6/27/16
I sent this note to the Wall Street Journal over a month ago
in response to a naïve letter written by another so-called “expert” in his
field. The missive wasn’t published but
is a paragon of insight, so I’m now sharing it with my readers:
5/14/16
Surely Marc Levine
cannot have been named chairman of the Illinois
State Board of Investments (“Fees That Sickly Public-Pension Funds Can’t
Afford,” Opinion, 5/14-5/15/16) while being as naïve as his protestations about
asset management fees make him seem to be.
Mr. Levine is absolutely right on his investment advice;
public pensions, in Illinois and elsewhere, would be better off investing in
balanced index funds than following their present course of investing in
underperforming, high fee alternative strategies. But Mr. Levine is absolutely wrong on his
politics. The managers who land this
lucrative public pension business are veritable cornucopias of those things
that politicians most fervently seek: “campaign” contributions, jobs for no
account relatives and other lackeys, post-public life employment, and other
expressions of the type of “public spiritedness” that make Illinois the
paradise for taxpayers that it is. One
suspects that established index houses like Vanguard, Black Rock, and State
Street would not be nearly as generous to those who award the
business. And that is why Illinois, and
many other states, are not following Mr. Levine’s sage financial advice.
See my two books, The
Chairman, A Novel of Big City Politics and The
Chairman’s Challenge, A Continuing Novel of Big City Politics,
for further illumination on how things work in Chicago and Illinois
politics.
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