Arnold Kling  

Laboratories of Socialism

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Gar Alperovitz writes,

Local and state governments are likewise changing the nature of American capitalism. Almost half the states manage venture capital efforts, taking partial ownership in new businesses. Calpers, California's public pension authority, helps finance local development projects; in Alaska, state oil revenues provide each resident with dividends from public investment strategies as a matter of right; in Alabama, public pension investing has long focused on state economic development.

He has many other examples, which excite him and depress me. Actually, I do not mind if some communities choose to be laboratories for socialism, as long as there are other communities that become laboratories for capitalism.

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CATEGORIES: Political Economy

COMMENTS (3 to date)
Jack writes:

I find it worrisome that states would invest pension fund money into own-state projects and other in-state developments. Talk about zero portfolio diversification!

mark writes:

These are drops in the bucket compared to the amount of investment in the equity markets controlled by state pension funds.

I do think that, if states are going to extract money from taxpayers to fund pension entitlements for the state's workers, they should be forced to invest those funds in businesses in their own state. That or Treasuries. That, at least, means that the money being taken from people in the state is being kept in the state and reinvested there. So the risk and reward are contained within the state. Do people understand that the reason New York centered institutions have so much money to invest is the transfer of dollars from state pension funds to those institutions? Imagine what would happen to income inequality if pension funds stopped sending money to New York.

david writes:

Singapore, incorporated. Ask your co-blogger.

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