NYC divests pension fund from private prisons

June 21, 2017 2:41 PM

Gothamist: New York City's pension fund is the first in the nation to fully divest from private prisons, according to Comptroller Scott Stringer. Trustees of the city's pension fund voted unanimously to divest in mid-May, and have since pulled $48 million of stocks and bonds from three companies: GEO Group, CoreCivic, and G4S.

Bloomberg: “Morally, the industry wants to turn back the clock on years of progress on criminal justice, and we can’t sit idly by and watch that happen,” said Stringer, who serves as the funds’ custodian and investment adviser. “Divesting is simply the right thing to do, financially and morally.”

posted by jazzbaby (17 comments total)

How many pension funds would have do this before it starts affecting these companies' ability to borrow money or raise capital? Has voluntary divestment ever worked as activism?
posted by indubitable at 3:26 PM on June 21, 2017 [4 favorites]

That's an immaterial amount both for the pensions and the companies, but sure, why not.

And I assume they retain some exposure to prisons via index funds.
posted by jpe at 3:39 PM on June 21, 2017

National and International level divestment is said to have made a difference in the collapse of apartheid in South Africa.

And here's an argument in the New Yorker that generally divestment campaigns don't do much. tl;dr: Divestment creates an market inefficiency which other investors with fewer ethical qualms will snap up and profit from. So all of us hippies accepting lower pay to work at progressive NGO's will also receive lower payouts from our ethical investments...
posted by kaibutsu at 3:40 PM on June 21, 2017 [8 favorites]

And taxpayers whose state comptrollers are hippies will pay more taxes to make up for the lost return.
posted by jpe at 4:13 PM on June 21, 2017

jpe — you can't have it both ways. If the pension fund's exposure to private prisons represents "an immaterial amount," then divestment won't lead to a tax hike to make up for the loss.
posted by roast beef at 5:13 PM on June 21, 2017 [11 favorites]

I know, but you don't get many opportunities to say "hippie comptroller."
posted by jpe at 6:00 PM on June 21, 2017 [12 favorites]

This is so interesting to me. For a lot of years, Illinois was the only state that banned private prisons (in 1990, before the current wave of opposition). But state pension funds aren't banned by law from investing in private prisons, although most of the union funds refuse to as a matter of policy. The governor, however, a billionaire hedge fund guy, made a shit ton on the private prisons that are illegal in Illinois as contrary to public policy. (But then, he made a shit ton of money on killing old people at for-profit nursing homes and killing babies by hiking the price of life-saving heart drugs, so.)

The United Methodist Church divested from private prison funds a while ago, and PCUSA has too, as well as some Baptist funds and some Catholic ones.

It's one of those instances of localized blindness because for YEARS I had no idea private prisons were such a big thing in the US because they're flatly illegal in my home state and the prison lobby doesn't really get much traction when they want to create private prisons here; I thought they were a weird localized phenomenon, not a nationwide phenomenon where NOT having them was the weird localized thing.

Anyway I'll be calling my legislators about divesting Illinois funds from private prisons. Not that we have a budget. But still.
posted by Eyebrows McGee at 6:29 PM on June 21, 2017 [11 favorites]

Well, I'm certainly glad to learn taking a moral stand is ridiculous and possibly even self-indulgently harmful unless it solves the problem all by itself. Makes life a lot simpler to know I can comfortably fund and then rake in the profits from all sorts of horrible behavior without any feeling of implication!
posted by praemunire at 6:54 PM on June 21, 2017 [12 favorites]

I know, but you don't get many opportunities to say "hippie comptroller."

One of my favorite Jefferson Airplane albums...
posted by RobotVoodooPower at 7:28 PM on June 21, 2017 [3 favorites]

tl;dr: Divestment creates an market inefficiency which other investors with fewer ethical qualms will snap up and profit from. So all of us hippies accepting lower pay to work at progressive NGO's will also receive lower payouts from our ethical investments..

Wouldn't it make more sense for an ethical investment fund to divest from private prison bonds and invest in private prison stocks, with the goal of gaining sufficient control to shut them down as such? That perhaps wouldn't have to end in a total loss for the fund: I suppose they could somehow attempt to force a sale to a government unit, with a covenant restricting any sale of the facility to a private party for use as a prison. In the mean time, the ethical fund could use its ownership power to gain influence on the board and push for smaller reforms.

I could understand divestment being the only option for certain things (e.g. hippies are never going to buy control of Exxon), but my impression is the private prisons aren't that big.
posted by cosmic.osmo at 8:53 PM on June 21, 2017 [2 favorites]

It's odd that an entity that operates jails with well documented human rights issues considers it beneath its dignity to invest in prisons to the pay for the pensions of its jailers.
posted by vorpal bunny at 10:06 PM on June 21, 2017 [2 favorites]

Gawd, just the mention of the word "pension", a social safety net that few of us enjoy, ought to remind us how financially disempowered we are.

Even if it doesn't make much difference, good for the NYC pension fund. In this era of Gerrymandering, popular majorities losing elections, unlimited donations from super-PACS, voter ID laws, and foreign powers doing who-knows-what to influence elections, how we steer our money is the closest thing to a "vote" that we have left.

It took six months, but I went through all the money I have control of -- IRAs, 401Ks, 503bs, bank accounts, and credit cards and did what I could to take my money -- *my* money -- away from evil doing entities. Pretty shocking how much was going to military contractors and fossil fuel companies. Goodness knows what my mortgage company is doing with my money. At least my car loans are with a Generally Non Evil credit union. My meager savings don't matter squat to someone like Trump but I can't stomach the idea of my hard work in the public sector supporting something like for-profit prisons and I'm convinced it is not necessary to play an ammoral investment game to get a decent return in order to retire. There are non-evil people in the world and we should support them whole heartedly.

At the very least, if you have a member run credit union which holds public meetings available to you, you should be banking there.

We are about to convince our nonprofit employer worth 100s of millions to divest from Wells Fargo. If it accomplishes nothing more than making us feel smugly better, it's worth it, because fuck these assholes.
posted by Slarty Bartfast at 11:24 PM on June 21, 2017 [9 favorites]

Can somebody explain this in lay man's terms? Why and how would a pension fund be invested in private prisons? Isn't a pension fund something people put money into which then pays out when they retire?
posted by gucci mane at 1:22 AM on June 22, 2017

Isn't a pension fund something people put money into which then pays out when they retire?

Yes. The fund then has a giant pool of money, which they invest, including in bonds and stocks (generally in safe industries). The point is to grow the money paid into the fund, so that there is more money to pay members when they retire. Otherwise, there would be no point paying into a pension fund rather than a bank saving account.
posted by His thoughts were red thoughts at 1:52 AM on June 22, 2017 [5 favorites]

I know, but you don't get many opportunities to say "hippie comptroller."

One of my favorite Jefferson Airplane albums...

Starship, not Airplane.
posted by Kirth Gerson at 4:15 AM on June 22, 2017

It's odd that an entity that operates jails

NYCERS != NYC.

And I think one can make a reasonable argument that private prisons are categorically different from and more harmful than state-operated prisons generally, no matter how much one yearns to see Rikers shut down.
posted by praemunire at 8:57 AM on June 22, 2017 [1 favorite]

I love pension fund activism because it reveals how finance is a public policy issue. It's one of those hidden levers of the universe, the sheer amount of money in public employee pensions is boggling.
posted by spamandkimchi at 4:34 PM on June 22, 2017