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Letter to Sacramento Bee
By Adam Summers
Dan Walters's column about the secrecy, risk, and political motivations behind the California Public Employees' Retirement System's investment decisions should raise red flags for legislators currently considering AB 2940, a plan to allow private-sector workers whose employers don't offer pensions or IRA plans to open retirement accounts through CalPERS.
Concentrating the power to invest hundreds of billions of dollars in the hands of a small group of union representatives and other politically connected officials necessarily leads to the politicization of investment decisions. This setup allows the pension board to circumvent the democratic process and pursue its political or ideological objectives through the power of the pension purse.
If legislators really want to encourage saving, they should reduce the state's heavy tax burden and let people keep more of their money to begin with. Then they should take a long look in the mirror. With its $17 billion-plus budget deficit, California has certainly set a poor example of financial responsibility. Rather than trying to compete with the private sector in an investment services industry where there is already robust competition, the state would be better served by getting its own fiscal house in order.
Adam Summers is a policy analyst at the Reason Foundation. An archive of Summers' work is here, and Reason's California research and commentary is here.
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