America's Pensions Can't Beat Vanguard but They Can Close Your Hospital
7 days ago
- #Financialization
- #Pension Reform
- #Infrastructure Investment
- Public pension funds in the U.S. hold $6 trillion in assets but fail to outperform simple index funds, while paying $60+ billion annually in fees.
- Pension capital, which is long-duration, is mismatched with short-term, high-fee alternative investments (hedge funds, private equity) instead of funding infrastructure like transmission lines, nuclear plants, and housing.
- Historical models (e.g., U.S. municipal bonds 1920–1960, Japan’s FILP, China’s CDB) show how patient capital can finance national development at lower costs.
- Private equity and hedge fund investments by pensions harm communities—closing hospitals, cutting wages, and bankrupting local businesses.
- Bailouts for pensions and hedge funds (e.g., LTCM, COVID-era Fed interventions) expose taxpayer-backed subsidies without structural reforms.
- Institutional inertia and consultant-driven incentives prevent pension reforms, despite evidence of underperformance and extraction.
- The next pension bailout is inevitable, presenting a rare political opportunity to attach conditions (e.g., infrastructure mandates, fee caps).