their spectacular rise in fortune with gratitude, Edwards has run as “the hater,” as described by Rich Lowry of National Review. Writes Lowry: “Edwards is like a stand-up comedian who has honed his act down to the most effective material. In the case of the comedian, all that’s left is laughs; in the case of Edwards, almost all that is left is unbridled hostility.”

Look at how far this has gotten him.

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