2023/10/31 by Sean H. Vanatta · 1 citation
Economics, Econometrics and Finance · Social Sciences · #Housing, Finance, and Neoliberalism #Political and Economic history of UK and US #Social Policy and Reform Studies
paper · pdf · doi:10.1080/00346764.2023.2270458
crossref issued 2023/10/31 · crossref published 2023/10/31 · crossref published-online 2023/10/31 · openalex publication_date 2023/10/31 · crossref created 2023/10/31 · crossref published-print 2024/04/02 · crossref deposited 2024/09/24 · openalex created_date 2025/10/10 · crossref indexed 2026/08/01 · openalex updated_date 2026/08/02
This article examines the transformation of public employee pension investment in the United States, from investing public funds in public infrastructure before the 1950s, to investing public funds in private securities in the years after.Three factors drove this change.First, motivated financial professionals convinced states to adopt the "prudent man rule," a legal investment standard that emphasized professional management and maximum financial returns.Second, declining bond yields during World War II led public pension managers to reconceptualize the political goals of pension investment, from balancing retiree returns against low-cost public infrastructure, to maximizing employee benefits by achieving maximum returns in financial markets.Third, public officials hired private asset managers to undertake new investment strategies.These professionals then used their influence to pursue further pension liberalization.Ultimately, US financialization was not a break, but a continuous process through which government officials intentionally used financial markets to enhance public social provision.