The following exchange between Albert J. Dunlap, former chairman and chief executive officer of Scott Paper Co., and Robert B. Reich, secretary of labor, came at the conclusion of a recent ABC News Nightline program on corporate layoffs:
Albert Dunlap: [W]e're in the silly season. It's the political presidential election year...and they need an adversary, and big business is the adversary for a moment. But they're losing sight of who owns corporate America. Corporate America is owned by the moms and pops of America, by the pension programs, by the 401(k)s. Their life savings rest in the success of corporate America. And people have always lost jobs, and it's unfortunate. I happen to come from a working-class family.
Ted Koppel: Let me just - and we're just about down to our last minute or so. Interesting point that Mr. Dunlap made there, Secretary Reich, and that is if the market were suddenly to take a dive, indeed, some of the pension funds, labor union pension funds, among them, would take the biggest hit.
Robert Reich: Ted, the top 10% of income earners in this country own 90% of the stocks in this country, 90% of the value of the stock market. So although obviously pension funds are dependent on a vibrant and buoyant stock market, let's not fool ourselves into who owns America. This is not your mom-and-pop ownership. This is a very small group of people.
Ted Koppel: All right.
Robert Reich: And again, Ted, it's not a matter of bashing the rich. It's not a matter of being - of portraying corporations as evil or venal. What we need to do is face the practical reality that we've got to help so many people get across this great chasm from the old economy to the new economy, and we are not, as a society, doing it now.
Ted Koppel: Mr. Dunlap, your body language says you've got one more thing to say. You've got 20 seconds....to say it.
Albert Dunlap: I sure do. That, unfortunately, was rubbish. The moms and pops of America own corporate America, not a bunch of rich people.
Ted Koppel: Mr. Dunlap, Mr. Reich, thank you both very much indeed.....
In response to an inquiry from Pensions & Investments, a spokeswoman for Mr. Reich said his source for the stock ownership data was a research paper,"Trends in Household Wealth in the United States, 1962-83 and 1983-89," by Edward N. Wolff, an economics professor at New York University. Mr. Wolff sent P&I his well-researched paper, which presents an interesting analysis and shows the top 10% of households in income in 1989 owned 90% of all stock held by households, not, as Mr. Reich said, all the shares of stock outstanding. Further, his paper notes his research excludes the interest households have in stocks in their retirement programs, such as defined benefit and 401(k) plans. Mr. Wolff said Mr. Reich misinterpreted the results of his research.
In addition, P&I looked up the quarterly Flow of Funds Accounts report, produced by the Board of Governors of the Federal Reserve System, Washington. It shows, as of Dec. 31, the market value of corporate equities totaled $8.3 trillion. The biggest holders, in order, were the household sector, which includes not-for-profit organizations, with $4.3 trillion, private pension funds with $1.1 trillion, mutual funds with $1 trillion, state and local government retirement funds with $702 billion, life insurance companies with $353 billion, foreign residents with $348 billion, and bank personal trusts with $225 billion. The rest of the equities were held by closed-end funds, broker-dealers and other groups.