It may have slipped past your radar screen, but over the past six months or so, a striking number of states and municipalities–including New York, Illinois, and California–have passed or are expected to pass laws restricting public pension funds in their jurisdictions from holding investments in global companies who do business in Sudan. And now, companies doing business in Iran are being targeted for divestiture as well. To put it bluntly, this gives me a very uneasy feeling.

Now don’t get me wrong: I’m no fan of Mahmoud Ahmadinejad and his cronies, and the thought of them having nuclear weapons scares the heck out me. And the slaughter in Sudan, (which I know far less about) is deplorable, if it’s as portrayed by disinvestment activists (what are the odds?). But the last time I checked, American foreign policy was the purview of the federal government, not a school board in Peoria. Even worse, these state and local governments aren’t taking action on their own accord, they’re being pressured into it by small but vocal special interest groups who feel divestiture is a good thing, but whom as best I can tell were elected by nobody.

It seems the economic might vested in public pension funds large and small gives these provincial governments a power not envisioned by the founding fathers. You may be complacent about this as long as they are using their financial muscle to fight things you dislike, like nukes in the hands of terrorists. But what’s to stop these pension trustees from bowing to pressure from other groups, to divest from countries that support the war in Iraq, for instance, or companies that are pro choice?

Private investors can, of course, direct their advisors to invest their money wherever they like. But public pension funds were not created to give their trustees and state and local governments political power far beyond their borders. Public pensions should be directed by law to use all legal investments at their disposal to attain the return and risk goals in their investment policy statements. Period.