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The Business Council strongly opposes this legislation which would prohibit investments by the state's $100 billion Common Retirement Fund in the “stocks, securities or other obligations” of any company engaged in the offshore outsourcing of jobs, and requires the fund to divest any current investments in such companies “in a fiscally prudent manner.”
At least, that's what the intent of the bill seems to be. The bill defines outsourcing as “to seek resources outside the United States to save more [sic] and/or to exploit the skills of another entity.” Since the meaning of this legislative language is unclear at best, its difficult to say exactly who would be affected by this proposal. However, the sponsor's memo in support of this bill provides a more recognized definition of outsourcing (work done for a company by a company or people other than the original company's employees), and states that the legislative intent is to prohibit investments in businesses that out-source jobs overseas.
Obviously, this bill would have a major impact on the investment options available to the Common Retirement Fund (CRF), and would adversely affect many Business Council members by making their securities off-limits for CRF investments. For example, one analysis shows that this bill would preclude the state retirement fund from investing in at least 23 of the 30 stocks tracked in the Dow Jones Industrial Average.
This is simply bad policy for the CRF, and contrary to the interests of state pensioners and the state and national economy. Many U.S. and New York businesses engage in international trade, and this trade involves both the selling of goods and services to, and the buying of goods and services from, foreign businesses. U.S. businesses and consumers benefit significantly from having access to foreign markets for U.S. produced goods and services, and having access to those goods and services that can be produced more efficiently overseas.
This legislation is a flawed attempt to respond to concerns about the impact of foreign competition on the U.S. and state economy. First, it will adversely affect the retirement fund and certain businesses, it will do nothing to alter international trade patterns. Second, it ignores the far more direct approach of actually improving our competitiveness, by addressing key cost-of-doing business factors such as workers comp, taxes, group health insurance, energy and others, which can be directly impacted by state legislative policy.
For these reasons, The Business Council opposes approval of S.6872.