Elected Officials and Other People's Pensions—A Match Made in Hell

Moneybox
A blog about business and economics.
Aug. 31 2013 11:48 AM

Elected Officials and Other People's Pensions—A Match Made in Hell

166174670
NEW YORK, NY - APRIL 09: Tight close-up implies shady conduct.

Photo by Mario Tama/Getty Images

David Halbfinger has a great piece in the New York Times about former city comptroller William Thompson's habit of investing pension fund money he was supervising with investment vehicles controlled by fund managers who donated to his campaigns. The fund managers get fees, some of the fees get turned into campaign contributions, and everyone wins.

Everyone, that is, except for taxpayers who ultimately need to make good on pension promises out of their own pockets if the funds' investments don't perform. Alternatively, maybe taxpayers will get fed up and city workers will end up receiving less than they thought they would.

Advertisement

Either way it's bad business. But while this certainly reflects poorly on Thompson, it's worth noting that this is a very systemic problem. Thompson's predecessor as comptroller, Alan Hevesi, moved upstairs to become New York State Comptroller before ending up in jail for corruption related to his management of state pension funds. Academic research on California cities has shown that across the board jurisdictions with elected rather than appointed treasurers face systematically higher borrowing costs than those where it's an appointee. But the Hevesi problems and the Thompson ones (where, to be clear, there's no evidence of criminal conduct) are probably best viewed in this context. There's a range of misconduct from the felonious to the sleazy to the merely inept along which this kind of situation can play out, but "effective stewardship of public funds" isn't likely to be on the list.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

Smash and Grab

Will competitive Senate contests in Kansas and South Dakota lead to more late-breaking races in future elections?

Stop Panicking. America Is Now in Very Good Shape to Respond to the Ebola Crisis.

The 2014 Kansas City Royals Show the Value of Building a Mediocre Baseball Team

The GOP Won’t Win Any Black Votes With Its New “Willie Horton” Ad

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Technocracy

Forget Oculus Rift

This $25 cardboard box turns your phone into an incredibly fun virtual reality experience.

One of Putin’s Favorite Oligarchs Wants to Start an Orthodox Christian Fox News

These Companies in Japan Are More Than 1,000 Years Old

Trending News Channel
Oct. 20 2014 6:17 PM Watch Flashes of Lightning Created in a Lab  
  News & Politics
Politics
Oct. 20 2014 8:14 PM You Should Be Optimistic About Ebola Don’t panic. Here are all the signs that the U.S. is containing the disease.
  Business
Moneybox
Oct. 20 2014 7:23 PM Chipotle’s Magical Burrito Empire Keeps Growing, Might Be Slowing
  Life
Outward
Oct. 20 2014 3:16 PM The Catholic Church Is Changing, and Celibate Gays Are Leading the Way
  Double X
The XX Factor
Oct. 20 2014 6:17 PM I Am 25. I Don't Work at Facebook. My Doctors Want Me to Freeze My Eggs.
  Slate Plus
Tv Club
Oct. 20 2014 7:15 AM The Slate Doctor Who Podcast: Episode 9 A spoiler-filled discussion of "Flatline."
  Arts
Brow Beat
Oct. 20 2014 9:13 PM The Smart, Talented, and Utterly Hilarious Leslie Jones Is SNL’s Newest Cast Member
  Technology
Technocracy
Oct. 20 2014 11:36 PM Forget Oculus Rift This $25 cardboard box turns your phone into an incredibly fun virtual-reality experience.
  Health & Science
Medical Examiner
Oct. 20 2014 11:46 AM Is Anybody Watching My Do-Gooding? The difference between being a hero and being an altruist.
  Sports
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.