The Govenator takes on CALPERS...

Arnold Swartzenegger is trying to get rid of CALPERS - the California pension fund - and replace it with a traditional 401(K) plan. This would make California public employees have the same kind of benefits that most Americans have. Even Federal employees, as I understand, have had such a system since the mid-eighties, when the feds got rid of their pension system.

It's a great idea, but I think that Arnie is in for a fight - coming between government employees and money is a dangerous idea. But the other thing about CALPERS is that their size makes them the 600lb gorilla of corporate government - they own so many shares in some companies that their decision on a proxy vote can decide the vote - so you have a quasi-govermental agency controlling companies. From what I understand, they also tend to engage in some "shareholder activism" - using the voting rights that come with being a shareholder to forward social goals.

I feel that social security reform is important, and I support the idea of private accounts. But sometimes people will suggest the government itself investing in the stock market as a sort of middle ground between private investment and social security. But CALPERS is an example of why that is a bad idea - when the government owns companies, that's called socialism. And if one state's pension fund has the power that CALPERS does, imagine what the Federal government would have.