Government should invest in its people — literally

Biss, Pawar urge use of pension funds as ‘activist investor for the public good’

Ameya Pawar and Daniel Biss address Indivisible Naperville Wednesday night. “How do we make sure that our investments are aligned with our priorities?” Pawar said. (One Illinois/Ted Cox)

Ameya Pawar and Daniel Biss address Indivisible Naperville Wednesday night. “How do we make sure that our investments are aligned with our priorities?” Pawar said. (One Illinois/Ted Cox)

By Ted Cox

NAPERVILLE — Two former candidates for governor called for public pension funds and other large government accounts to be used as “an activist investor for the public good” Wednesday in a meeting at the Naperville Municipal Center.

Former Chicago Alderman Ameya Pawar and former state Sen. Daniel Biss of Evanston — candidates in last year’s Democratic Primary campaign — addressed Indivisible Naperville on the issue of using public dollars to enhance the public good.

“How do we make sure that our investments are aligned with our priorities?” Pawar said.

Both cited a suit filed this summer by Illinois Policy Institute Chief Executive Officer John Tillman and the Warlander Asset Management hedge fund as an illustration of the consequences of “activist investing.” Biss and Pawar charged that the suit was trying to force Illinois to default on bonds used to lower the state debt — and that they stood to profit through hedge investments if the state failed to pay them.

“They weren’t content just to make a bet,” Biss said. “They made a bet and then worked to make it come true.” He added that a court ruling in their favor “would have been devastatingly harmful for the state of Illinois … I would say for generations.”

Biss and Pawar pointed to the way government investments are sometimes funneled into hedge funds that then buy and hollow out companies, firing workers to heighten profits, as another illustration of activist investment — one that needs to be reversed.

Biss said pension accounts that invest in such predatory hedge funds, which remove workers from the taxpayer rolls, only succeed in diminishing the very taxes that go into those pension funds.

“If you invest in companies that slash jobs, you’re cannibalizing your own pension fund,” Biss said.

“Somehow, working against the common good is in the common good,” Pawar said.

Instead, they urged large government funds, invested in markets to raise value, to be used to benefit the public good.

Biss said large investment could potentially fuel growth in elements of the Green New Deal nationally and the proposed Clean Energy Jobs Act on the state level. In a previous opinion column that ran in August in the Chicago Sun-Times, they suggested public funds could be invested in gun manufacturers in sufficient amounts to earn spots on corporate boards “to force an industry shift on smart-gun technology.”

Daniel Biss and Ameya Pawar address Indivisible Naperville Wednesday night. (One Illinois/Ted Cox)

Daniel Biss and Ameya Pawar address Indivisible Naperville Wednesday night. (One Illinois/Ted Cox)

Dianne McGuire, founder of Indivisible Naperville, said she’d looked into so-called ESG accounts — emphasizing environmental, social, and governance criteria — offered by Fidelity Investments, and that they were very competitive on rate of return with any other investments.

Biss called for government funds to be “an activist investor for the public good,” and said the recent proposal by a pension task force under Gov. Pritzker to combine the 650 state pension funds for police and firefighters to be combined into just two — one for each of those professions — made this “a perfect moment” to consider that approach.

“We have the money to do this,” Pawar said, citing the more than $4 trillion currently in state and local pension funds. “The question is whether we can mobilize it.” He suggested the massive Illinois Municipal Retirement Fund was “on auto-pilot” in what it puts its money into.

Biss warned that “cottage industries” of pension managers and consultants who occupy redundant positions in each of those separate police and firefighter pension funds would lobby against any consolidation.

“The people who are going to crow the loudest about this pension consolidation are the people making money off it,” Pawar added.

He called on public investments to be subject to “basic principles,” such as “we’re not going to invest in companies that damage the environment.”

“You don’t want pension investments to be a kind of political football,” Biss said, so that a Democratic administration might put money into solar energy, only to see a Republican administration voted in and pull those funds to invest them in fossil fuels.

Instead, they argued, such investments should be based on a clear and long-term public benefit.

“We shouldn’t ignore the environmental consequences” of an investment, Biss said, “because the environmental consequences could have fiscal consequences” down the road — say, with the cleanup of coal ash after a power plant has closed, or larger manifestations of climate change.

Pawar pointed out the conversation is changing not just in the public sector, but in private firms as reflected in the recent statement issued by the Business Roundtable, which called for corporations not to blindly purpose profits, but to promote “an economy that serves all Americans.”

“It’s our money,” Pawar said. “It should not be going into investments that destroy our neighbors or the long-term viability of our communities or, more importantly, the long-term survival of human beings.”

Ameya Pawar is founder of One Illinois.