There's nothing like a little old-fashioned blackmail. . . . The Wall Street Journal reports that education unions are increasingly turning to powerful allies in their fight against education privatization and outsourcing: public employee retirement funds and their billions of investment dollars. In one case, the Journal says, protests from government employee and teachers unions prompted the $145 billion Calpers system (the retirement fund for California public employees) to pressure a major backer of Chris Whittle's Edison Schools to stop investing in firms that take over troubled public schools. Calpers officials, after a pitch from state unions, told investor Jeffrey Leeds that they would not invest in a $500 million fund that his firm, Leeds Weld & Co., is launching, unless he promised to cease and desist from investing in firms like Edison. Leeds agreed. But the retirement funds aren't done with Whittle yet: now they're vowing to block the pending sale of Edison to Liberty Partners, Inc., which manages the $94 billion Florida state retirement system. It's amusing to watch unions act like persnickety capitalists, but of course what this is really about is hardball politics by another name.
"Calpers flexes muscle against privatizing jobs," by Charles Forelle and Daniel Golden, Wall Street Journal, September 23, 2003 (subscription required)