EDITORIAL: Unsustainable investments
Spending other people’s money is what the left does best, so it’s no surprise congressional Democrats would come up with a scheme to bankroll pet causes with cash from retirees. In 2009, the Democratic-controlled Congress passed a law encouraging the Thrift Savings Plan (TSP) to come up with new investment options. Rep. Gerald E. Connolly, Virginia Democrat, wanted to know whether greenbacks could be steered toward “socially responsible” firms.
That would be a bad idea, the Government Accountability Office (GAO) concluded in a report released Thursday. About 4.5 million federal employees have $308 billion in the government’s 401(k)-style retirement program, which allows employees to put their assets into several index funds that vary in potential risk and return.
One fund invests in Treasury securities, offering the least risk. Another invests in bonds and other asset-backed securities. The most popular option tracks the Standard and Poor’s 500 Index, investing not in any one particular firm but in the broader market.
“Socially-responsible” patronage directs dollars toward firms that meet criteria laid out in the United Nations document, “Principles for Responsible Investment.” These values are kept vague for obvious reasons, but in practice the idea is to set up a system to reward corporations for such things as speaking out against the evils of global warming, promoting alternate lifestyles and “contributing to their community” with donations to liberal causes. There’s no room for anyone involved in, say, nuclear power or national defense.
The Thrift Savings Plan surveyed its members and found there was no demand for a socially responsible fund. In other private-sector retirement programs that did offer a save-the-polar-bears option, as few as 0.5 percent of members chose it. When people are in control of their own money, they’re not looking to hug a tree — they’re looking to get the best bang for their buck.
That’s not what they get from purportedly environmentally conscious, fair-trade firms that insist on only using recycled paper. GAO tested its current portfolio against the best-performing, socially responsible index fund and found the liberal stocks would have resulted in “lower returns and higher volatility” compared to the broader market. Over 10 years, the lefty stocks averaged a 12 percent return compared to 33 percent for common stock.
It’d be a much smarter move to create a fund from politically incorrect companies like the two publicly traded U.S. firearms manufacturers. Smith and Wesson stock grew from $2.35 in January 2009 to $10.10 per share today. Sturm, Ruger and Co. jumped from $6.27 to $49.43 over the same period, not counting $1.93 in dividends.
This politicized investment idea, however, was never about sensible investing or returns. It was always about encouraging companies to toe the liberal line using the savings of retirees as an incentive.
The Washington Times
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