poli-sci@ucbvax.ARPA (05/29/85)
From: JoSH <JoSH@RUTGERS.ARPA>
Poli-Sci Digest Wed 29 May 85 Volume 5 Number 21
Contents: Divestment
Infant Mortality
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Date: 17 May 85 03:18 EDT (Fri)
From: _Bob <Carter@RUTGERS.ARPA>
Subject: divestment legal?
Hi Steve,
I think you conflate two ideas and read the market wrong.
From: upstill%ucbdegas at Berkeley (Steve Upstill)
There is certainly a legal
issue, particularly wrt the public funds (in California, at
least) in general and the UC Board of Regents in particular: the
law states explicitly that they are to buy/sell only to maximize
the profit of the pension fund. Furthermore the board members
are, believe it or not, PERSONALLY LIABLE for any losses incurred
as a result of variance from this policy, in California. There
is a recent case supporting this. I'm not even sure good faith
has anything to do with it.
You're right. The standard is reasonable prudence, not good faith. I
don't know this statute, but it sounds like it justs restates the
general law of fiduciary duty, for which personally liability is the
classical compliance device. The interesting thing in this area is
watching the courts and legislatures trying to resolve the built-in
conflict between the interest of the life-tenants (who want income)
and the remaindermen (who want security and growth).
Assume
1. Payout from firms doing business in the Republic of South
Africa will stay the same in the short term.
2. Some holders of debt and equity in these firms will divest
under political pressure, tending to lower demand and the
market price for these securities in the short term.
3. It is reasonable to expect that in the long term, the
R.S.A. government will fall and the successor regime will
expropriate R.S.A. holdings of these firms.
Under these circumstances it would be in the interest of present
employees to have the fund divest, so that it could eat its loss and
recover from it before it has to start paying them benefits. Former
employees could argue that their interest would be best served not
just by holding on to a position in R.S.A. firms, but in putting more
of the fund's capital into them; as the P/E falls these become more
attractive income investments.
There are, in general, two ways in which legal institutions can
solve problems of this sort. The hard one is to attempt to weigh the
gains of one class against the losses of its opponents, taking care
to put real bounds around the concepts of "gain" and "loss."
Disregarding the warm toasty feeling present employees would get from
moralizing vis-a-vis R.S.A., is the long-term risk to the fund
substantial enough to justify the short-term risk (if there is one)
to the retirees' benefits?
But, resolution of this kind of conflict more often involves much
posturing about the sacred nature of the trust obligation, followed
by a finding that because Heaven says so, the class of beneficiaries
with the least political power, or the class which finds itself on
the wrong side of trendy upperclass prejudice (perhaps the same
thing), should lose.
I don't follow the adventures of Rose Bird much any more, but
about forty percent of sitting federal judges were appointed by Jimmy
Carter. I have little doubt that a court can be found to justify
divestiture.
Saying this does not so much answer your question as contradict
an assumption you make in asking it. Asking American legal
institutions to serve as independent sources for normative statements
is a bit like asking the National Council of Churches about the
Kingdom of God; it has been so long since either of them believed in
what they are supposed to be selling that they won't even understand
your question.
_B
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Date: Wed 22 May 85 11:11:30-PDT
From: DANTE@EDWARDS-2060.ARPA
Subject: Divestment
At the next GM shareholders meeting there are stockholder proposals
dealing with GM actions in South Africa. Could one of the fans of divestment
please explain to me why, assuming the object is to do away with apartheid,
it is more effective for the big institutional holders (e.g. UC) to sell
their shares (and thus their votes) to supporters of apartheid rather than
use their votes to support anti-apartheid proposals.
Mike
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Date: Wed, 22 May 85 09:59:25 edt
From: ihnp4!sabre!decvax!genrad!panda!wjm@Berkeley (William J. Masek)
This is a response to the infant mortality rate stuff.
Ronald Reagan is trying to dismantle the support system for the poor. He is
generally succeeding. The NY Times artical said the rate of decrease was
changing and among some groups it was actually increasing. I didn't get to
see the actual article but I believe it said infant mortality rate was
increasing in some low income groups. It is generally accepted in medical
circles that the health of the mother has a strong effect on the health of
the baby. How can anyone be surprised at the results?
bill
[What results? that I.M. went from 12.6 (/1000) in '80 to
10.6 in '84? I don't see how this is unsurprising to someone
with the above expressed sentiments. That the rate of decrease is
slowing? That some selected subgroups buck a demographic trend?
I agree, it is unsurprising that a rate at the 1% level slows
as it approaches 0 asymtotically, and that fluctuations exist.
However, I don't see what these have to do with any other point.
--JoSH]
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