Legislators Say: Do As I Say Not As I Do

Today in the Humboldt Times-Standard, I found an op-ed piece that revealed a well-kept secret that I don't recall reading about in the Bee: our Legislature thinks they don't deserve the same pay cut that has been inflicted on other state employees.

Apparently the California Citizens Compensation Commission decreed back in May that legislators' pay should be cut 18% effective December 2010, from $116,208 to $95,291, and also that per-diem, car, medical and other benefits should be cut 18% effective next month.

And legislators are feeling so threatened and deprived, they have been whining to AG Jerry Brown, claiming that if they are based on budget problems rather than on the constitutional criteria that are presumably prescribed as a basis for the commission's decisions.

What is not immediately clear is whether or not legislators have read the existing legal opinions which the commission presumably based its actions on. It's also not clear why the AG should spend its remaining unfurloughed staff time on this rather than on truly important matters that affect the whole state.

It's also not clear if CalPERS has any legal basis for putting legislators in their place, nor if they have the moral authority to do so, given recent reports of funny business highlighted in previous posts. But it's in the interests of CalPERS members and retirees, even those who reside in other states, for legislators to follow the rules and take their fiscal medicine, just like everyone else.

As my mom used to say, 'joys shared grow happier; sorrows shared are weakened.'

Does CalPERS Have A Board Recall Process?

About halfway through this news article, we learn that Kurato Shimada, re-elected to the CalPERS Board just a few weeks ago, is also implicated in the insider-trading funny business that tars two former colleagues on the Board, Alfred Villalobos and Fred Buenrostro, as well as the lame (and ill) duck, Chuck Valdes.

The mystery of the power of incumbency is clearly not yet solved. Although we may easily identify the perpetrator - namely, human nature - the nature of the motive is far murkier. But until that clarity is achieved, I fear that democracy will fail to achieve its promise of the greatest good for the greatest number.

Sustainable Pensions

It's not news that pension funds nationwide have taken a beating, and face tall challenges if they are to meet the overly-optimistic commitments which have been made.

As a retiree, I am very concerned about a CalPERS investment strategy that is fixated on a numerical target such as 7.75% ROI, rather than on investments which are sensible and low-risk. Personally, I would prefer to see relatively small reductions in my modest stipend if they meant that CalPERS would have the flexibility to abstain from unrealistic or uncomfortably high risk.

The selfish attitude of too many civil servants, that they should get what has been promised no matter who else suffers, could easily erode everyone's quality of life as local and state governments gut basic services now and in the future.

Retirees, many of whom receive stipends that dwarf mine, should have options to give back some of the money in return for considerations such as having the capital that has been set aside on their behalf invested in more conservative and less risky ways.

Another alternative would be investing such capital in truly sustainable ways that could directly benefit such wise pensioners.

I'm Voting For JJ Jelincic

JJ and I sat down yesterday afternoon for a discussion of CalPERS, economics, and sustainability. After almost 2 hours of a wide-ranging conversation, I feel that his understanding of CalPERS as an organization, the details and structure of the financial system as a whole, and the practice of ethical politics, all make him an excellent choice for helping protect our retirement security and strengthen CalPERS operations. Apparently he had been considering running for at least a year before making a definite decision about a year ago.

While my ideas about how best to achieve sustainability, and related concepts about economics, are unusual, he understood these ideas well enough and readily enough that our conversation was for me an enjoyable discussion and meeting of two informed and independent minds. I believe we both learned some valuable information and concepts.

He listed 4 key reasons for running:

1. having a board member with his level of investment expertise

2. cutting costs by bringing money management in-house and reducing the use of contractors and consultants, and also reining in top staff salaries

3. defending defined benefit pensions in general

4. improving corporate governance

However, I have not yet had the opportunity for a similar discussion with Cathy Hackett, which I hope will take place later this month. Still, I should state for the record that I am somewhat skeptical of unions in their role nowadays, although more skeptical about corporations. Union leadership often seems to focus on money only and not on the larger leadership of ensuring a robust economy that can actually meet everyone's needs. And they are not always open to new ideas, such as when Bill Camp and the Labor Council didn't even bother to talk to me before making an endorsement in Sacramento's 2008 mayoral race.

Nov. 5 update: Having never had an opportunity to discuss economics and CalPERS management with Cathy Hackett, I cannot know if I would have changed my mind. But maybe she didn't really want to respond to my questions.

Another Predatory Investment Comes Home To Roost

Today's paper had more news about investment woes at CalPERS. It turns out that this isn't exactly new news.

As in East Palo Alto, this ill-timed real estate venture is all about dispossessing renters and profiting from gentrification. But apparently the tenants were tenacious, being as fond of their homes as anyone.

Especially nowadays.

Healthy Lives Essential to Wellness

Rep. Matsui and CalPERS Board Chair Feckner explain - and advocate - how to fix our health care system, and why we need to.

But as long as we continue to live the lifestyle common in the over-developed countries, this fix won't stick. We need to use less fossil fuel, less sugar and white flour, less paperwork, and do a lot more walking, gardening, and traditional crafts that are the foundation of local self-reliance and sustainability.

Now, half the people do all the paperwork, a quarter of the people run the machines, and a quarter of the people are either homeless or filthy rich. We need a 20-hour workweek so people have time to take care of themselves and their families, and live a healthy balanced life.

Discussions about economic welfare never address the insecurity of a very uncertain future for this economic system, and of not knowing how your town will be able to take care of itself locally. We need to de-develop in order to achieve the greatest economic security for the greatest number.

It's Not the Money, Folks

Apparently CalPERS invested in another ill-fated real estate venture to gentrify East Palo Alto.

The weak link in their analysis is similar to the misperception which underlies regulators' concern that banks should retain more capital as a proportion of loans on their books. But the real cause of the financial crisis was bad collateral, overvalued houses funded with abusive mortgages. So what banks must do is insist on quality collateral for their loans, and exercise due diligence on mortgage terms.

Similarly, for CalPERS, the quality of an investment cannot be completely evaluated by looking at the expected monetary return on investment. One also has to look at how an investment will directly help meet people's needs for clean air and water, healthy food, and snug shelter. A project that substitutes rich people's needs for poor people's needs just creates for social chaos.