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Investor Capitalism: How Money Managers Are Changing the Face of Corporate America (New York: Basic Books, 1996), p. 25. 26. Roberta Romano notes the growing proportion of pension fund investment: “The percentage of corporate equity held by institutional investors generally, and by pension funds in particular, has increased exponentially over the past few decades. From holding less than 1 percent in 1950, pension funds held 26 percent of corporate equity by 1989. ” “The Politics of Public Pension Funds,” The Public Interest (Spring 1995), p.

As Heather MacDonald writes: “The lovefest between the advocates and the corporate establishment depends partly on corporate self-interest. Businesses pay off the anti-discrimination machine in the hope of inoculating themselves against litigation. But the relationship has another basis as well: There exists inside corporations a parallel network of activists who share the same goals as, and maintain close contact with, the civil rights groups. This is the internal affirmative action apparatus, a fearsome bureaucracy that just grows and grows.

Corporate leaders often lose sight of the fact that the most important secondary effect of what they do— not what they aim at, perhaps, but what their actions lead to—is to raise the poor out of poverty and to 32 ON CORPORATE GOVERNANCE offer unparalleled opportunities for the development of human talents. Their further great effect is to animate civil society, that huge, bustling arena of the world’s grand experiment in self-government. These two signal achievements, raising up the poor and energizing civil society, provide powerful moral claims for business corporations.

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