The Cold War in Welfare: Stock Markets Versus Pensions
A new Cold War has developed between competing blocs of countries over the role of financial markets versus the state in the provision of pensions and the financing of the economy generally.
An Anglo-American bloc, which has spread into South America, Australia, Canada and Japan, favors private pension investment on stock markets. Proponents of this approach argue that it will be much more efficient and provide capital for corporate growth. A European bloc, which covers most European countries other than the UK, favours state provision and a much smaller role for stock markets in pensions' provision and in corporate relations with the financial sector. This model is, unsurprisingly, under threat from the World Bank, financial markets, and many senior academics in the US and Britain.
This book is the first to analyse comprehensively this situation. It argues that social provision and corporate relationships with the financial sector are inextricably linked, and moreover that the expansion of private pensions through stock markets has all the attendant consequences for the control of companies by investors on those markets who want to maximize individual financial returns as opposed to corporate growth. Indeed, the book comes to the conclusion that many of the arguments used in support of the Anglo-American approach are based not on improving pensions and economic growth but rather on how to promote stock markets themselves, a decidedly different matter.
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activity Anglo-American model approach arbitrage argue arguments basic pension benefits billion GBP capital markets capital-market companies concentration contributions corporate costs dependency developing countries domestic economic growth emerging markets employees ENRSP Feldstein figures finance/production financial flows financial institutions financial integration financial markets financial returns financial sector financial system fund managers funded pension funded systems Germany hedge funds Human Development Index ibid implications important income increase interest issue labour ment mergers and acquisitions Netherlands nomic OECD organisations pay-as-you-go pension arrangements pension funds pension schemes pension systems pensions provision personal pensions political portfolio private pension private provision private sector privatisation proposals public expenditure public pensions rate of return relationship retirement Richard Titmuss risk role shareholders shares Singh sion social security south-east stock markets structure supplementary takeover theory tion welfare blocs World Bank