Reply to Policy Center Reply of September 2, 2007
Reader comment on: Let States Divest From Iran
in response to reader comment: Response to Jewish Policy Center
Submitted by Jeffrey L. Glasgow (United States), Sep 2, 2007 12:00
To the Policy Center,
It is my understanding that it is the Bush administration's job to "turn the screws on Iran, and, in fact, has stated firmly that it is the screw turner and not free lancers like the divestment proponents.
If I were writing a brief, I would point out the fact that your response is almost totally non-responsive to the issue that I raised--that of fairness for pension fund beneficiaries. You are seeking to convince me that divestment will have little effect on my portfolio. I will take your word for that for the sake of this discussion. If it will have such a small effect on my portfolio, how do you expect that it will have any effect on Iran?? What you persist in not addressing is the fact that divestment is being mandated. Please save me the "if we don't do this, we are all going to get blown up" argument. There is clearly a difference of opinion, first, over whether the divestment of your "less than 50" stocks would have on the behavior of Iran and the Sudan, and second, whether your scenario is, in fact, correct. People with more knowlege of foreign policy than I, am sure, and even possibly you, disagree over the motives and plans of Iran. I suggest that you read Professor Burton's article that I referenced in my last post.
The true issue that you apparently refuse address is the provision, in every single divestment bill, that eliminates the berneficiaries' protection of the fiduciary duty rule. Why to insist on ignoring that question??? The fiduciary duty rule prohibits the financial decisions from being made for political agendas. Let me turne the tables on you, to use you your example. Suppose, instead of divesting of funds that invest in Iran, the legislature chose to manadate divestment from England, Argentina or Israel. What would you argue if this was proposed. My point is, political winds change and today's patriot is tomorrows traitor. Please do a little "alter casting" as the social workers call it and see what it looks like from another point of view.
I would also observe that you still have not addressed my suggestion that there is more than patriotism involved here, and that the proponents of divestment are less interested in my welfare than in my pocketbook.
Note: Comments are screened, and in some cases edited, before posting. This site reserves the right to reject anything found to be objectionable.
Jewish Policy Center replies:
Thank you for continued interest in this subject.
1. The Bush administration does not have to be the only screw turner. Why can't states and individual investors also take part in the economic punishment of Iran? These are not "freelancers." Rather, they are concerned citizens. They should be lauded for their interest in Iran sanctions. Indeed, not enough citizens are the municipal or state level care about critical foreign policy issues.
2. I reject the notion that I have not responded to the issue that you raise - that of divestment being unfair to pensioners. I have now clearly stated several times that beneficiaries will be protected, by virtue of the fact that there are plenty of other good investment choices out there. I even provided you with a model divestment mutual fund that has had excellent returns, not as an advertisement, but as an example of how to invest without rewarding companies that work with Iran. It can be done. And it can be done with great success, as this one company has demonstrated. If you read the article I cite, their investment strategy is not brain surgery.
3. The reason why your portfolio will not suffer as much as Iran will suffer stems from the fact that the companies were are talking about likely make up 1 or 2% of your pension fund portfolio. (By the way, you still owe me a number - this is very important to our debate. If we are to have a fair discussion about this, it is imperative that you find this figure from your pension fund manager). Iran gets hurt when many state pensions and city pensions and company pensions begin to divest from companies that work with Iran. These companies eventually realize that they are being punished. When they stop working with Iran, Iran loses business partners. This will isolate them further. You lose nothing. They lose business partners. It's that simple.
4. Iran divestment is NOT being mandated. The states are doing this on their own volition. As are municipalities like Beverly Hills, and individuals.
5. Why do you continue to insist that the beneficiaries are going to suffer? As I mentioned in my last response to you, many states are divesting for purely fiduciary reasons. If you read the language of many of the state laws, they explicitly state that because of grassroots divestment (outside of the state or federal framework), investing in listed companies is more dangerous from a fiduciary perspective. States' motives are often not political, but financial only.
6. Your question about England, Argentina or Israel is preposterous. No alter casting, as you call it, is necessary. While political winds may change, these states would never in our lifetimes be targeted by US sanctions. Iran, by contrast, has been identified as a terrorist state since the hostage crisis of 1979. That's nearly three decades. No winds changing there.
7. Finally, I cannot stress to you enough, and I cannot understand why you cannot accept, that your welfare and your pocketbook will both be protected, despite what the one scholar you cite has to say on the subject. Again, I implore you to call your pension fund manager on Tuesday morning, after the holiday, to find out how many companies would be divested from your fund. Let me know what he says.
Submit a comment on this article
Other reader comments on this item
Comment on this item