46: How Capital Uses Workers’ Pensions Against Them w/ Kevin Skerrett

Antifascist Dad Episode 46: How Capital Uses Our Workers Pensions Against Us Guest: Kevin Skerrett Matthew Remski: Hello, everyone, this is Matthew Remski. And this is Antifascist Dad podcast episode 46, How Capital Uses Our Workers Pensions Against Us with Kevin Skerrett. Kevin Skerrett: Once we end up in a role like this, literally sitting on a fiduciary board that's investing, in some cases, hundreds of billions of dollars in assets, you know, you're really no longer a worker. You're no longer engaged in the traditional capital relationship. You're an investor. You are, in fact, acting as an agent of private capital. And the legal structure that you are embedded within requires you to do that. If you do not do that, and we are all trained to understand this, if you consciously decide to do something that's in the interests of workers in Canada or overseas or out of concern for the environment that you know is going to sacrifice potential returns you might generate. In other words, take less of a return, you can be sued. Matthew Remski: You can find me on Bluesky and Instagram under my name. I'm at YouTube and on TikTok as AntifascistDad. And the Patreon for this show is antifascistdadpodcast, where subscribers get early access to a second weekly episode. And today, and for the next couple of weeks, it'll be something a little bit different because municipal elections here in Toronto are right around the corner. And for the next few weeks, I'll be publishing interviews with local socialist candidates about what they're up against and what they hope for. This week, I'm speaking with Chiara Padovani, who's running for city councillor in Ward 5. She's a social worker and formidable tenant union organizer with some amazing success stories under her belt. And we have a great, great conversation related to our subject today, actually. And my conversation with Kevin, in the sense that Chiara says tenant union organizing today is where labor organizing was 100 years ago, at a point of maximum risk and maximum potential. And remember, if you can't afford to support the show, these Patreon episodes all get unlocked. And these election season ones will get unlocked pretty soon because the election is barreling towards us and I really want to support Chiara's campaign, so I'll unlock that in a few days. Also, I'll direct you to the show notes, where you'll find a bunch of resources for this episode and also a link for my own book, Antifascist Dad: Urgent Conversations with Young People in Chaotic Times. Okay, I consider myself a pretty savvy student of capitalism, but sometimes I learn about some particular contradiction or brutality that makes me feel as though this sense I have of myself as smart, is unrealistic, maybe even somewhat liberal and self protective. Like I can think my way out of this, I can draw others with me, maybe it's not so bad. And then sometimes I'm caught up short. I think the last time that this happened out in the wild, it was listening to Cory Doctorow speaking about on one of the many podcasts that he appears on about AI and the Precariat and how many nursing agencies now in the United States are running on a kind of Uber platform where once an order is placed for overnight service, the company runs credit checks on the available nurses in the workforce and uses AI to almost determine by placing a bet on which person in that workforce has the highest level of debt stress at the moment and is therefore willing to accept the lowest wage. And they can just do that. And I remember hearing him tell this story on one podcast and then on another, and by the third time I was like, oh, okay, I'm getting used to that now. Yes, of course they would do that. Of course they would do that to nurses. But for a moment or for maybe a week actually, I was shaken. And similarly, coming across the work of Kevin Skerrett and his colleagues in a 2018 book called The Contradictions of Pension Fund Capitalism, I had a similar moment in which I just suddenly felt very naive and quite scared actually. So Kevin is a researcher, formerly with CUPE's Pension Department, and an expert in the history and structure of Canadian pension fund financialization. And if that sounds abstract, it boils down to the logic of capitalism has transformed the labor movement's total relationship to money and investment in such a way that workers in Canada are now invested in funds that actively extract profits from the global south through privatization schemes that impact things like water and electricity. But I start my conversation with Kevin by going back in history so that we can trace the origins of pension demands to 19th century labor movements where what was ideal, what was the standard position was that a state provided universal pension should be mandatory. And of course that as an ideal, as it doesn't get fulfilled, leads us towards a mid 20th century full on shift where large US unions began negotiating employer specific pension funds rather than continuing to press for universal coverage. And that's where we get to talking about the Ontario Teachers Pension Plan and the Canada Pension Plan within this trajectory. And you know, just to make it personal, my dad is a lifetime high school teacher and union organizer, is now retired and so he's now a beneficiary of both the OTPP and the CPP, which means this story hits really close to home. It's a longish discussion. There's a lot of details to it, there's a lot of history to it, and Kevin is really good at walking through all of the twists and turns. So I'm gonna shut up there and roll the interview. Here's my conversation with Kevin Skerrett. Kevin Skerrett, welcome to Antifascist Dad. Thanks for taking the time. Kevin Skerrett: Thank you very much. Matthew Remski: Now I'm gonna ask you to walk step by step through the painful contradictions of labor capital. Where it came from, what it was originally intended for, what did the pioneers of trade unionism say about it and what it does now? Because there's a big journey there, there's a lot of differences to cover, and it's a technical journey with many specific steps. But for those who only listen to this first five minutes, I wanted to paint the overall picture as concisely as possible. And I'll start from a personal point of view and get your read on whether or not I'm getting the picture here. From my understanding, my father, my late mother, they're born in 1946 and 47, respectively. They work their whole lives as teachers in the Toronto Catholic branch of the TDSB. And they are socialists. They're union reps. They were on the front lines of collective bargaining and strike actions, and they paid their monthly dues into the union and the Ontario Teachers Pension Plan while they participated in contract and pension negotiations. And that money and the money of their comrades went into an investment fund that they considered to be their shared security and a kind of proof that their solidarity had built material benefit. And I don't recall ever discussing what was happening with that fund or who was managing it. I do remember my mom commenting at one point with a certain amount of pride that, you know, we did really well with that investment. But how that happened is that in a long, slow process between the 80s and now, and here's where I really need your help, union bureaucracy got seduced by private equity culture and chose higher return strategies over values and internationalism. And instead of that fund, instead of that fund, the OTPP growing through investment in public goods that my parents would support, it winds up becoming one of the most ruthless private equity or asset management raiders in the world. And so now today, my socialist retired father is getting pension payments that are generated in part by profits made on the privatization of things like Chile's water system, which happened under Pinochet. So is that a fair summary of the contradictions that you've studied and plotted out and that you want people to be aware of. Kevin Skerrett: That is a fair summary, particularly from the Ontario and Canadian perspective. And that is the perspective that I've kind of brought to this. I worked for many years in the labor movement for a public sector union, CUPE, on pensions. And I will admit to you that I started this in the mid-1990s and I did not realize that we were actually right then in the midst of what was really a transformation in the structure, the financial involvement of our pension plans and our pension funds. I want to talk about that, but actually if I could, I want to set that up with a bit of a broader history from even before the 