The decline of publicly traded companies - and what it means for us

Today's #1 most-emailed op-ed on the New York Times explores the decline of the stock market as a common investment, and what it means for the way we influence our own investments.
Only the biggest and oldest companies are happy being listed on public markets today. As a result, the stock market as a whole increasingly fails to reflect the vibrancy and heterogeneity of the broader economy. To invest in younger, smaller companies, you increasingly need to be a member of the ultra-rich elite.

At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years. Civilians, rather than plutocrats, controlled corporate America, and that relationship improved standards of living and usually kept the worst of corporate abuses in check. With America Inc. owned by its citizens, the success of American business translated into large gains in the stock portfolios of anybody who put his savings in the market over most of the postwar period.

Today, however, stock markets, once the bedrock of American capitalism, are slowly becoming a noisy sideshow that churns out increasingly meager returns. The show still gets lots of attention, but the real business of the global economy is inexorably leaving the stock market — and the vast majority of us — behind.

Committees on investor responsibility and responsible investment activists must recognize that our schools are among the 'ultra rich elite' who have the ability to invest outside of the stock market, and we must adapt our strategies accordingly. We must employ new strategies and tools - such as fund manager engagement, new comprehensive responsible investment policies, and community investment - to deal with the changing landscape. The strategies that REC has advocated in for institutions' stocks, such as proxy voting and shareholder resolutions, will still be important for a long time, but there is much more out there that we can - and will - be doing in the future.

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