“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx
May 18, 2009
In mid-April, just as Steven Rattner was trying to strong-arm UAW workers into accepting a new round of concessions, he was named in a massive “pay-for-play” scandal involving the New York state pension fund.
New York State Attorney General Andrew Cuomo revealed that Rattner’s company, Quadrangle Group, a private equity company, had been hired to manage a chunk of the huge New York state pension fund, in exchange for a million-dollar payoff. Also named in the pension scandal was the Carlyle Group, which has included as investors or consultants a few former U.S. presidents (Bush, father and son), U.S. cabinet secretaries and several former corporate CEOs, as well as foreign dignitaries.
What attracts such corporate vultures is no mystery: the outsized management fees and commissions. As the New York Times explained, “The fees paid to the money managers can be very lucrative, even when there are losses....”
There are similar kickback scandals in at least three dozen other states – such scandals have become commonplace. Often they take the form of corporate contributions to politicians’ campaigns. After the contributions, the companies get contracts to manage public pension funds. These kinds of kickbacks are not considered criminal. At most, they may result in a slap on the wrist. The Carlyle Group, for example, just settled with the SEC by accepting a 20 million-dollar fine.
In 1997, there were so many kickback scandals involving California pension funds that the state legislature actually passed a bill banning them. But the California state courts quickly threw out the law. The judges declared that a ban would “discriminate” against some politicians, who depended on the campaign “contributions” to get elected.
These scandals offer a rare glance into how politicians and financiers use public funds for their own benefit. The pension funds, which contain close to three trillion dollars, are taken from state and local government workers in order, supposedly, to pay for retirement. For the capitalist class and its political lackeys, this money is used to fund their own enrichment. They milk these funds for huge management fees. Capitalists also use pension funds to help finance big real estate developments, or to buy up corporate stocks and bonds, thus pushing up the value of the capitalists’ holdings. Speculators throw pension fund money into commodity markets, often resulting in higher prices for oil and food. Speculators also use public pensions to help fund corporate takeovers. Workers at the companies taken over often end up with concessions – including cuts in pension benefits!
Obama appointed an extremely wealthy speculator, Steven Rattner, to strong-arm auto workers. That says all that needs to be said.