1980s, because I know you're interested in the longer sweep of this history and the role of the labor movement in relation to the financial sector and the relation to pensions. What's interesting, if you look back, even going back to the very early labor movement and socialist movements of the 19th century, retirement security and pensions was actually a core pillar demand of the working class movements of Europe and North America. And in fact, as you may know, the first universal pension scheme was established in Germany in the 1880s. And that actually became a model for the welfare states that eventually emerged in the 1930s, 40s and 50s up to the present day. And I would say from that 19th century origins of the modern left, the trade union movement, the idea of a universal public pension was always the demand. It was just an obvious and understood demand that when workers, after a period of time having to work for a wage and, you know, working under difficult conditions of the economies of the time, all workers should not just fall into poverty if they stop receiving their wages, if they reach an age or they end up with a disability where they can no longer work, they should have a basic security to fall to. And so it was demanded. Universal public pensions became attached to, you know, virtually all of the trade union and left wing organizing of that time. Matthew Remski: And there's a principle there too. Let me just point out that I think what they're saying is that my contribution, my social contribution actually means something beyond my working days. Like if I have put in my blood and sweat and tears into some sort of social project that should provide for me, that should respect the fact that I am becoming old and that I am becoming an elder. Kevin Skerrett: That's exactly right. And the aspect of this that I would just pinpoint is the original conception of that right, of that entitlement and social right. It was a universal right that society owes to workers, it's not simply given individual employers that owes to their own workers. It's a social right. And that was quite universal. And I want to make the point that there was a turning point in the thinking and the structure of this and tracing especially the North American history of this, I would say the US trade union movement that really took off in the 1930s and 40s, the trade union movement, the CIO of the time, that's what they were demanding, a public universal pension. And they achieved a partial victory with the establishment of Social Security in the 1930s ahead of Canada. But it was inadequate. It was always recognized as not enough to really properly live on. And what happened was that in the late 1940s, early 1950s, the trade unions, the large trade unions like the United Auto Workers in the US auto industry, became so powerful and so effective in their collective bargaining, their ability to exercise the right to strike, that they were able to start looking at, rather than continuing the social political project of a universal pension for all workers, they started to get into discussion with their own employers about collectively bargaining, a pension that would be established at General Motors and at Ford Motors and then over in the steel industry, at US Steel, these very large companies. And they were actually able to achieve that. They actually turned a corner in their own strategy and said, well, if we can bargain a workplace based pension for our members, then we should do that. And now I know I've read enough to know that some of the initial thinking was, well, if we do this at the big companies and this becomes popular, it will become so general, it will lead to pressure to establish, to move it all up to a universal public system. Well, of course, looking back now 80 years, that's not what happened. Matthew Remski: And I just want to ask too, to clarify that when, I mean, Henry Ford greets that proposition with mass violence for years until he finally begins to concede. And I'm wondering whether at a certain point it becomes more beneficial for the big industrial owners to say, yeah, okay, you know what, if we make private or company related pensions an actual benefit, that might give us a competitive labor advantage and it might actually be better for everybody in a kind of competitive capitalist society. And it might actually decrease our tax burden if we were to otherwise pay into a universal system. Is that part of the reasoning too? Kevin Skerrett: I would say that's exactly right. The provision of pensions, like today in US economy, the provision of private health insurance to their own workers becomes itself a form of competitive advantage, one company to another. That's one of the ways that competition works out. But one of the key ingredients of those workplace based systems is, unlike Social Security, unlike our old age security system, which is effectively an unfunded pay as you go kind of system that is not financialized. When they started to establish workplace based pensions that were defined eligibility is by where you work, they established a system whereby contributions would flow into a fund and the fund would be invested privately and generate a rate of return. And the returns on those private contributions became over time, more and more vital to having enough money to be able to pay, you know, relatively generous pensions compared to what the public system was offering. So I'm just situating that sort of turning point in around 1950, in the years following this, they became more generalized where you had large unions and large profitable employers establishing pensions and funded pensions that were financialized became more the norm. Now if I just quickly connect that to the Ontario teachers and what happened in Canada. Canada was following along in the same path, especially in the private sector, but frankly in the public sector. The old style pension systems that were not fully financialized, pouring money into stock and bond markets and the financial markets did not really emerge for quite some time. And in fact they were invested where there were workplace pensions, like the Ontario teachers of the 1970s and 1980s when your parents were working. What was the investment system then? Well, there was a separate reserve fund, a pension fund for Ontario teachers, but it was by law structured by the Ontario government to be invested exclusively in government of Ontario debentures, non marketable debentures. So not in the financial system. So this then leads in the 1980s, and this is what you were alluding to before, leads to a recognition. Oh well, actually, if we compare this Ontario teachers system of the 1980s to the sort of normal fully financialized pension systems that are more the norm in the private sector, we're not doing very well. We're not generating much of a rate of return with this credit to the government debentures, we could double the rate of return and get a better pension or lower our contribution costs by essentially financializing the plan. And if I really simplify, that's what happened. Both the Ontario government and frankly the trade unions representing teachers and eventually other kinds of public sector workers saw an interest in saying, well, yeah, if we could get effectively a subsidy into the provision of our pension from the financial markets, why wouldn't we do that? So in 1990, the plan was restructured dramatically into a sort of jointly controlled but also fully financialized structure. And that's what led to that plan becoming really a financial asset manager. And we can talk about some of the details of where that got them, but that is the backdrop. And you're quite right to say this is a very political trajectory that has all kinds of consequences. Matthew Remski: Let me just summarize because I think this is so. It's so potent to actually see it clearly. As soon as labor unions and corporations in the states, and this is mainly in the post war period, unions give up on the notion of universalization because they realize they can collaborate with their industry affiliates and they can create more privatized pension systems. The corporations appreciate that because it provides them a kind of competitive labor advantage. And once that happens, once the universalism value is disconnected from the process that opens up this kind of, I don't know, zeitgeist of well, obviously the private markets or stock markets or financialization is the way to make the best returns. What was the hedge that Ontario law or Canadian law had against that? And why were they 30 years behind the ball? Was there somebody on our side of the border or was there a government on our side of the