It's no 6 minutes after 11 programming on Minnesota Public Radio is supported by Fox Searchlight Pictures. Cousin Bette a, tale about lust greed and revenge featuring Elisabeth Shue and Bob Hoskins. Hey, good morning. This is midday on Minnesota Public Radio. I'm Perry fanelli in today for Gary. Eichten. Who returns on Monday. Thanks for joining us today. You may have heard the state of Minnesota will no longer invest pension money in companies that receive more than 15% of their revenue from tobacco the state began investing its Pension funds and Reserve funds in tobacco companies five years ago. The state has about three hundred and ten million dollars in tobacco stock, which is only a fraction of the newly 44 billion dollars in Pension funds. The state has invested Doug Colgan tracks the debate surrounding the cigarette industry and investments in tobacco companies as director of The Tobacco information service of the investor responsibility research center near Hanover Hanover New Hampshire is based in Washington. It's a nonpartisan nonprofit research group funded by institutional investors, including the Minnesota State Pension funds and he's on the line today. Good morning. Mr. Colgan. Thanks for joining us today. And we invite list to call with questions and comments about one of these states should invest in tobacco stock. What about the question? What about basing decisions on investments on anything other than financial performance the Twin Cities number today is 2276 thousand to 276 thousand outside the metro area. The toll free number is 1 800-242-2828. 1 800-242-2828 sander stand at these decisions at the state investment board make are supposed to be long-term decisions and many people think there's a rapidly changing environment surrounding tobacco right now with the several lawsuits in such a first of all how big of a role do you think that the changing environment plays in these kind of decisions? I think it plays a very big role indeed. The tobacco industry is probably facing its greatest challenge since the surgeon general's report came out in 1964. That was the first time linking health concerns to smoking cancer to smoking and now I guess that's we recognize the extent to which this has caused health problems and the industry's efforts to conceal some of those health problems in the documents that have come out in Minnesota. We realized that we now are changing and are entering an environment that where tobacco stocks are under tremendous litigation pressure as smokers and former smokers now bring suits against the company's for the health problems. They caused first premise and that was at these are supposed to be long-term decisions. Let me first of all I should ask you is it should that be the case? Should they be based on decisions based on the companies themselves vs. What the current situation is particularly when you're talking about a big pension fund like the Minnesota state board of investment. You have to take a long-term perspective. There is so much money that the These funds have that it's hard to move in and out of companies very quickly. They basically are in it for the long term in are looking toward the retirement of the pensioners in in the plan and therefore it at you. You have to look to wear these companies may be headed horse with every day. There seems to be a new development that makes it difficult to predict the future and I think that's one of the challenges that the trustees of the fund and the staff will have is they look toward this question of divestment over the next six weeks and they really over the next six weeks get a clear enough crystal ball to know what the tobacco industry is going to look like a few years down the road. We asked you about these these tobacco companies themselves and in a lot of times now we have to say Tobacco a quote on quote because so many of these companies are much more than just tobacco has that it is the fact that many of these companies are are large conglomerates muddied the waters as far as these kind of investment decisions of food unit. And that's the the biggest cookie and cracker company and in the American, press the world and of course up there in Minnesota even sure you're very familiar with the Kraft Foods division of Philip Morris. So you are in fact not only selling off or investing in a tobacco company, but in some very large food businesses and there are other companies as well Lowe's which makes the Newport brand of cigarettes is also very heavily invested in insurance companies Bulova watches and is itself a far-flung conglomerate. I'm so it. It does muddy the water somewhat, it's hard to make a clean if you will clean choice between tobacco or not. Tobacco. The decisions people make is a tobacco company considered any company that invests even in a 1 or 2% in tobacco or is this some kind of a guideline here in this case any company with 15% or more that is a decision that the guy gets the trustees of the fun have to make how they want to Define. What is a tobacco stock but it is a very good question. And one thing that we do at irrc is try to determine all links that companies may have to the tobacco industry and then the trustees can use information that we provide to determine whether they want to include that kind of company or not. I can give you a couple of of examples certainly a company like Philip Morris. Is driving over half of its sales and even more than half more closer to two-thirds of its profits from the sale of tobacco products. So it's quite clear that a big company like that that falls in the category, but then there are smaller companies or are large companies with smaller interest in tobacco i1 good example is Sara Lee Corp how many people don't think of Sara Lee is a tobacco company, but in fact about 2% of its sales come from cigarettes that are used by those who hand rolled cigarettes smokers who handle cigarettes and mainly that's in in Europe. So by the the definition