A pension for trouble.

Robert Reich. Laura Tyson. Olena Berg. Olena Berg?

As the Labor Department bureaucrat in charge of regulating private-sector pension-fund assets, Miss Berg arguably wields far more raw economic power than her better-known colleagues. While they talk, she has the power to act. Under her jurisdiction come investments worth $2.4 trillion - nearly 40 per cent of the nation's total financial assets. Her goal is see that these funds are used to finance job creation, start-up companies, housing for the inner city, and other "economically targeted investments."

More than fifty million Americans depend on these assets, which generate $100 billion per year in benefits. By law, pension-fund trustees must act with undivided loyalty to the interests of the beneficiaries. Any project that explicitly aims to provide benefits for the broader community will, by definition, violate this fiduciary responsibility.

There is, of course, no economic rationale for an activist pension-fund policy. Investments that benefit society will meet the market test - and the test of feduciary responsibility, the so-called "prudent man" rule - and so will be funded. If public-spirited investments are also prudent on these criteria, than any pension-fund manager, from any government body or private corporation, should be interested. If not, not.

Many states already have the dual-purpose concept written into their pension statutes. Many have been burned. Connecticut's state pension fund lost $25 million trying to save Colt Industries, the firearms maker. The Kansas investment program lost $118 million out of a $360-million pension-fund portfolio, much of it in a vain attempt to bail out a politically well connected S&L. Governments have a nearly unblemished record of picking losers and sticking with them for political reasons. Even when overt disasters have been avoided, activist pension funds have earned significantly less than market rates of return.

Admittedly, Miss Berg need not fear such a comparison. The volume of assets she controls is so vast, she is the market.

At least earlier Democratic leaders such as Walter Mondale and Michael Dukakis were honest about their intentions. They advocated tax increases to pay for more government intervention in the economy; they were rejected by the voters. Mr. Clinton's stimulus package was an equally explicit attempt to politicize economic policy. It too was rejected.

The front door is closed to experiments in industrial policy. The pension window is wide open, however, and American workers are likely to get soaked.