border who, who looked at that system and said oh, if we do that we'll lose the principle of universalization. We don't want to go that route. Or was it just simply a delay? Kevin Skerrett: Yeah, it's itself an interesting question that someone should examine this history in more detail than I've done. I've looked at some of the history and I think I can share this about the thinking of the time and how this evolved. I mean it's very interesting to align the history of the teachers plan that I just described with another important example that's become very important today and that is the system at the Canada Pension Plan, what is now the Canada Pension Plan Investment Board. So just to add this for further context, you know, as this was happening, the emergence of these workplace systems in Canada, the public pension system was very inadequate. Something initial established in the 20s and then a proto OAS was established in the 1950s. But very means tested and very inadequate. So the pressure to establish a more Social Security like system in Canada continued until the 1960s. And in the mid-60s Canada the federal government with provincial government support established a new public plan called Canada Pension Plan which we still have today. It was to be combined with old age security, the federal tax funded system. And at the time in the theory was it would still be modest. There was a fight over how extensive it would be and frankly the unions wanted it to be at least twice as large as it ended up being. But they could not convince the governments to do that. There was a ferocious counter attack against it from the banking and the insurance industry, not surprisingly. And so it ended up being a compromise system established in 1966, which limited the level of benefit in combination with OAS to something like a quarter, like 25% of the average industrial wage. So not enough of a replacement to really live on. But it was still quite important. It was a breakthrough and it was a public system. And the key detail from an investment perspective is what was the financing system for CPP when it was first established? It was structured, in fact, even less financialized than the Ontario teachers system because it was largely a pay as you go system, meaning current contributions from current workers were intended to be essentially transferred to current retirees without necessarily holding a large full fund sufficient to pay all of the pensions promised. However, they did establish a small reserve, sort of a cushion that would allow fluctuations. There was a reserve established that was to be invested. But here's the interesting detail. The original reserve fund for the Canada Pension Plan was not to be invested in the financial markets on Wall Street or Bay Street. Instead, they were designed to be structured into loans to provincial governments that provincial governments would use to build public infrastructure, to build schools and universities and highways and bridges. All the things that provincial government good Matthew Remski: things like good things, good things. Kevin Skerrett: And so in fact, the original CPP Reserve Fund in the 60s, 70s and into the 1980s and 90s was actually an engine of low cost credit for provincial governments to build our public infrastructure. So then what happened? We all know that now, CPP Investment Board is not like that. And the short answer that is like the transformation of Ontario teachers. The logic that government ended up into in the late 80s and the 1990s, as you know, this is the period of neoliberalism where the whole logic of government public programs was being transformed and the logic of the financial markets and the private markets was taking off. So you had in the late 90s, a Liberal government, with Finance Minister Paul Martin being told that the Canada Pension Plan didn't have enough money. This funding system was not making enough money because of how it was designed. And so it was transformed in 1997, 1998 into a quite different structure. The simple summary being they decided to trim some of the benefits. So we actually lost certain benefits. But more significantly, they established a new crown corporation that would receive a larger flow of the contributions and create a larger reserve fund. Rather than being worth two years of benefits, it's worth five years of benefits. And it would be invested in the private markets. So that was launched in 1998 or so, and that fund today growing only since 1998, it is now an enormous $800 billion pension fund, the largest fund in Canada and in fact one of the largest pension funds in the world. And like teachers and certain other Canadian, large Canadian pension funds, they didn't just, I mean, initially the thinking was, well, let's put it in the stock market, which is doing very well in the 1990s, and the private bond markets, but they went much further than that. They ended up transforming the investment structure of these plans into something that was increasingly involved in private assets, as you said before, private equity, real estate. And most significantly, and I would argue most concerningly, they became very interested in, in investing in public infrastructure, essentially privatizing and taking over ownership of a whole range of public infrastructure, not just in Canada, but even more distressingly internationally and in the Global South. So that sort of traces, I mean, that's just two pension plans to talk about when you add the others. Canadian pension funds have actually become an engine of privatization and very rapid growth of these private financial assets. Matthew Remski: I want to pick out an ironic contradiction in this history that you've just delivered that I think speaks to, I don't know, a number of things around Canadian self perception through this post war boom that I think a lot of us associate. If we're Gen X, certainly if we're boomers, we associate with a kind of national richness, a development of Canadian culture. I have always understood that it's the war dividend, the peace dividend, that positive Cold War economics coming out of the 60s and 70s produced a kind of budgetary surplus year upon year that allowed for, you know, great cultural projects, arts councils to be flush with money in most provinces, the centennial celebrations in Montreal, all of the architecture that was built around the celebration of a kind of new and evolving Canadian nationhood. And it seems to me that part of what you're saying is that part of the financial engine of that was the fact that the CPP was actually reinvesting the contributions of Canadian workers back into actual nation building projects that positively impacted publicly owned infrastructure. And with privatization over the next several decades, that reverses so that that same money is then used to privatize public infrastructure in the Global South, which is what we'll get to. But is that. I almost feel like I'm wearing a tinfoil hat when I'm saying that. But is that a reasonable historical arc that I've just summarized? Kevin Skerrett: I think that is quite reasonable. I think that's really what happened. And in a sense, this returns to the question you raised about, you know, why would the Ontario government do that? Why would they cut off their own financing system in favor of this private one? And I would then add to that, you know, why would the federal government and especially the provincial government that are actually partners in the legislative structure of CPP, why would they agree with Paul Martin's proposal that they have to give up their access to the, you know, basically cheap credit, cheap loans that they can get from the CPP fund and cut that off and force themselves when they need to borrow, when they need to deficit finance or whatever they're doing? You know, why would they do that? And I actually think this is an interesting political question because it was, I would argue, clearly not in their interest. So long as their interest, we understand their interest as guided by continuing that social project you describe of building a fair and balanced kind of social economic model which is led and guided by a public sector that can be, you know, can provide goods and services relatively effectively and efficiently at relatively low cost. But of course, we've all gone through the last 40 years of the turn to a different kind of model and a different kind of system, what we call the neoliberal turn from that older structure. I'll just add one level of detail to this because you mentioned, you know, going back to the 60s and you know, how we understand this trajectory. I think it's very important and I'm quite influenced by a