that Minnesota is using it wouldn't reach the 15% threshold and therefore would not be subject to a sale and yet because of concerns about being tied to the tobacco industry Sara Lee has recently decided that it will be selling off its tobacco business and therefore itself. Completely out of the tobacco industry and not have to worry about these divestment concerns talking today about the state of Minnesota to say Asian to no longer invest pension money in companies that receive 15% more than 15% of their revenue from tobacco. We invite listen to call him with their questions or comments about what goes into that decision and perhaps is it a good idea for all investments in should the state investment board look at it all its investments in the same light should these Investments be viewed in anything? Other than that how they perform financially to 276 thousand of the Twin Cities number to 276 thousand. The toll-free number is 1 800-242-2828. 1 800-242-2828 2 first color is Joe in Buffalo Morning Joe. I just have two points first. I think this is more of a political than an economic decision and second. I think it's fairly hypocritical. I think it's hypocritical because Minnesota is involved that's more detrimental to society than tobacco. I mean as a state we promote gambling we received gambling money. We advertise for gambling and gambling is much more detrimental. I mean, would you rather have a young man and a woman with a gambling problem or where the tobacco products anybody's going to choose the tobacco problem and answer the economic still right now. Tobacco is having a tough time in the US there will be a national settlement within the future and I think I don't resolve a lot of domestic economic problems. But in terms of the overseas Market American Tobacco has never had it better Asia, Africa American Tobacco sales have just a dramatically increased over the last 10 years. So it's still a very profitable industry. I just like to see your guests address those appointment. Okay, mr. Culligan the question about politics of versus policy and it is that generally is that a lot of these decisions are made or I guess the way I would answer that question is to say that this is a policy decision being made in a political environment. I'm not sure that you can separate the two here. In fact, I would say that the tobacco industry to some degree has lost control over its own destiny because of Politics the Congress and the states through the Medicaid suits and other other lawsuits that are pending have really come to take control over our to a large extent control over the financial prospects for this industry. When they lose a case the stocks go down when they win the case of stocks go up and you can you can very easily chart the the ups and downs the roller coaster ride. If you will have the tobacco industry based on how these lawsuits have gone, but your collar also makes a very Point the tobacco companies that particular Philip Morris and RJR Nabisco, which have international tobacco arms have seen tremendous growth in their sales since 1990 the almost a doubling of sales and profits from their overseas divisions. And in fact Philip Morris for the first time in 1997 earned more profits from its International tobacco division, then it did from its domestic division. So if that your color certainly makes a good point that regardless of what's happening in the United States, these companies are growing by Leaps and Bounds in markets that formerly were closed to us tobacco companies, but with the fall of Communism in Eastern Europe and as a market open up in Asia as well, these companies have been ready to move in and have been doing it with both feet. I want to look at that kind of arguments of both for and against divestiture for just a moment here and it does kind of dresses the stock price issue that what one of the arguments for divestiture was. The tobacco stocks have been lagging. They've been underperforming I first first of all, I'm wondering is that the case and and then how have the the lawsuits including the Minnesota lawsuit affected stock prices as far as whether they're underperforming or outperforming the market? It depends on the time frame you're talking about, you know, if you went back to 1955 and if you had $100 of of a stock to invest in any company at that time, your best investment would have been in Philip Morris of any company out there because it has grown so much since that time it it really would have been a phenomenal investment worth thousands and thousands of dollars today. So Over a long historical time frame like that. You would have been very well served by investing in Philip Morris or right or frankly many of the tobacco companies. Now, if you look since a 1990 this is when more of the roller coaster comes into effect, they were the tobacco industry have started to see a lot more lawsuits the Medicaid suit started to come into play in in 1994, including one Minnesota filed its case and if you then look in an even shorter timeframe, since they the settlement proposal that came out last year in 20 almonds to a year ago today. The tobacco stocks have basically been dead in the water. They have virtually there's been a little ups and downs, but over the course of the last year they barely moved in price and as we all know they the overall stock market has had a tremendous time over the last 12 months up more than 40% So If you were investing in in the last year, there were all kinds of places. It would have been better to put your money than tobacco. This decision was based on a sound financial analysis. You could say that is not what the stock prices have done, but what they're going to do and it's very difficult making these decisions by looking in the rearview mirror and as we look forward, what is the sixty-four dollar question here is what's going to happen in congress with this national settlement appears that it may actually fall apart that the the