Tom Curtis and Tom Hall on Divestiture

Tom Hall to Tom Curtis, September 10, 2007
Subject: RE: 090907 Curtis To Hall, Divestiture

Dear Tom:

Good to hear from you. I was thinking about you a couple of weeks ago, wondering how you are.

All is fine here. Back at school for three weeks now, doing the usual stuff.

My view on divestiture is quite conservative, and it carries over to "socially conscious" investing (I think that's what people call it). I think that those responsible for managing pension funds, mutual funds, etcetera, have one job and one job only and that is maximizing the returns for the owners subject to risk considerations. And if that means owning companies that operate in Sudan or sell cigarettes, then so be it.

The reason I hold this position is because I think that this is one of those cases where once you go down the road of diversiture, where do you stop? Granted, terrible things are going on in Sudan, but they're going on in a lot of places in the world (although perhaps not as bad as in Sudan). The problem is, once you say we need to unload our holdings of companies having anything to do with Sudan, where do you stop? Should we unload holdings of companies operating in China? Russia? I can think of several Middle Eastern countries that are no better.

The same thing, in my opinion, applies to those who think we should have nothing to do with tobacco companies. What's so special about tobacco? I can think of several products we consume that cause health problems. Alcohol? Trans fats? Automobiles? Petroleum? Where do you stop?

So since I don't know where you stop along that road, I think the best thing is to never go down it. And I'm surprised and disappointed the legislature thinks we should be doing that.

I hope all is well with you.

Tom Hall

Tom Curtis to Tom Hall, September 9, 2007
Subject: 090907 Curtis To Hall, Divestiture

Hello Tom,

I hope all is well with you and your family and you are having a good year. We haven't conversed for some time, but I would like to hear what your thoughts are on the following.

I have been reading the numerous articles concerning divestiture of the public retirement systems throughout the country. As an economist, what is your position on divestiture by the public retirement systems in Sudan, or any other country that our state legislature might suggest? What are some of the positive and negative ramifications that the pension systems will have to shoulder?

Take care,

Tom Curtis