political economy literature that, you know, tries to understand the major difference between the post war period of the 60s and 70s when, when things were building and, and, and public sector was expanding compared to the, to the last period of the neoliberal turn. I think it's quite important to recognize that from a macroeconomic perspective, the rates of growth and the rates of profit from that growth, and I'm not just talking in Canada, but across the western capitalist world, were very high in the 1950s. Quite famously, we had growth rates of 5, 6, 7% with very high profitability. This allowed an expansion of welfare state provision and an expansion of a certain kind of approach to public policy that then frankly came to a screeching halt in the 1970s with the various crises of low growth, low profitability, corporations weren't making much money and you had huge inflation. This was a major turning point. I'm not sure it's still fully understood and recognized. But this then led to desperate search for alternative models and approaches and a major political struggle that I would argue the efforts of the labor movement to retain what had been established. Labor was defeated kind of famously in the United States and in the United Kingdom under Reagan and Thatcher. But you know, the implications of all of this were felt in Canada and beyond. And so by the time of the 1980s, when we have, you know, Mulroney government and a kind of a right wing turn, market logics and financial logics started to become embedded in political consciousness, including of the elite of the political leadership class of the government. So when governments would turn to look at these problems, oh well, the contribution costs of the Canada Pension Plan are going up. They are flooded with neoliberal solutions to these problems. And even provincial governments like low income provinces like the government of Newfoundland or New Brunswick or other provinces that actually relied on those cheap credits, they bought into this. It was not in their interest, but they did get convinced. And I would also add, and I know you want to talk about the politics of this trade unions and the labor movement, I would suggest looking back, they should have seen the dangers of these turns and seen where this is going to bring us, but I think they did not. I think they were also optimistic and caught up in a certain mania of enthusiasm for financial markets, not seeing where it was going to take us. Matthew Remski: It's occurring to me that I'm very familiar sort of with the political literature around what we call, what you've called the neoliberal turn. I'm also wondering, and I'm sure I've seen this reference somewhere, if there's also a cultural memory issue going on with the fact that as in the immediate post war economy, there is this incentive for governments and corporations to begin to nurture social welfare values, to begin to say, yes, well, we're going to enter into collaboration and collective bargaining with unions. Because of course the alternative is being broadcast to the world, which is that in the Soviet Union there is universal healthcare. In the Soviet Union there's people, people get free dentistry. There's a realization that some third way has to be offered, some kind of concession has to be offered to those who. Why exactly did they defeat the Nazis to begin with? What was the point? And I think by the time we get to the 70s, that cultural memory has faded and somehow there's more of an open gap within the culture, within the hegemonic process for these neoliberal ideas to come in and say, well, you know what, that part of history is over and now we have to look to this sort of new way of doing things. Kevin Skerrett: I think that's exactly right. And I think, as you know, that concept that you're describing is in some ways encapsulated in this famous phrase popularized by Margaret Thatcher in the 1980s. There is no alternative. This is the argument that the attempts, the experiments, the revolutionary experiences in the Soviet Union and in other parts of the world, in the view of the right wing in North America and Western Europe. But beyond was that those experiments had failed. This was drilled into us, including through a lot of propaganda that distorted a lot of the history. But, but, and we can talk about that, right? But the popular idea was those efforts to resist capitalism and its worst excesses and extremes and the inequality that comes with it have all failed. And so there is no alternative but to embrace the capitalist system and in fact integrate ourselves into it, try to make it work for us, get involved in private investment, embrace the financial markets. And this is something that was of course promoted by the far right and the neoliberal right that became more and more dominant in the 1980s. But as you, I think, are suggesting, rightly, this became part of popular consciousness, which then only accelerates with the fall of the Berlin Wall. The transformations in Eastern Europe and in other countries and to a point where, you know, as you know, the early 1990s had even scholars talking about the end of history, that the whole debate about liberal capitalism was over. It is now the hegemonic system that we all are required to embrace. And it's in some ways fascinating to just look back at that moment of triumphalism and celebration of capitalism. Here we are in 2026. What is this now, 36 years after that period, and look at the world we've got. I can't really imagine anyone now arguing that history is over and capitalism has proven itself to be the definitive winner of the social debate. We have war, we have genocide, we have climate catastrophe, which is, you know, the world is going up in flames. And these actors that we are talking about, including strangely, these financial actors and asset managers connected to workers through these pension funds, they're actually a part of the problem. And yet we're told, no, no, they're help, they're working for us, they're generating profits for us. And so we've got to get on board. So we even have this summit, this investment summit in September in Toronto where the pension funds are co hosting global capital to come to Toronto and talk about the new world they're going to build. We've come a long way since the early 90s. Matthew Remski: Well, and that's the thing is, once again I think about my parents wondering about how the captains of their pension funds would be sitting in that room with Carney and his Davos friends and somehow finding common cause. And it's just so bizarre. And it comes out of this moment that you describe in your own personal history in the 1990s, where you're not really aware, as you get involved with CUPE, what's happening, where the sausage is being made with financialization. And so I'm wondering, how did you start to figure out what was happening as you were doing your other union activities? Because I imagine that it's like looking at the finances of pensions is, is one part of what unions have to do. And it feels like it's a missing part, but you sort of picked it up. How did that happen? Kevin Skerrett: I'm glad you asked because this is an interesting part of my own engagement with this because. And I'm very humble about this, I will admit to you. I was trained at Carleton University in I would say a critical political economy, kind of Marxist background of political economy. So I thought I brought to this subject a very critical eye. Oh, boy. But when I started working in the labor movement, I started to see what was evolving. But I was trained to view the pension funds that were now emerging as a potential source of working class and trade union power at the time. What the unions, including CUPE, where I was working, what we were literally campaigning for was something that we called joint trusteeship or joint management and control of the large pension plans. And in fact, Ontario teachers had achieved that. So we were involved in saying, well, let's get that for the other big pension funds. And what I was trained to think about this goal was that, well, by doing this, by gaining more governance control over the fiduciary decision making, the fiduciary boards that oversee these plans, we can do two things. We can protect and defend the benefits, including when there are surpluses in these funds. And you may know that's part of the struggle is to make sure that the money that's in these funds is used for pension benefits and not stolen by the employers. So that's one goal. But the second goal was, well, we see that these pension funds are too often operating like regular predatory financial capitalists. And the analysis was they do that