any kind of Bill that comes out is not going to offer letter look anything like the June 20th settlement proposal that came out last year that the tobacco industry was willing to live with and it's in fact it's changed so much that is you know, the tobacco companies have walked away from Are the McCain bill that's currently pending and there's a some feeling that the tobacco stocks May rally. If in fact the McCain bill is defeated. But when the dust settles I suspect people will realize the G that the industry isn't any closer to setting settling. It's legal problems than it was a year ago. If Congress doesn't take action so looking over the longer-term. It may mean that they're still as much uncertainty associated with the stocks looking forward as there has been over the last couple of years were talking today with Doug Cogan. He trashed the debate surrounding the cigarette industry and investments in tobacco companies. He is director of The Tobacco information service of the investor responsibility Research Center based in Washington DC. It is a nonpartisan a nonprofit research group funded by institutional investors and it includes Minnesota State Pension funds. We are join now by Secretary of State John grow who was on the state investment board and who voted To divest study future Pension funds in tobacco a secretary state good morning lot of lot of criticism has been has been one of the first criticism is this kind of the idea of micromanaging These funds. How do you respond as a member of the state of Espen Ford in weather? What rule the board should play in in, you know management stocks overall Begin by saying that I've been a member of the state investment board for almost twenty-four years and we do not micromanage but it is our responsibility as elected officials as members of the board to determine bra General policy. The tobacco issue is not new to the State Board of investment with four years ago. We had a restriction about owning any stock in companies that had ownership in tobacco all over 50% We removed. Restrictions in 1993 in 95. We started looking at the issue of tobacco again in 1996. I had a resolution that said we shouldn't be investing in tobacco companies the reasons for that are because within their sector the tobacco companies have the greatest risk and the lowest return and they're incredibly volatile 96. I mean, you said they've always been volatile what changed in those years uncertainty. We have higher external managers to manage our money and we ask them. What do you think about the Apple purchases? We got mixed. Choose from them. Some of them were continuing to buy. Tobacco stocks others were saying. Hey, we're not going to risk it. We're not going to do it. And so as is true in in a feel like Investments where your you have no certainties of any kind. We got mixed reviews, but quite frankly. I reintroduced the motion at the State Board investment meeting yesterday that said we won't buy any new stocks in these companies because several things have happened number one. Of course, we had the case building Minnesota number 2 with some of that case brought the disclosure of volumes of information that seem to be impacting on lots of other state three. Come back from Washington and just talking to people they are it appears Congress is going to take some action what that is. I'm not sure and then of course just the second week. We had that Florida jury decision where for the first time punitive damages were awarded and it seemed to me that my fiduciary responsibility of such to be sure that these Pension funds are well protected. They're not when we're investing in funds that are so volatile and we don't know what's going to happen said well, you know, and I don't know if the state is invested in Microsoft for example, but would the state should the state. Divest from Microsoft because of the federal antitrust lawsuit against yet. I mean based on things that are going on is that the kind of you know, should we be basing decisions investment decisions based solely on what we think might happen a fiduciary responsibility. That means taking a look at the bar. Todd environment in the general climate and if we are concerned about it, then I think we ought to do what four members of the board did and voted for the resolution other other companies are other stocks. You're looking at that that you're not that I'm looking at but there may be something that the auditor is looking at and it would be perfectly appropriate for the auditor to bring those concerns. In fact, we have a responsibility to bring those concerns or if a Fielder something that is a solid to live with the backhoe if we're going to the roof would you have made the same decision? I may get tobacco stocks were performing well, and and would you do you think the war would have made the same decision? It's hard to say I set up a theoretical and asked us to the sky. If I can't imagine this scenario with a climate right now where tobacco stocks would be going to the roof. I mean it I would expect we're going to see them going up and down as we have seen over the past few years. Keep in mind that we have other options. There are other places out there for us to put the pension money. And as one Wall Street analysts said there is a massive uncertainty about what is going to happen in the future. Check Tri-State Jonesboro. Thanks for joining us today. 26 minutes after 11 talking today about the decision by the state investment board to divest of pension money from companies that receive more than 15% of their revenue from tobacco, and I will invite you to give us a call with your comments or questions. The Twin Cities number is 227-6002 276 thousand. The toll free number is 1 800-242-2828. 