The fundamental challenge in this recession is that the growth that preceded it was a mirage. Bubble era borrowing created a network of financial jobs, real estate jobs and construction jobs that collapsed with the end of the bubble. Many of those jobs will never return.
An extremely high proportion (75%) of job losses in this recession are permanent rather than temporary. States will need to nurture completely new industry sectors and the infrastructure to support those jobs, while the jobless will need retraining in new skills to participate in those sectors.
As this Dispatch will highlight, the first step is to fund jobs
that support long-term economic competitiveness, notably by investing
in people and physical infrastructure. While the economic climate for
profit-making business opportunities is more limited, investments in
education, health care, transit and energy efficiency can create
immediate jobs while strengthening building blocks for long-term
In the past few years states have become increasingly unwillingly torely on the chance that volatile global investment markets will chooseto invest in their local communities. Instead, states are choosing todirectly invest themselves in local emerging opportunities. The greatadvantage of direct investment, instead of simply raiding the statetreasury and giving away corporate welfare, is that by making directinvestment in local businesses, states create a financial stake infirms. If these businesses are successful, they will return equity tothe tax payers that can be reinvested in other projects. According to the National Association of Seed and Venture Fund, as of 2006, all but six states had state venture capital funds.
Florida Governor Charlie Crist recently signed an economic stimulus plan for the state that redirects $1.95 billion of the state's pension fund
into direct investments in Florida's economy. The amount is limited to
1.5 percent of the state's pension money, but even that limited
percentage can add up to massive investments in jobs for the state's
In creating the program,
legislators and the Governor pointed to the success of similar programs
in other states, particularly the California Public Employees' Retirement System (CalPERS), the nation's largest pension fund. A recent study
found the California fund's in-state investments had fed an estimated
$15.1 billion into in-state economic activity in 2006 and created
124,000 jobs, more jobs than the construction or motion picture
Companies are required to calculate the risks to their businesses based
on a range of potential threats to their business models, but there is
currently no requirement that they calculate the potentially
catastrophic costs of climate change. A few U.S. companies do so
voluntarily, but most do not.
Illinois state law prohibits investments in companies that do business in Sudan. Now, the teacher pension is pulling roughly $130 million in international investments. This is clearly a good move. Investing in genocide is not a moral solution as Divest Sudan makes clear.
The beauty of pushing for pension divestment is clear. First, American workers should seek returns that aren't built on the blood of genocide victims.