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Financial Institutions and Economic Security (FIES)

Investigators

Ms Jonquil Lowe
Prof William Lazonick
Prof Mariana Mazzucato
Mr Alan Shipman

Funding

The FIES project has been co-funded by the EC Network of Excellence Dynamics of Institutions and Markets in Europe (DIME, 2007-2012) and the FP7 project on Finance, Innovation and Growth (FINNOV, 2009-2012)

Summary and aims

Driven by industrial innovation, in the last half of the 20th century, the populations of the advanced nations of North America and Europe attained, on average, very high standards of living. Yet, in the 21st century, large numbers of people in these nations are economically insecure. Such is particularly the case in the United States, the world's largest economy, where, even before the 2007 financial crisis, employment income had become unstable and retirement income unpredictable.

Home ownership can complement employment and retirement income as a source of economic security. Yet, again especially in the United States, the rise in subprime mortgages that preceded and precipitated the financial crisis reflected a lack of stable and remunerative employment opportunities for large segments of the population. The fact that banks and insurance companies were willing and able to use the subprime mortgage market as a foundation for making mammoth bets on financial derivatives reveals how the fortunes of the rich and poor have become inextricably joined, for better or, as we can now see, for worse.

In between the rich and poor in a highly unequal economy is the disappearing "middle class". In an age of corporate cost-cutting and offshoring, often in the name of "maximizing shareholder value", economic insecurity confronts not only the poor but also large numbers of better educated people with ample work experience and considerable skills. The movement of emerging economies such as those of China and India into higher value-added activities has created new competition for the jobs of well-educated and highly experienced workers in the advanced nations, while fiscal tightening at home threatens to drive up unemployment.

The purpose of the Financial Institutions and Economic Security project is to delve into the role of financial institutions in supporting or undermining economic security in the advanced nations of the West, and the implications for industrial innovation and economic performance.

FIES documents

Davies, B., Ginn, J., and Minns, R. (2010) Funded pensions: what are they for? (PDF document, 105 KB)

A highlight of the FIES project in 2009 was the IKD Conference on Financial Institutions and Economic Security (FIES) held in London, UK on 21-22 May 2009. The FIES conference considered the influence of financial institutions on employment security, retirement security, and housing security, analysing a range of examples from North America and Europe. The FIES conference report, videos of the presentations and a series of policy briefs are available for your review below.

PDF IKD FIES Conference Report (PDF document, 60 KB)

Prof Mariana Mazzucato, Open University
video Linking Economic Security to Corporate and Financial Change

Prof William Lazonick, University of Massachusetts Lowell
video Economic Insecurity: Employment, Retirement, Housing (and Health)
video How Shareholder Value Undermines Employment Security

Keith Smith, Imperial College Business School
video Financial Institutions and Economic Security

Andrew Tylecote, University of Sheffield
video Financial Markets' 'Great Distraction'

Matthieu Montalban, Groupe de Recherche en Economie Theoretique et Appliquee
video France Resists Financialisation

Jürgen Kädtler, Socialogisches Forschungsinstitut Göttingen
video Germany's Uneasy Shift to Shareholder Value

Janet Williamson, Trades Union Congress
video Defending 'Stakeholders' Against the Maximising Shareholders

Christian Weller, University of Massachusetts (Boston)
video Why Many Americans Can't Afford to Retire

Richard Minns
video Financialisation, National Security and Economic Insecurity

Question-and-answer session
video Challenging the Link Between Financialisation and Insecurity

PDF IKD FIES Employment Policy Brief (PDF document, 55 KB)
PDF IKD FIES Housing Policy Brief (PDF document, 50 KB)
PDF IKD FIES Retirement Policy Brief (PDF document, 50 KB)

FIES news

Lazonick, W. "The Buyback Boondoggle", Business Week, August 13, 2009
Lazonick, W. "Everyone is paying the price for share buy-backs", Financial Times, September 25, 2008

Events

Conference on 'Financial Institutions and Economic Security'

Contact

Jonquil Lowe, jonquil.lowe@open.ac.uk

Last updated: 5 August 2013