Although in the news for her lawsuit against the Bank of New York Mellon, underperformance from North Carolina's state treasurer Janet Cowell merits greater attention. A series of blog posts from one of her competitors in the upcoming Democratic primary -- a long-time investment professional -- has zeroed in on a few startling revelations.

Ron Elmer has noted that, during the past three years, the North Carolina Retirement System has earned a return 1.2 percent below the national median and failed to meet its own benchmark. In fact, of 31 states with fiscal years ending on June 30, North Carolina was next to last for gains, ahead of only Pennsylvania.

With assets of $74.9 billion, this poor performance equates to a forgone $2.7 billion. And Elmer asserts, with good evidence, that even a "simple portfolio of index funds would easily outpace the median pension fund returns... and handily beat the returns produced by North Carolina's pension investment returns."

The lack of transparency in this area may well be just as concerning as the performance failures. Since taking office, Janet Cowell has ceased publishing the amounts paid to external investment managers. By way of deduction, however, Elmer estimates that amount to be $337 million in 2011 alone. To put the magnitude of those unnecessarily high payments into perspective, consider that the North Carolina Treasury Department's entire annual expenses came to $51 million in 2011 (p.108).

With such money flowing, and an unwillingness to reveal it, one shouldn't be surprised where Cowell's fundraising dollars have come from. When first running for treasurer in 2008, more than 40 percent came from out of state. However, for this year's campaign, out of state funds have comprised 50 percent, and she has held fundraising events in New York City, Washington, D.C., and Austin, TX. New York has provided her more money than Charlotte, North Carolina's largest business hub.

Cowell even admitted that during her 2008 campaign "mostly, I just sat in a room and dialed for dollars for a year and a half of my life." She mentioned this to promote taxpayer funding of treasurer campaigns as an alternative. But there is a superior solution, one that doesn't require forcibly taking people's money to pay for political campaigns. Simply invest these dollars in low-risk and indexed funds, as promoted in The Coming Generational Storm, since these would rule out the pay-to-play politics she has exemplified.

Notes

• At the John Locke Foundation's recent candidate briefing, I gave the fiscal presentation. Click here to watch the video (10 minutes).
• There will be a Constitutional Candidate Forum, hosted by Founders' Truth and Constitutionalist Gathering Place, on April 28, from 1 to 5 p.m. at the Lighthouse Convention Center, Raleigh. Go here for more details.

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