Politics becomes amusing when liberalism becomes theatrical with high-minded gestures. Chicago's government, which is not normally known for elevated thinking, is feeling so morally upright and financially flush that it proposes to rise above the banal business of maximizing the value of its employees' and retirees' pension fund assets. Although seven funds have cumulative unfunded liabilities of $25 billion, Chicago will sacrifice the growth of those assets to the striking of a political pose so pure it is untainted by practicality.
Emulating New York and California, two deep blue states with mammoth unfunded pension liabilities, Chicago Mayor Rahm Emanuel has hectored a $5 billion pension fund into divesting its holdings in companies that manufacture firearms. Now he is urging two large banks to deny financing to such companies "that profit from gun violence." TD Bank provides a $60 million credit line to Smith & Wesson, and Bank of America provides a $25 million line to Sturm, Ruger & Company.
Chicago's current and retired public employees might wish the city had invested more in both companies. Barack Obama, for whom Emanuel was chief of staff, has become a potent gun salesman because of suspicions that he wants to make gun ownership more difficult. Since he was inaugurated four years ago, there have been 65 million requests for background checks of gun purchasers. Four years ago, the price of Smith & Wesson stock was $2.45. Last week it was $8.76, up 258 percent. Four years ago, the price of Sturm Ruger stock was $6.46. Last week it was $51.09, up 691 percent. The Wall Street Journal reports that even before "a $1.2 billion balloon payment for pensions comes due" in 2015, "Chicago's pension funds, which are projected to run dry by the end of the decade, are scraping the bottoms of their barrels."
Nevertheless, liberals are feeling good about themselves — the usual point of liberalism — because New York state's public pension fund and California's fund for teachers have, The New York Times says, "frozen or divested" gun holdings, and this month, Calpers, the fund for other California public employees, may join this gesture jamboree. All this is being compared to the use of divestment to pressure South Africa to dismantle apartheid in the 1980s. Well.
Apartheid was a wicked practice. Guns are legal products in America, legally sold under federal, state and local regulations. Most of the guns sold to Americans are made by Americans. Americans have a right — a constitutional right — to own guns, and 47 percent of American households exercise that portion of the Bill of Rights by possessing at least one firearm.
For Emanuel to say gun makers "profit from gun violence" is as sensible as saying automobile manufacturers "profit from highway carnage" — which, by the way, kills more Americans than guns do. Emanuel, who is more intelligent than he sounds (just as many think Wagner's music is better than it sounds), must know that not one fewer gun will be made, sold or misused because Chicago is wagging its finger at banks.
Moral grandstanding, however, offers steady work and The Chronicle of Higher Education reports a new front in "the battle against climate change": "Student groups at almost 200 colleges and universities are calling on boards of trustees to divest their colleges' holdings in large fossil-fuel companies." Of course, not one share of those companies' stock will go unsold because academia is so righteous. Others will profit handsomely from such holdings and from being complicit in supplying what the world needs. Fossil fuels, the basis of modern life, supply 82 percent of U.S. energy, and it is projected that they will supply 78 percent of the global increase in energy demand between 2009 and 2035, by which time the number of cars and trucks on the planet will have doubled to 1.7 billion.
Institutions of higher education will, presumably, warn donors that their endowments will be wielded in support of the political agenda du jour, which might include divesting from any company having anything to do with corn, source of the sweetener in many of the sodas that make some people fat and New York's mayor cranky. Or anything to do with red meat, sugar, salt, trans fats, chickens not lovingly raised. ...
Liberal ethicists may decide that the only virtuous investments are in electric cars. The Obama administration says 1 million will be sold by 2015. Maybe 70,000 have been so far. Just imagine how pension funds will prosper by betting on the next 930,000.
George Will's email address is email@example.com.