When I lived in Seattle, there was a neighborhood grocery store that I liked. One fine day I found it closed. And it stayed closed for many days. Then word came out that the landlord had jacked up their rent to something they felt was unreasonable. For months the store stayed closed, as they tried to negotiate or find someone else. The grocery store never re-opened, it was eventually replaced by a new business.
This displacement of local businesses is quite a common phenomenon. But the thing that was quite interesting about this case to me was who the landlord was. It was a Teacher’s Pension Fund! Teachers in the Midwest, working hard to educate their students with the limited resources and support they get, with the assurance that they will have a pension to draw from when they retire. So from each paycheck, a small amount went into this fund, and fund managers were investing on behalf of the teachers, buying up stocks, mutual funds, real estate etc.
The goal of the pension fund was to maximize its return for their teachers to guarantee they have enough for their retirement. In a weird, ugly way, these teachers in the Midwest were gentrifying my neighborhood in Seattle, probably without even realizing it 🙂
This is when I first came to understand how closely we are *all* tied to the “market”. The largest investors in businesses, stocks are often pension funds. At some point in the last 5yrs, the largest 300 pension funds held $3trillion in assets (I don’t have more recent numbers). When the stock market rallies – pension funds and other retirement accounts grow. When companies chose to forgo increasing wages and instead give out dividends to their investors, they still end up helping pension funds and retirement accounts grow and helping retirees have larger safety nets. Public marketplaces are the ultimate tool to align incentives across people of all income levels, as long as all income levels are enabled to have a seat at the table, can make the same bets and are treated fairly.