because of who's running them. And if we could just get some union seats on these boards and control these things jointly, we could gain at least shared control over investment policy and bring union and worker perspectives into the formulation of investment policy. I confess I was very enthusiastic about this vision of a kind of class control and class power, at least a shared power if we were to achieve this. But I will say it did not take very long. Within a few years of my work in this area, including actually being involved in negotiating new joint control structures, and I even started to sit on joint boards appointed by CUPE by the union. I began quickly to see the obstacles, the structural limitations of this thinking because, and I'll simplify this, you know, two things happened to really, you know, shake my, my confidence in this. First of all, I came to see that even at that time in the mid and late 1990s, these big pension funds, led by Ontario teachers, by the way, were already starting to become significant players in these private financial markets. Involved in privatization. We learned about a major project in Nova Scotia. Actually, the provincial government in Nova Scotia announced that they were going to build 56 new public schools, badly needed because their schools were falling apart. And it was a very big and exciting new program. And they said, and we have an exciting model under which these new schools are going to be developed and managed. It's called a public private partnership. Uh, oh, now of course, as you know that term, we didn't know that term prior to 1997. Oh boy. So we had to examine it. And what we came to learn is, oh, well, this is actually another term for privatization, for bringing private corporate actors into not just the construction, but the ongoing maintenance and management of public infrastructure, doing it, of course, on a for profit, profit maximization basis. So that's troubling enough. But the reason I mentioned this Nova Scotia project is CUPE started to build an effort to challenge this and to oppose this. And by the time we woke up and realized what was happening, the auction was won. And the consortium that bid to be the lead corporate actor in the public private partnership was in fact led by OMERS, the big municipal school board pension fund of Ontario, where CUPE members, the largest single union, represented by that pension fund. So the Ontario public sector pension fund was involved in the privatization of schools in Nova Scotia. Matthew Remski: Incredible. Kevin Skerrett: So this was, you know, clearly this is like, well, wait a second, what's going on here? And then the second piece of that story is CUPE actually had representatives on the board of OMERS at the time that were involved in the decision to proceed with that investment program. So of course, as you might imagine, there was a rapid engagement with those individuals that the union had named to that board. Like, what's going on? Why would you do this? And their response was, oh, well, we were told this was going to be better than having this project invested and controlled by some American bank or some other financial actor. In other words, this was appealing to the idea that, well, if it's a Canadian pension fund involved in privatization, it should be fine. It should be fine, or at least it's socially better than a full privatization. So that experience, and I can talk more detail about it, that was a powerful signal that this was changing course. And we had no real ability to sort of challenge that. The second thing I'll just say briefly, that I learned quickly in this experience was that actually, once we sit down on these boards, once union people are sitting around a table legally empowered to share decision making, one of the first things they are told is, it's very nice that you bring your union hat and your worker perspective and your union priority into this room. But the reality is that you now have a legal obligation that is captured by this long established notion of a fiduciary duty. You have a legal responsibility and obligation to invest these monies. In a way, the way that the dominant conception and practice of fiduciary duty law is, your obligation is to do whatever you can to represent the interests of the beneficiaries by maximizing the rate of return that you obtain. Matthew Remski: Because now you're in the real world right now. You're not just in labor anymore. Now you're in the real world, and the real world is capitalist realist. And because we're in the same room together, we already know that the notion that labor and ownership are in perpetual conflict. But that's not really true anymore, right? That's not the issue. That's the past. Kevin Skerrett: That is exactly right, what you just said. And I think it's actually really, ever since this time of the late 90s, I've been trying to understand my own confusion, and I think a widely held confusion about these relations. And I think what you just said really in some ways pinpoints the problem and the nature of the confusion. Because once we end up in a role like this, literally sitting on a fiduciary board that's investing, in some cases, hundreds of billions of dollars in assets, you're really no longer a worker. You're no longer engaged in the traditional capital relationship. You're an investor. You are in fact, acting as an agent of private capital. And the legal structure that you are embedded within requires you to do that. If you do not do that, and we are all trained to understand this, if you consciously decide to do something that's in the interests of workers in Canada or overseas, or out of concern for the environment that you know is going to sacrifice potential returns you might generate. In other words, take less of a return, you can be sued. Matthew Remski: Right. Kevin Skerrett: And it has happened. Trustees and fiduciaries do get sued. And so I came to understand this is actually a very powerful mechanism and disciplinary mechanism to effectively insist that everyone that walks into these rooms becomes a supreme capitalist. Matthew Remski: Now you're very humble, as you say about it took me a while to figure this out. But let's just be clear that Kevin, you've gone on to do probably, along with your colleagues, some of the most significant research to figure out how this is all working and to try to publicize it. So let's not get that lost there. But what I do want to ask is whether or not there was a certain amount of idealism walking into that position in the early 1990s that gave you this sense of, well, maybe financialization is a kind of neutral instrument that can be used in any direction. It's just a technology and maybe workers can seize control of part of that as well. And maybe that informed some of the delay you experienced in figuring out. No, actually the same conflicts are still there. Kevin Skerrett: Exactly right. And I like the way you articulate that because I think in some ways this is a major challenge for the left and the socialist left and the labor movement and all of us that are troubled by what we're seeing. And I think you're quite right to say that in a sense there's a parallel with the naive view of the state, I would say the naive social democratic view that, that views the state itself as a kind of a neutral instrument that we can just, we'll get people elected into power and then they will have power and be able to implement a radically new program. Well, actually when we look at it, the state in capitalism is by necessity a capitalist state. It is dependent on and required to maintain capital accumulation as under a certain structure. Likewise, in fact, I would say in an even more stark way, financial systems and markets and financial investment entities are even more embedded in the capitalist system than the state is. So it is the ultimate naive view to think, oh well, we can just take over these things and invest and manage investment policy in a way that is somehow in workers interests and in a sense operated in an anti capitalist way. That's kind of the thinking and clearly this is not at all the case. And I would in some ways summarize this to say, sadly, as more and more joint governance structures were achieved by different trade unions, the thinking was, well, we will just train these peoples, these trustees and the people named onto these boards to be good, critical advocates and champion a better investment policy. And this is, I mean, this has just utterly failed. And I think it's. It's not a failure of personal strength and integrity. It is a structural limit, just like with the state, that we have to think through more deeply. We have to