Money and morals don't mix
BACK IN THE old days, when Republicans, led by Ronald Reagan, actually stood for a set of principles, efforts by Democrats to make political statements with other people's money were roundly criticized.
One of the most prominent examples was the campaign during the 1980s for disinvestment by public pension funds in the South African economy.
It was a misguided idea from the outset. Professor Walter Williams (and others) predicted during the national debate on the subject that disinvestment, along with such other steps as economic sanctions, would have the counterintuitive effect of strengthening apartheid and delaying its inevitable collapse; he then showed, in a subsequent 1989 book, that that was the actual outcome.
But a narrower issue was important too. However abhorrent the system of apartheid, was it appropriate for government officials to use public pension funds to make political statements?
For principled Republicans, the clear answer was no. Elected officials and pension administrators had (and have) an unambiguous fiduciary responsibility to current and future retirees and to taxpayers to manage the funds so as to achieve the best possible financial returns for beneficiaries. In plain English: Those pursuing specific political goals, however worthy in moral terms, ought to do so with their own dollars rather than those belonging to others; and to the extent that public policy goals are involved, it is the taxpayers or the population generally -- rather than, say, retired government workers -- who should bear the cost.
That was then. Now it is the Islamic regime in Iran that is front-page news, with its ongoing efforts to build nuclear weapons and its bankrolling of terror throughout the Middle East. In response, the California Legislature is considering legislation mandating that the large state public pension funds -- the California Public Employees' Retirement System and the California State Teachers' Retirement System -- sell off the billions of dollars of shares they hold in firms doing business with Iran.
This legislation appears likely to receive heavy Republican support; after all, it is easy to claim that disinvestment would "de-fund terrorism." But that assertion is highly dubious -- and Republicans would be just as wrong to support disinvestment today as Democrats were to support it in the 1980s.
