16 September 2005

Should BWC Be Privatized?

Ohio House Speaker Jon Husted thinks maybe it should, and he might be right. According to the ONN article, Ohio is one of only 5 states that has a state-run monopoly running the workers' comp system.

The key issue here is the poor management of the BWC investment portfolio. It was an underperforming fund because of poor investment decisions. Furthermore, the BWC has problems reporting its performance accurately, and one analyst earlier this year couldn't even figure out what they did from their own records.

But there are caveats to privatization. For one thing, statehouse Republicans are essentially corporate lobbyists. There is plenty of reason to believe they will do the right thing in the wrong way, and use the BWC fund as a cash cow for corporate contributors. 'It probably has the insurance companies and bankers salivating,' says Dem leader Chris Redfern.

One solution is to set standards of good corporate governance and citizenship as a requirement for those who wish to manage the funds. For example, the company must be legally headquartered in Ohio (or at least not the Bahamas). And it should be prohibited from investing in companies that don't adhere to similar standards of corporate governance and citizenship.

Props to the Right Angle Blog for its post about the issue.

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