Pondering the California Pension Proposal

A bunch of you have been asking my opinion on the proposed California legislation that would preclude state pension funds from investing in private equity firms that are partially owned by sovereign wealth funds of nations with poor human rights records (download: CalifBill.pdf).

Part of today’s plan is to give it serious thought and speak with the parties involved, but my gut-check feeling is as follows:

I don’t have a philosophical problem with the bill, just as I didn’t with that Sudan bill in Illinois last year. But I’ve got a bunch of practical problems with it. Chief among them is the inconsistency of preventing investment in firms that have sold management company stakes to Dubai (for example), but not those firms that count Dubai among their largest limited partners. This is a distinction without much difference, and really opens bill sponsor SEIU up to more charges that this is more about unionizing Manor Care than it is about human rights…