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.

Will The Real Conservatives Please Stand Up?

The Tea-Party March on Washington last Saturday was billed as a grassroots movement of conservatives. But since the dominant theme seemed to be frustration, it's hard to tell what they wanted to conserve. Jitters about the national debt, while understandable, seem like a delayed reaction, given military spending in this century and the last.

But whatever "conservative" means, there is something suspicious about any definition of conservatism that attracts fewer women than men. Given the nature of human reproduction, women are by definition the more conservative sex. Whether created or evolved, the sex whose reproductive success requires more long-term planning is the sex who will conserve and allocate resources in the most judicious and thrifty way, ceteris paribus.

I can't help noticing that groups labeled "progressive" often attract women and others who are having trouble finding enough resources to conserve. While I'm not altogether sure exactly what "progressive" means, I think these groups are often trying to improve people's lives.

One way of looking at all this is to try to find the best of both worlds. So, if it is conservative to think we have to live within our ecological means, then I am a conservative. And, if it is progressive to think we have to share when we can, and take care of mothers and children first, then I am a progressive.

But what about CalPERS? How can investments best succeed at optimizing both resource uses and outcomes? One way is by directness; by minimizing the distance, the amount of processing, between resource and outcome.