Walter Russell Mead has a nice take on the demands of meeting the 8% return most public pension funds are predicated on. He shows how big pensions funds and Wall Street interact--often to the detriment of both. Pension reformers should keep in mind that changes should not simply be to bring benefits down to sustainable levels, but also to enable "pension funds to invest in safer investments and stop paying huge fees to hedge fund managers and investment banks -- and because public pension funds are such large pools of capital, this would be an effective way to help bring Wall Street back down to earth." Yet, public employee unions continue to fight for the right of pension fund managers to make risky investments.
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