understand, like, why does this fail and what would it look like? What would it take to actually reorient this kind of structure into something that's socially helpful and useful and not predatory, not destructive. I'll just slip in this key point because it even relates to what I consider to be similarly misguided optimism about the power that these pension funds have. As you may know, some of our comrades and colleagues in the environmental movement and in other social movements are really quite fixated on the idea that, for example, the climate crisis and the investment of financial monies into the fossil fuel industries, we can challenge that and turn it around by lobbying the pension funds to divest from this sector. And of course I'm sympathetic. I'm a deep believer that we are in a catastrophic crisis and we need to stop the investment flows from this sector and engage in a radical transformation, a just transition. But we're not going to be able to do this by lobbying the pension funds. And we're especially slip in this final point. We're especially not going to be able to achieve that on the argument that doing so is somehow based on a financial logic. In other words, the main argument that comes from the environmental movement about this is, oh well, the pension funds shouldn't be doing this. Not because it's threatening humanity and our existential future. No, it's because it's a bad investment because there's risks involved in it, and over the long term it's not going to generate an adequate return. Even that argument is embedded in. In a financial logic that we have to get beyond. We have to not be driven by those calculations. And of course, what I would argue is the only way to do that is to go above these structures and actually impose socially, legally impose rules and restrictions and ultimately democratize the whole financial sector through political control. So this really does relate to a lot of the activity of the left today. Matthew Remski: You know, you're going through this revelation in the 1990s, and at the same time I'm going through my own sort of dissociative processes and I idealize a bunch of ways of life that essentially like depoliticize me. My listeners know all about this, but like, I become disconnected from my family heritage within the NDP, because during this time, the party increasingly seems to be turning to consultants for messaging advice, increasingly ignoring the membership and convention resolutions. Like, I grew up thinking that Jack Layton was a great guy. And then I came to learn that while a great affable guy, he also became very, very interested in a kind of moneyball politics that was much more interested in, okay, well, how does messaging play and how can we play to the center and how can we win over Liberal voters? Which, of course are great strategic considerations, but really that became the end emphasis, that winning the game became more important than really putting forward or executing one's values. And so I wanted to ask if you see a relationship between these two forms of emerging managerialism that basically put values to the side. We have the financial aspect through what's happening with pensions, and then we have this political thing that's happening through, you know, the rise of the consultancy era. Kevin Skerrett: I do, unfortunately, I agree fully. And I did go through, I guess, a kind of parallel experience. I was never a particularly partisan supporter or believer in the NDP or sort of social democratic politics, but of course, always very aware of the sort of the complex connections between labor movements and social democratic political parties. But, you know, I was always guided by, you know, an ultimate recognition that the system itself embeds and builds in these structures that push us down the road that we were going down. And I've always wanted to think about, you know, how do we not do that? But as you say, especially in the context of the 1990s and the, you know, the neoliberal turn, this affected everything. This affected the labor movement, this affected social democratic politics, you know, most dramatically in my experience in Ontario, with the confrontation with the Ontario government that I know you're very familiar with, with the Rae government experience with, you know, the standout moment being the confrontation with public sector unions over the social contract. Essentially, you have an NDP government using their power to legislate, to overturn signed collective agreements and use the weapon of legislation against the unions in just the same way that Conservative and Liberal governments had done previously. This was in some ways, looking back, really, I would say, a key moment whereby the NDP in Ontario, and I think this then just extended, declared itself to be willing to accept that their responsibility as a credible alternative political party extended to and included being willing to attack the labor movement and workers rights as well and as effectively as the other political parties. And that continues with us today. We now have this happening in Manitoba most dramatically, but the experience runs in all provinces and at the federal level. So I quite agree with you. I would only maybe add to the point that, yes, this is to some extent an issue of the integrity and the character of the leadership, like specific leaders. But my interest is really in going beyond the individuals involved and thinking like, how did we get to a point where the labor movement and the left is so defeated and weak that the expressions of the left in social democratic politics feel completely free to make the kinds of compromises and shifts that we're talking about? So I think rather than being fixated, I think some of our comrades become very focused on the individual weaknesses of an individual leader. My interest is the more structural one. How did we lose, how did the left lose the energy and the power that it had? And what can we do about it today? How can we understand what's unfolding, unfolding today? And how can we use the obvious failures of this economic system and of the increasingly capitalistic framework of everything, of healthcare, of pensions, of infrastructure, of social services, soaring inequality, climate crisis. These are all system rooted problems. And here we are, we no longer have a politics that is based on challenging the system or where we find it. It is very tiny and sectarian and not very effective. So my appetite is to connect these things we're talking about to the urgent needs to rebuild the socialist left, rebuild a critical political left that is prepared to keep the critical analysis of capitalism at its center and, you know, find alternative approaches and strategies that are still viable, notwithstanding everything that we've lost. Matthew Remski: You know, I'm wondering whether you agree with me or if you see an opening in the moral power of some of the stories that you're able to tell about what our pension funds have gone on to do. When I'm going through your work on this, some of the Ontario Teacher Pension Plan's greatest hits include the privatization of public water infrastructure in Chile, which initially happens under a US backed fascist government. And somehow, somehow my parents, their pension plan becomes invested in that. It becomes invested in the disaster of Thames Water, it becomes invested in private daycare corporations, I think in Florida. Is that where they were? Kevin Skerrett: Yeah, in the UK and in the UK. Matthew Remski: So I, when I think of what does capital do to us, and I think of, oh, this money that I put into my shared or my collective bank account with my comrades has now been mobilized to literally harm the lives of poor people in the global South. Have you seen as that subject comes up in conferences, as you present your work, as you talk with other labor leaders, maybe people who haven't considered these things before, has that had a big impact? Because it seems to me that beyond, oh, well, are hedge funds really part of our values, aside from the abstraction of financialization itself, are these actual attacks that are basically made in the name of our pension programs, are those morally moving to people? Kevin Skerrett: I'm glad you asked this, in part because for a number of years I was hopeful, maybe optimistic, that my efforts to compile these stories and examples of kind of the most extreme and ugly illustrations of what these Canadian pension funds were getting involved in. I kind of had an idea that once these stories were told and the consequences were shared, this would be a wake up call and sort of shock people into a recognition of a problem and somehow of its