ALEC on NTD News: Our 401Ks are quickly becoming 201Ks
At the state level politically motivated investments schemes are being used to wage left wing politics against all of us.
NTD News featured ALEC Chief Economist Jonathan Williams at the ALEC 49th Annual Meeting talking about the growing threat politically motivated investment schemes pose to our retirement savings.
Highlights from the conversation with NTD host Paul Greaney and Jonathan Williams:
Paul Greaney: We’ve heard a lot about ESG investing at this conference and the possibility that state pension money is possibly being used to undermine American interests have state legislators who’ve been watching these panels been surprised by what they’ve learned?
Jonathan Williams: Up until maybe even six months ago or a year ago, but most people including myself, and others that hadn’t studied the issue, probably thought ESG was some cardiac procedure. It actually stands for environmental, social and governance principles, but it’s almost impossible to define ESG.
But at the state level it is being used to wage left wing politics against all of us. And in the case of the pension systems that you talked about, this has been a major discussion point here at ALEC, not just at this meeting for but for a number of months as we have new model legislation on this topic that legislators around America who are here for nearly all 50 States this week have come up to talk to me to ask how they can keep politics out of their pension system, whether it’s being sold as ESG or by some other ruse.
This is very dangerous for pensions, as you and I’ve talked about many times are underfunded, massively. And in our new report at ALEC, we detailed more than $8 trillion in unfunded liabilities across the state plans and the 50 states. And guess what, this only makes that job of solving that issue much much more difficult because you’re sacrificing the needed returns in these plans, inherently by playing politics and take it away needed investment decisions that could really help shore up those systems.
Paul Greaney: So break that down for us. For anyone at home who isn’t so familiar with ESG. How exactly is it holding back?
Jonathan Williams: It is being weaponized and no matter how you define it, you ask 100 people on the street I think you get 100 different answers for what ESG actually means. Consider the state of Maine, which became the first state in America to divest all of its asset holdings as a state, including its pension holdings, from all fossil fuel related companies. And you can imagine the kind of detrimental impact that has in a year like this when the market has plummeted our 401 k’s are quickly turning into 201 Ks.
Unfortunately, and state pensions are not immune from that same issue, especially if they’ve taken away that important sector of the economy for those investment returns.