1 800-242-2828. And we're talking today about the kind of the principle behind this not a silly just tobacco but whether or not it's a good idea to a bass investment decisions on anything other than how it performs in the marketplace. If you have some thoughts a give us a call to 276 dollars in the Twin Cities one 800-242-2828 also want to remind listeners. And you are the director of The Tobacco information service of the investor responsibility Research Center. You listened in on the brief discussion with the secretary anything that pops in your head as we were discussing the board's decision. Well, I think the Secretary of State grow did make a number of good points and describing the situation that the industry currently faces. There's no question that right there in Minnesota. You have had a landmark case and the documents that came out of that case are likely to have an influence on many cases going forward and it certainly appears that that's already happened in this Florida case of the Maddox case where punitive damages were awarded for the first time and so I do believe that you can lay the fiduciary groundwork to make the argument for tobacco divestment the difficulty, of course, that one face is still Back to looking forward one has to determine whether the stocks will continue to underperform the market or whether they will make up some ground against the market in other words outperform the market going forward right now. The tobacco stocks trade at a discount to the market of about almost 50% In other words, the price-earnings ratio that people talk about that. You see listed in your own your stock page in the newspaper for a company like Philip Morris is about 12. Whereas for the S&P 500 overall. It's more like twenty-four. So there's a lot of brown the tobacco companies could potentially make up in the future but I miss grow is making the bat that they're not going to be able to do that because of all of the litigation problems that they're facing. Talking about this said this lawsuit Minnesota being a beneficiary of a large settlement from the industry. Wonder if you think it's a conflict of interest for the state to make this kind of decision with that in mind. I mean it in any thoughts on that should have shouldn't be a factor affect. The state was has been working at cross-purposes by investing in the tobacco stocks and then turning around in suing these very same companies that they're investing in Minnesota isn't unique that way. In fact, there are only a few states that have completely divested tobacco stocks and most of the states out there, you know, 41 states have these Medicaid suits that they have filed but it does pose the kind of a perplexing problem for the pensioners in these plans that while there is money that they have put into these stocks and hope that the prices will go up. Actions that are also being taken by the State against these companies are surely driving down the prices. So definitely the left hand isn't working with the right hand and then in this kind of instance are good, and I'm pleased to say we're now joined by state auditor Judy Dutcher is Dutch a good morning. She defends the decision based solely on on policy. I think you see it a bit differently. Could you kind of explain why you voted against the decision to divest but yeah, I can I have yesterday when the resolution was distributed to us. As I said that as I've always said I am not comfortable as a politician as an elected official micromanaging those individuals that we have hired as our active money managers, and I'm further uncomfortable in that the board is advised in its investment decisions. Because none of us are investment experts and none of us are in a position to guess the market we are however advised by a group of people who are the experts there in the investment advisory committee and they're the group of individuals that advise us as board members what type of decisions what kinds of decisions we should be making everything from what active money manager we should be hiring how much of the portfolio we should be putting into International Investment Etc. We never sought their input on this decision. Not that they would make the decision for us that ultimately is our responsibility as board members, but certainly I would think if this is a financial decision driven only by Financial indicators and indices, then we should seek more information and then the one chart that was distributed Yesterday by Secretary of State grow about how it performed over a five-year Horizon performing I mean What is wouldn't be prudent person? Look at this and say hey if you know tobacco stocks have not done very well. There is this climate of uncertainty. I mean wouldn't there be a certain amount of you know, what would it seem prove to somebody that I do at least you advised that I think about this kind of decision. For us the State Board of investment and so the prudent person is those people that we hired at Hazard acted money managers to make us money. I mean their goal in investing the money isn't to lose it certainly and the volatility surrounding a stock certainly does breed profit and soul my my voting against the resolution yesterday isn't because I support tobacco companies. I like every other politician out there find a pledge not to take money. It's about my fiduciary obligation and I view it as maximizing the returns for the pension pension years have entrusted me with their life savings here to invest. This isn't the state the general fund. This is the pension ears life savings here. And I just realized your application is such that I'm not going to start micromanaging on these issues as you would mention earlier. I said about Microsoft and there's a lot of other issues out there that are more volatile than Microsoft. Very strong feelings about you know, whether you should have money invested in them and I am not in a position to start micromanaging cuz I think it's a real slippery slope ones elected officials starts trying to patch things up is financial measures when really quite frankly think their political measures your decisions solely on that. Should there be any other factor in whether or not