own accord, leads to pressure to change the situation. So that was, frankly, the mode I was probably in until about 10 years ago. Matthew Remski: I'm hearing a. But. But then I found out that. Kevin Skerrett: Oh, yeah, that's right. What I have come to, and this is even since, like, we published the collection of materials, the edited volume that we called The Contradictions of Pension Fund Capitalism, which you refer to, we published that in 2018. And I would say even at that time, I felt as though by putting this on the table and bringing this sort of into the light, this would have its own impact and generate debate and discussion about, at the very least, how do we stop this? And it has not done that. In fact, the situation simply gets worse. As I say, I mean, the festival of private predatory finance that just happened in Toronto at the invitation of Mark Carney. I think you know that the large Canadian pension funds and asset managers like BlackRock and Blackstone and others who themselves invest pension fund money, Brookfield, the big famous Canadian actor, they want to take over the world, and the Canadian government is encouraging them to do so. So I think we do need to, in effect, highlight the intense, you know, moral drama that you refer to. But I have come to the conclusion that that's not enough. I've done many presentations and workshops for union members and others. And of course, once I outline these examples and illustrations, the totally understandable question that is raised is, okay, Kevin, I agree this is a problem, but what can we do about this? What's your alternative to this? And because of what I already said about the path to taking these things over or transforming them through governance and getting seats on boards, because that is a proven failure, in my view. So what is the alternative to that? And unfortunately, this raises the really challenging question of, in effect, how do we take on private capital, private financial capital, and in particular, how do we take it on at this stage of development where we ourselves, certain categories of worker, especially relatively privileged workers that have pension funds, or for that matter, relatively privileged Canadian workers that have the Canada Pension Plan roaming the world for good deals in the global south and elsewhere? We kind of have a stake. When people talk about it, it's like, well, don't we need these profits? Aren't we? I mean, much as I don't like it, aren't we in a sense dependent on these returns? And frankly, the answer to that is yes. We've fostered and cultivated a system where people feel and actually are. It's not just a fiction, it's not just a fetishism. People really are materially better off when they have a good pension. And I would even go so far as to say they are in some cases materially better off when their pension fund makes bandit like returns in their investment programs. This sometimes translates into improved benefits. Matthew Remski: Right? Kevin Skerrett: Plus the question is, is this really how we want to be establishing material retirement security or economic security for workers or for anyone else? And of course my argument is no. This is a zero sum game where you're creating losers as you create winners. And at one level we have an international scale where I mean, I'll just throw in a statistic that I haven't mentioned. Something like 85 or 90% of pension assets in the world are coming from seven countries. That's how unequal pension asset construction really is. And of course Canada is one of the seven. Canada, Australia hit way above their weight in populating the world of pension funds. And I'll just slip in those, those countries, those seven countries, the pension assets that come from their pension funds total up to about $72 trillion US. This is not a marginal or trivial component of the global financial system. It's actually quite central to global capitalism. Matthew Remski: It's at the heart of it, Kevin Skerrett: a big part of it. It's not exclusive and of course the bulk of it is attributable to the very wealthy elite. But I think it's important to recognize that in order to really come to terms with what would it look like to challenge this, to shrink finance, to gain social control over what it does so that it is not operating in a predatory way and to in a sense liberate ourselves from the dependency that's been cultivated on these financial market returns. And of course that involves the ambition of establishing public pensions that are not financialized, which I've tried to write about. But you know, we need a whole lot more work to help people understand that it is quite possible to have a non capitalistic, non financialized pension system that is providing people with economic security, but not dependent on exploitation and accumulation by dispossession. Matthew Remski: I think one of the most powerful aspects of this work is that it really does highlight the contradiction of social need versus the legalistic and hegemonic restrictions of capitalism in a way that I think is unavoidable. And I think I come away from this topic almost more than from many others, thinking that revolution in some way away from capitalism is essential for survival. And it's going to happen in some form at some point of maximal crisis. And ideally that is collectively directed, it's democratically enacted, which is preferable to the violent shocks that create these traumatic repercussions that lock people into cycles of revenge. And really avoiding those shocks means working collectively somehow as hard and fast as possible on things like, yes, how these finances are structured. And so I guess one of my last questions is it looks like the Ontario Teachers Pension Plan has a $30 billion surplus that is burning a hole in its pocket right now. And as you've laid out according to its own fiduciary laws or guidelines, people managing that have to pursue the highest, most predatory rates of return that they can possibly pursue. But let's say that those laws can be changed somehow, that a change can be forced. Like what could the OTPP actually spend that money on in line with the goal of supporting all working people and actually embodying the values that go all the way back to the CCF? Kevin Skerrett: Yeah, this is a fantastic question that I think we all want to grapple with because it's kind of easy for someone like me to say, well, we really need to democratize and get social control over the entire financial system. It's easy to say that, but what would that look like mechanically? And how do we get there? What would be a path in that direction? And I would say it's tricky because this is such an uneven and unequal system. But I would say quite clearly some of what the pension funds are now doing, their involvement in privatization and these predatory operations is the result of them being deregulated over the years. Matthew Remski: Right. Kevin Skerrett: Just to mention a couple of things that I didn't say before. It used to be that pension funds, it was not legal to invest more than 20% of a portfolio outside of Canada. And then there was pressure from them and others to say, oh well, let's get rid of that rule. That rule was eliminated in 2005. So now you can invest them anywhere. That could be changed. Also, it used to be that pension funds were quite restricted in the kinds of investments that they could pursue. It used to be, in fact, at one time, and it's really shocking to, to look back at the history, there was one point where in western countries, pension funds were not allowed to invest in equities. They could only invest in bonds. And then when they opened the door to equities, I'm thinking back to the 1970s in particular, it had to be only a particular kind of blue chip, low risk, large company equities that were very secure and low risk. In other words, the whole structure of pension funds was structured to be low risk and not into the wilds of all these new forms of investment. Matthew Remski: But again, it's like, I think if you get people into a room in which they're sitting around a boardroom and there's always going to be a carrot, there's always going to be something sparkly, some new type of thing, thing, some new treat that the capital order is going to throw at you and say, and say, you know what? You could do this, you could do this. And you know, we can get rid of that little, like, restriction because, like, it wasn't, I don't know, who is it really serving? You know, what's the difference? Do we really have a border? I don't know, like we have this 20% thing. You know, why should it be 20%? It should be 40. Maybe it should be 60. Well, you know, if it was 80, it could, like