Stephen Bainbridge writes one of the most intelligent blogs anywhere, Professorbainbridge.com. A specialist in corporate law at UCLA Law School, he has taken up the extremely important subject of CALPERS, the nation's largest pension fund, consisting of the retirement investments of California's public employees.

CALPERS has recently launched a campaign against 2700 publicly—listed companies in its portfolio to act in the "public interest." Steve notes that sitting on the board of CALPERS is Phil Angeledes, California State Treasurer, a man who is well—known to covet a run at the governorship in 2006.

Such a campaign is ludicrous on many grounds, but will make for good campaign ads for Angeledes, as a crusader against corporate fat cats. Meanwhile, the actual shareholders, the people corporate directors supposedly work for, and whose interests they are required to protect, will undoubtedly suffer, as attention and resources are diverted from the actual business of the companies in question.

But what makes the abuse of CALPERS truly dangerous is that California's taxpayers are required to make up any shortfalls CALPERS might experience, if its investments do not pan out. This is structurally simlar to the conditions which produced the 1980s savings and loan scandals. CALPERS can abuse its investing power for political purposes, without being held responsible, because the taxpayers will pick up the tab for failed investment strategies.

Posted by Thomas  04 17 04