the state to invest in tobacco stocks or any other considered not socially responsible determining What are good stocks of water from a moral point of view more in trouble? I mean that the board meetings are going to go a lot longer than they have right now because we're going to have everybody that has a certain issue or certain problem with coming in and saying words, please give us cuz I don't like this company for all the following reasons. And again, I am looking at it from a few purely fiduciary point of view that I view it as my obligation not only to maximize profits for my pension ears, but to seek the advice and guidance of the investment advisory committee and we didn't do that the governor who Gunner Carlson who was the state auditor thinks. Yeah probably was a good idea to divest. What why do you think that you might have a different opinion on that? The political pundits would tell me it wasn't a smart thing to do it yesterday because obviously There Was the vote today or two to pass a measure. I think he don't he had his reasons for voting for my readings from reason for voting against it, but I certainly strongly stated my reasons that I'm not going to be in micromanaging the experts cuz I am not an expert and investment and neither are any of the other constitutional officers quite frankly and until we start Consulting with the investment advisory committee on these type of issues. I think we're really headed down a dangerous path. Stay out of your duty Dexter. Thanks so much for joining us today Day daughter Duty Dutch, her hit is now 25 minutes before 12 noon your listing to mid-day on Minnesota Public Radio on. Finelli in today for Gary actin and we will continue our discussion with Doug Colgan director of The Tobacco information service of the investor responsibility Research Center in just a moment. This is Robert Siegel all things considered as more than a news program. We bring you stories about ideas about the Arts about interesting people and developments in our lives that haven't made headlines. At least not yet. We bring you the stories of commentators the insides of Scholars and the experiences of all sorts of Americans and we start with the day's news TuneIn later today to NPR's All Things Considered and you can hear all things considered to starting at 3 this afternoon right here on Minnesota Public Radio one other program note in just a less than a half an hour. Midday will be going live to Washington DC National Press Club speech featuring General Josiah bunting. He is a superintendent of the Virginia Military Institute. He will speak about women in the military service military training and Military education General Josiah bunting superintendent of the Virginia Military Institute shortly after noon live from the national Press Club in Washington coming up here on mid-day NPR's Main Street radio coverage of real issues is supported by the blandin foundation strengthening rural communities and Environmental Education through the school nature project quick. Look at our weather forecast. Probably the most it cloudy skies a chance of showers and thunderstorms all across the state today is generally in the 70s. There was a chance for showers and thunderstorms in the East US Another why should be partly cloudy Louis tonight to Upper forties to offer 50s tomorrow should be partly cloudy and warmer will see how is tomorrow in the lower 70s in the arrowhead and some lower 80s in Western Minnesota for the Twin Cities this afternoon a 60% chance for developing showers and thunderstorms a high of 73 tonight a 30% chance for evening showers and thunderstorms then clearing and some areas of dense fog late tonight. Aloha 55 tomorrow should be partly cloudy and a high of 78 degrees. You were listening to mid-day on Minnesota Public Radio on. Finelli in today for Gary item. We were talking today about the state of Minnesota's decision to no longer invest pension money and companies such a backhoe companies that have arrived at least 15% of their income from tobacco. Yes and thoughts today. Give us a call 227-6002 to seven is the number in the twins to 276 thousand is the number of the Twin Cities. The a toll free number is 1 800 242. 28281 800-242-2828. We are joined from near Hanover New Hampshire today by Doug Cogan. The director of The Tobacco information service of the Investor's responsibility Research Center. It's a nonpartisan nonprofit Group, which is funded by institutional investors, including Minnesota State Pension funds so good. Guess they have today Mr. Calkins that thanks for being with us. My pleasure. They're great great to have you today. Let's see. That's a great to a phone call end up bringing Gary from Minneapolis. I giri just got through saying in the facing just on the phone a little learning good returns for those people in a pension fund is probably is a mistake. I'd like to maybe remind people that 2 years ago our governor Arne Carlson advocated making a loan of those funds to Norwest and Al cecchi to build that facility up and aloof. I think that was probably a bad decision especially based on how things came out. With that particular facility and also El Chucky just having blown what 35 or 40 million on a failed governor's race in California. I think Miss daughter had the exact right lean on thanks. And so I'll hang up. Okay, thank you. Gary did want to follow up to on your thoughts about what she had to say since you commented on the Secretary of State John groh's comments. So I guess I'll be appropriate for you to maybe come in and done some things that the statue had to say was you had on the program have articulated their positions very well. And I would say that his daughter is is absolutely right that the decisions made on behalf of pensioners have to be based on financial decision on financial considerations in Gary. Your caller was making that exact same point there really is a fiduciary responsibility. And in fact of body of law that guides