The Ownership Revolution

An excerpt from Big Macs & Our Pensions: Who Gets McDonald's Profits? the book that explains the connection between the retirement income of the middle class and the profits of big business

"The McDonald’s Corporation mostly belongs to working people, middle-class citizens. That’s you and me and hundreds of millions of others around the world.

Few of us became owners because we wanted a piece of the company or its profits. Instead, becoming owners was a side-effect of saving for retirement. But what a side effect! It turned out to be what I call the Ownership Revolution.

Over the past 60 years or so (depending on which country you live in), ownership of big corporationshas shifted from rich people to working people. At the beginning of the Ownership Revolution, the rich owned almost all of the stock in big companies. Today, that’s
reversed, with the majority of stocks in most big corporations belonging to working, or middle class people, through pension funds and mutual funds.

Put another way, we see working people who need to fund and grow their retirement income, and we see companies that need to sell stock to expand. When these two sides began satisfying the needs of the other, a new era of corporate growth and better retirement incomes
emerged.

But what about the rich you ask, the 1% as some would call them? Well, we may have less money per person than the rich, but we really outnumber them. When hundreds of millions of us contribute modest amounts each payday, the sums quickly multiply into the billions and trillions."

TIAA-CREF Contributors and Chubb

 By Robert F. Abbott, author of Big Macs & Our Pensions: Who Gets McDonald's Profits? the book that explains the connection between the retirement income of the middle class and the profits of big business

Sunday, March 30, 2014

If you teach, work at a university, or a non-profit organization, you may make retirement contributions through TIAA-CREFF, the mutual fund and pension fund company.

And, if your do contribute to through TIAA-CREFF, you would have been among the owners of just over 1-million shares of Chubb, the big insurance company, at the end of 2013 (based on figures from nasdaq.com). At that time, those shares had a value of $88,915,000.00

The Chubb Corp., (ticker CB) enjoys widespread ownership among institutional investors, more than 85% of its stock. Institutional investors refers to collective investing organizations, the biggest of which are pension funds, mutual funds, and insurance companies. The ranks of institutional investors also includes hedge funds and college endowment funds.

If you'd like to know more about Chubb, please see the investment profile I published last week at Seeking Alpha. It's titled, Chubb's Business Model & Execution: A Platform for Income.

For more connections between working, middle class people and the world's biggest corporations, please visit our archives.

The Bigger Picture:

Will Profits from Big Macs Add to Your Retirement Income?

In 1948, the McDonald brothers redesigned and remodelled their drive-in restaurant in San Bernardino, California. Taking inspiration from Henry Ford's assembly-line, they created the fast food revolution, with the quick service and low prices we now take for granted.

In that same year, the U.S. National Labor Relations Board ruled unions could include pension issues in contract negotiations. That ignited a massive expansion of pension plans.

In the 1950s, pension funds started buying stocks, rather than just bonds or their equivalents; in addition mutual funds came of age. With these two developments working, middle class people became owners of big business. At first, their stakes were modest, but steadily growing.

And in just a few decades, they gained controlling interests in many large corporations through their funds. Management guru Peter Drucker has called it, "...one of the most startling power shifts in economic history."

Now, working people reap the benefits of those investments, collecting much of the profit distributed by McDonald's and other big corporations.

Discover how the pieces fit together. In Big Macs & Our Pensions: Who Gets McDonald's Profits? - a new booklet -(about 25-pages), you will:

• learn more about the McDonald's transformation and its implications for the future
  
• find out how McDonald's makes its profits (and it involves more than selling Quarter Pounders)
  
• meet some of the working people who get McDonald's profits through their pension and mutual funds
  
• find out how low wages became embedded in the fast food industry
  
• hear accusations from critics of McDonald's wages, and
  
• learn who has the ultimate say on fast food wages (the answer may surprise you).

You may not be among the owners of McDonald's. But if you belong to any pension plan, or contribute to a mutual fund or whole life insurance policy, you likely own pieces of some big corporations.

More importantly, though, your retirement income will be bigger and grow more dependably than you would otherwise expect.

Big Macs & Our Pensions: Who Gets McDonald's Profits? is now available at Amazon.com