US imperialism: Morgan Stanley, unions & capital strike

Michael Keaney michael.keaney at
Thu Nov 21 05:19:40 MST 2002

US bank in hot water after telling clients to pull out of unionised firms

Charlotte Denny, economics correspondent
Thursday November 21, 2002
The Guardian

One of America's leading investment banks, Morgan Stanley, has outraged US
unions by telling clients to pull their money out of heavily unionised

"Look for the union label - and run the other way," the analysts say in a
research note circulated to north American clients last Thursday.

Describing pension plans as "toxic" for shareholders, the analysts argue
that union firms are more likely to provide retirement and healthcare
benefits that could eat into corporate profits.

"Rigidity in labour costs, processes and pension requirements, while perhaps
beneficial to employees, may prove toxic to shareholders," the note says.

Union leaders reacted furiously, accusing Morgan Stanley of giving
irresponsible advice to investors.

In a letter to the bank, John Sweeney, the president of the AFL/CIO labour
federation, said Morgan Stanley appeared to be "attacking the fundamental
structures of fairness in our economy".

Pointing to the collapse of anti-union companies like Enron, WorldCom and
Tyco, once the darlings of Wall Street, Mr Sweeney said analysts had failed
to tell investors to sell these companies until it was too late to salvage
anything from the "tech wreck".

"It is hard to resist the conclusion that the same biases about what
constitutes successful employee relations underlie both your analysts'
enthusiasm for Enron, WorldCom and Tyco, and their hostility to union
workers and their employers."

In a separate note sent on Monday, the report's authors did an apparent
u-turn, saying they were not anti-union, and that while heavily unionised
industries have "meaningfully underperformed the market, we are explicitly
not in a position to cite unionisation per se as a cause of this

Morgan Stanley declined to comment: "We have heard from Mr Sweeney and we
look forward to talking to him to address his concerns," a spokeswoman said.

Duncan Green from the lobby group Just Pensions, which puts pressure on the
City to invest responsibly, said the bank was advising investors to
contravene international labour laws.

"If these analysts lose their jobs as a result of their half-baked advice, I
hope they don't go running to the union to defend them," he said.

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