Monday, July 31, 2017

Monday Morning Links

Miscellaneous material to start your week.

- Cole Eisen points out how Sears - like far too many other businesses - has deliberately depleted employees' pension funds while extracting billions of dollars for executives and shareholders:
Sears Canada’s woes stem from what appears to be a methodical process of value extraction. While Sears’s pension funding position deteriorated from a $220-million surplus in 2008 to a $110-million funding shortfall last year, its leadership funnelled cash out of the firm. Over the period, Sears Canada paid out more than $1.4-billion through special dividends and share buybacks, with a large chunk of the proceeds going to Eddie Lampert – chief executive of Sears’s U.S. parent company – who holds a combined 45-per-cent stake in the Canadian subsidiary personally and through his hedge fund ESL Investments. After selling off real estate and profitable divisions of the company for cash, Sears’s Canadian leadership – recently approved to receive millions in bonuses – are now poised to make the gutting of the once-iconic brand complete by slashing pensions and benefits.

These practices are not unique to Sears, but reflect a fixation on short-term gains that drives corporate decision making in Canada. Of the firms in the S&P/TSX 60 Index, 40 sponsor defined-benefit pension plans of which 34 recorded funding deficiencies for both 2015 and 2016. As the total net pension funding position among these firms collapsed from a $560-million surplus in 2007 to a $13-billion shortfall last year, they paid out a staggering $410-billion to shareholders. Share repurchases and special dividends can be a legitimate course of action in certain circumstances, but these payouts are also used for inflating share values and triggering quarterly executive performance bonuses. With nearly 80 per cent of U.S. chief financial officers admitting to turning down projects expected to produce positive returns in the long run to avoid lower quarterly earnings, the distortion short-term pressures yield becomes apparent.

While pension funding obligations are just one item on corporate balance sheets, the practice of starving plans while disgorging value reflects an economy-wide embrace of attitudes that privilege short-term payouts over investment and innovation. These attitudes reflect the ongoing financialization of the private sector and pose a serious threat to Canada’s future economic prospects.
- Meanwhile, Michael Savage points out the U.K.'s culture of employer breaches of basic employment standards. And Morgan Lowrie reports on the abuse of temporary foreign workers who face a combination of legal risks and language and cultural barriers in any attempt to stand up for themselves.

- Ben Kentish exposes the U.K. Cons' choice to respond to expert recommendations to control dangerous acids by disbanding their expert panel and putting the public at risk with dangerous deregulation.

- Similarly, Joe Romm writes that the Trump administration is going out of its way to shut down energy efficiency policies which would save billions for the American public while also reducing environmental damage.

- Finally, Michael Harris discusses how the Trudeau Libs are a do-nothing government in the areas where they're spending the most time courting international media attention. But Jordan Press reports that while the Libs may be happy to drag their heels on such trifles as health, education and environmental protection, they're in a frantic rush to privatize as much infrastructure as possible even before they've formally set up the mechanism to do so.

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