there's this weird combination of, I don't know, opportunism and, I don't know, jangling keys and then just the force of capital never stopping, never stopping looking for space that seems to have created this inexorable process. Kevin Skerrett: It's absolutely right. And of course, as you know, as we've been discussing the jangling keys and the way people are mesmerized by this, I think it's very common that people are impressed and mesmerized. It is partly. I now argue, and I've been working on this in recent years, I now argue that this is partly because of how effectively the sort of the money fetish that Marx talked about extends to the financial world. And what I mean by that is when people, it's understandable, you know, if you, if you're a teacher or you're a retired teacher and you get your annual report from your pension plan, and when you see that the plan generated a 9% rate of return last year, how do you feel about that? Pretty good. Matthew Remski: That's amazing. Kevin Skerrett: And then when they say we now our surplus is larger and we can now improve our indexation for retirees because we have this surplus, how do we feel about that? We feel fantastic. Matthew Remski: And not only fantastic, I think it validates a sense of meritocracy that can even trickle down into labor consciousness. Like, oh, I deserve that. That's what we worked for. We're being rewarded by capitalism, actually. Kevin Skerrett: Exactly. We worked hard to establish this pension plan, to make our contributions and make sure there's good experts that are doing the investment. So this is our reward. But my point about the fetish is the black curtain is always there so that your parents don't find out where the money's coming from. Where does the 9% come from? That's not discussed. That falls to people like me and others that try to draw attention to where this is coming from. But to get back to your point, which I think is so key, I want to mention just kind of one illustration of a kind of programmatic strategic path that I think shows that there is a way forward. And in a way it's kind of using the moral force that you referred to. Talk about a way for effectively bringing in a re regulation and a kind of more social control over these things. Just to illustrate, again, this I haven't written about. I'm writing an article about this right now. I don't think you will have heard of this because it hasn't been widely reported, but in 2013 there was a dramatic, there was a drama in Saskatchewan when it was reported in the media that the, that a very large chunk of precious farmland in Saskatchewan, which is like the precious resource of the province, had just been purchased by the Canada Pension Plan Investment Board. This is something that in earlier years had been not legal. There had been restrictions on farmland ownership, but of course the government deregulated those rules. Interestingly, an NDP government had deregulated farmland ownership, making it very interesting, so made it available to outside investors. And of course, of course, as the pension funds are looking for promising new assets and new categories, they say, well, this looks fantastic, we will buy this. And this was part of a pattern. But here's the positive story. This generated a storm of controversy. Much criticism from farmers, from the community, and even from conservatives and the government of Saskatchewan, which is a very right wing government. They end up under such pressure because of this. They convened a consultation with the population, overwhelming opposition to the financialization of their farmland. What's the outcome of that experience? Within a year or two, I think by 2016, the government of Saskatchewan passes legislation formally prohibiting pension funds from buying Saskatchewan farmland. Matthew Remski: Wow. Kevin Skerrett: Now I think that's an incredible story. Here you've got a right wing, pro neoliberal government undoing a deregulation that had happened under an NDP government. Because financializing the farmland was unpopular, because people, and this is interesting, people recognized that it was harmful. They don't want their farmland to become another plaything of Wall Street because of the social consequences, because they care about farmland. So my argument is, let's take a lesson from that example and say, well, this proves that governments can actually get this form of financialization under control. And let's make sure that people don't just care about farmland. They care about health care and education and transportation and water and energy and all of things that are vital to having a decent life. And they care about it in Canada. We also care about how it's handled around the world. So I really like this example. It hasn't been widely reported because it reinforces the idea that actually predatory financial capitalism, including led by pension funds, can go too far and anger the population. So I think we need to seize on examples like that and say, actually there's another way forward. And it doesn't involve polite lobbying of the Canada Pension Plan Investment Board. The government of Saskatchewan didn't bother doing that. They just said, let's make it illegal. And that's what they did. Yeah. Matthew Remski: And I suppose the lesson for everybody else is that you find something that you value as much as the Saskatchewan farmer values the soil, right? Kevin Skerrett: Exactly, exactly. And I think it does make it incumbent on us to continue the work of drawing attention to what's going on. The other dramatic example that I have written about, which goes international and it sort of speaks to your example of Chile. The Canada Pension Plan Investment Board a few years ago was working in hand in glove with the far right president of Brazil, Bolsonaro, to privatize the water system. Privatize the water system of Rio de Janeiro state. Matthew Remski: Incredible. Kevin Skerrett: And I know about this story because I was still working at CUPE at the time. And the workers from the water system of Brazil, of Rio de Janeiro found out that one of the bidders in this auction of their employer was this Canada Pension Plan Investment Board company. And so they were appealing to us, the unions of Canada, the labor movement of Canada, you know, can you do something about this and not have your pension fund legitimizing and potentially profiting from this Bolsonaro privatization? So we tried desperately to draw attention to this, to get media coverage of this process. We got nowhere. It was not even reported in our media that this happened. This is still a story that's not widely known. This is one of the most ugly, obscene, predatory examples of our Canadian pension funds capturing the assets, the social assets of another population for profit in order to pump profits out of Brazil, out of low income and poor Brazilians. That's how Canada Pension Plan is gonna pay our pensions. This is obviously a disaster, but people don't even know about it. So we've got a challenge on our hands to expose these examples, but provide people with a kind of a strategic pathway, something to do about it. Matthew Remski: Kevin Skerrett, thank you so much for your work. It's an amazing amount of study and research that you have to do to unpack all this, of this very, very hidden stuff, you know, hidden behind the veil of the fetish. And I really appreciate it and I hope that more people get in touch with what's happening with our pensions. Thank you so much. Kevin Skerrett: Thank you, Matthew. It's a very good conversation. Matthew Remski: You know, circling back to the top, I have to say that when the shock and numbness from learning about this obvious but also hidden reality wore off, I did feel some clarity. Because learning about how such a powerful and deeply rooted contradiction is disfiguring the dignity of workers and making it even more impossible to see how it could be reformed in its own terms, it just drives me further into radicalization. Because if the forces of capital are that ruthless that even workers have their ideals and savings co opted and locked into anti worker assault forces, we just have no choice but to think together and plan out how the socialist revolution happens. So thank you once again to Kevin. Up now on Patreon is my excellent and very hopeful and pugnacious interview with Chiara Padovani. I'm not pugnacious with her, she's pugnacious with the entire world. And it's wonderful to hear it. She's running for city councillor in Ward 5 in the upcoming municipal election here in Toronto. And we talk about tenant union organizing where it seems some of that socialist revolution already happening. Take care of each other.