Despite the numerous problems facing state pensions across the country, state politicians are now calling on local pension funds to make “socially responsible investments” in local businesses and other community endavours. The practice is gaining traction on both sides of the aisle, earning the support a diverse group including these two unlikely bedfellows:
“Using pension money would simultaneously achieve another of Mr. [Jesse] Jackson’s goals: encouraging pensions to focus on socially responsible investments,” Alden noted.
Jackson’s proposal found support in an unexpected place last week. In Wisconsin, an econonomic development agency spearheaded by an appointee of Republican governor Scott Walker, unsuccessfully asked the state pension fund trustees to use $200 million from state pension funds to help start up businesses.
Ahh, bipartisan consensus.
At first glance, this sounds like a nice idea. Using local pension money to support local business sounds like a classic win-win to most states and municipalities. Experience has shown that when political interest have the ability to influence pension funds, money is routinely diverted towards pet projects and pork barrel spending rather than wise investments, leaving pensioners holding the bag when they go bad.
To their credit, most pension funds have done well resisting this political pressure. Let’s hope they continue to do so.