Public-employee pension funds are designed for two reasons: First, to provide a comfortable retirement for contributors. Second, to not be a burden on taxpayers.
That’s why state officials ought to ignore the proposal of LatinoJustice and the National Institute for Workers’ Rights for the California Public Employees Retirement System to divest from Tesla Inc. for purely political reasons.
On Oct. 15, the activist groups sent a letter to California Controller Malia Cohen, an ex-officio member of the CalPERS Board. The letter attacked “Tesla’s anti-inclusion, anti-opportunity, and anti-diversity stance as well as its record of discrimination against workers.”
The letter linked to a Dec. 15, 2023 post by Musk on X, reading, “’Diversity, Equity and Inclusion’ are propaganda words for racism, sexism and other -isms. This is just as morally wrong as any other racism and sexism.”
“Divesting from Tesla repudiates the company’s anti-inclusion position, condemns its CEO’s corrosive rhetoric, and sends a clear message to Tesla and other companies,” the activists argue.
Musk’s opinions are beside the point.
CalPERS’ investment has been sound. Reported the Teslarati website last May, which reports on Tesla news, the value for the 183,343 shares of stock CalPERS owned in 2018 has multiplied 11 times, to about $500 million today. CalPERS has invested more since then and now owns about 6.7 million shares.
CalMatters noted CalPERS in the past has divested from domestic tobacco and gun firms. But it has resisted divesting from oil companies, much to the disappointment of activists.
This editorial board has been consistent on this point: pension funds should be invested primarily with investment performance in mind. Investments should not be made primarily with ideological or political point-scoring in mind.
As good as doing so might make some activists feel, those good feelings could well be at odds with the goal of ensuring pensions are well-funded.
State employee pensions operate under the California Rule, upheld in 2020 by the California Supreme Court, which mandates government workers being paid the retirement incomes promised them at time of employment.
In sum, the activists can invest their own money however they like. But public pensions ought to invest in legal equities based solely on sound principles to protect both retirees and taxpayers.
It really should be that simple.
