The Emergence of Universal Owners

Challenge, July, 2000 by James Hawley, Andrew Williams

(7.) Bernard S. Black, "Shareholder Activism and Corporate Governance in the United States," in The New Palgrave Dictionary of Economics and the Law, ed. Peter Newman (New York: Macmillan, 1998).

(8.) Joseph A. Grundfest, "Just Vote No: A Minimalist Strategy for Dealing with Barbarians Inside the Gates," Stanford Law Review 45, no.4 (1993): 857-973.

(9.) "Why Corporate Governance Today? A Policy Statement," California Public Employees' Retirement System, 1995, p. 14.

(10.) Interview with Kim Johnson, general counsel, Colorado Public Employee Retirement Association, December 4, 1997.

(11.) Interview with Kurt Schaht, general counsel, Wisconsin State Investment Board, December 2, 1997.

(12.) The controversy arose out of Maxxam's desire to log old-growth redwood trees, provoking strong opposition from environmental groups and other concerned citizens. The issue was presented to the board of the California Public Employees' Retirement System as Agenda Item 16 on April 14, 1997. See also Mitchel Benson, "Fund Warns Maxxam Not to Log," Wall Street Journal, February 19, 1997, CA1.

(13.) Interview with Jon Lukomnik, deputy comptroller for pensions, New York City, December 15, 1997.

(14.) Interview with Kim Johnson.

(15.) In economic terms, the optimal investment for a firm occurs when the marginal private cost to the firm just equals the marginal private benefit the firm receives. When the benefit to the economy at large--the social benefit--exceeds the private benefit, as it does with education, firms will underinvest from the point of view of society at large.

(16.) See Robert E. Lucas, "On the Mechanics of Economic Development," Journal of Monetary Economics 22, no. 1 (1998): 3-42; and James E. Rauch, "Productivity Gains from Geographic Concentration of Human Capital: Evidence from Cities," Journal of Urban Economics 34, no.3 (1993): 380-400.

(17.) CalPERS, "CalPERS Adopts Study on Workplace Practices," news release, June 15, 1994, Sacramento, California; and The Gordon Group, "Report to the California Public Employees' Retirement System, High Performance Workplaces: Implications for Investment Research and Active Investing Strategies," Waban, Massachusetts, May 30, 1994; and City of New York, Office of the Comptroller, "High Performance Workplace Practices: A Recommendation for Institutional Investor Action," January 1995.

(18.) "Regional Linkages, Silicon Valley and the Networked Firm," talk given at The Changing Nature of Entrepreneurship, a conference sponsored by the Center for Economic Policy Research in association with the Chemical Heritage Foundation, Ralph Landau Center for Economics and Policy Research, Stanford University, May 30, 1997.

The most famous case of a company failing to capture the benefits of its R&D expenditures may be Xerox PARC, a basic research facility for Xerox Corporation in Palo Alto, which invented, among other things, computer networking and the graphical user interface with its mouse as an input device.

(19.) William Crist, personal communication, January 1998.