Friday, December 5, 2014

Me Too Divestment

The idea of divesting university pension and endowment funds from various causes continues.  First it was fossil fuel and Israel.  Now it's Turkey:

The Armenian Students’ Association held a town hall Thursday to educate students about and receive feedback on a resolution it plans to bring to the undergraduate student government calling for the University of California Board of Regents to divest from the Republic of Turkey. From 1915 until 1923, Turkish authorities massacred about 1.5 million Armenians in the then-crumbling Ottoman Empire, leading to the seizure of Armenian land and forcing a diaspora of the Armenian people. “This resolution is economic with a political end,” said Sevana Manukian, a fourth-year human biology and society student and a member of the Armenian Students’ Association. “We want (the Republic of Turkey) to recognize a historical tragedy.” ...

As of December 2012, the UC Retirement Plan and the General Endowment Pool both held investments in Turkish bonds, with a base market value totaling more than $65 million, according to the listings of investment holdings on the UC Office of the Chief Investment Officer’s website...

Full story at

The problem with all of these propositions is that they involve using money of someone else to promote causes that may not be supported by all of those other people - and typically at zero cost to the proposers.  In each case, the proposers can say that the cost of just their divestment would be small (due to less diversification of the portfolio), but when everyone gets their pet cause included, the potential costs rise.  Obviously, the $65 million referenced in the article above is a tiny fraction of the total pension and endowment.  But suppose divestment fever at some point extends to China (no elections, other human rights issues)?  Companies that do business with Saudi Arabia (no elections, repression of women, religious intolerance)?  Etc. Etc.  The pension fund is underfunded and is being blamed for the Regents' recent tuition proposal, particularly in right-wing news media:  Using it for particular causes simply adds to such complaints and makes UC vulnerable to charges that it isn't focused on the return on the portfolio.

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