the decision-making process by these trustees that says You must make your decisions on the basis of the exclusive benefit of the pensioner. Who's money you are entrusted to invest and therefore if you have a particular social concern in a for one thing or against another your personal feelings should not enter in to the decision that is made about managing. Someone else's money. So there is it certainly appropriate that the focus has to be on the financial considerations. And I do think it's interesting that Miss. You're pointed out that the investment advise me advisory committee that the pension fund has was not consulted apparently before this vote was taken yesterday there many other Pension funds across the country that are considering doing what Minnesota is doing but have have in fact insulted a Wall Street analysts in an advisory committees that they may have and taking their fiduciary Prudence of the responsibilities that they have very seriously and M and going about it in a and with a lot of due diligence having said that I think it Probably also fair to assume that over the next six weeks as the staff makes the bigger the more important decision about whether to sell all of these tobacco stocks right now. It's just a freeze on any additional Investments that as that analysis is done over the next six weeks. I would imagine that's certainly the investment advisory committee will be consulted that the Wall Street analysts will be polled. The investment managers will be consulted and that there will be more information that that comes before the trustees and they had apparently yesterday Richard in St. Paul your question or comment All right of a couple come inside first. This is not exactly but I pressed it does I recall quite a few states around the country. They tested the tells me country doing good or any company doing business with South Africa show politics does enter into this and has a long history of it and second if she says, it's me no matter what they do if they make good money. We should basically you invest in them. Okay. Thanks for the call. I wanted to ask you. Mr. Colgan about how different states have handled these kind of cases. Could you talk a little about you know commonalities differences how hot is Minnesota kind of Stack up to other states of have dealt with this that have did or eliminated tobacco stocks from their portfolios. And any number of approaches have been taken and it started with the state of Maryland back in March of 1996. And there it was just the staff in the executive director who decided that because of the mounting litigation concerns, they would get out of these out of these stocks that was followed by the New York State Pension system in New York State Common retirement fund which took an approach that is pretty similar to where Minnesota is at right now where there would be restrictions on any further. By the act of money managers of the fund but the index portion of the fun that basically tracks, you know, a large basket of stocks like the S&P 500 that wouldn't be touched by the policy and that's what is now in place in Minnesota in in Florida was in with the next case in Florida had 835 million dollars of tobacco stocks of really substantial holding of tobacco stocks that it has sold as a result of a decision by the trustees at having consulted with their staff and like Minnesota in Florida you had three in this case three state elected officials who presided over that pension system finally in in in Massachusetts. There was legislation that was passed last October that required that pension system to sell its tobacco stocks. So in this case, it was the legislature that got involved and I get that gets back to your callers Richards point of the politics does enter into it. It's absolutely true as much as we want to say that all of these decisions should be based strictly on financial grounds that you cannot eliminate the political dimension of this and sometimes politics also affects the financial prospects and sometimes the financial prospects in turn affect the politics. I think the fact that you did have so many divestments taking place with companies doing business in South Africa back in the 1980s that that was one of the key factors that led to the end of Apartheid in that country. So in some time in some instances when politics and finance get together, it can be put toward good ends and I think South Africa is a good example of that. Okay, I Ruth Ann St. Paul. You're the next caller. Go ahead. I am against investing in stocks because of the morality of the issue and I don't think you've been divorced because of good or evil that a certain company does Ruth. Are you talking right into your phone? And I hate myself would never invest in a tobacco company. I have a relatively when he was in his steamed took up smoking and now in his 50s, so I am prejudiced. I'm sure but I think you have to be responsible for the investment you make morally I want to ask you about that clearly any individual can invest however they want but when you're dealing with estate investment board to represent every Minnesotan there representing a wide variety. Opinions. So what what what obligation does the state have to to try to represent all these different opinion than me that must be extremely difficult difficult and we're as an individual like Ruth may choose not to invest in tobacco stocks because of her own moral objections. It's more difficult for the state and its trustees to make a decision on behalf of all the pensioners in the estate and the retirement system because not all of the pensioners May hold those moral objections. It may in fact simply be looking to maximize the return on their investments in their in their Pension Plan looking for their retirement years. And therefore morality can only come into play I would say as a secondary issue that the primary focus has to be on the financial considerations when you're talking about a state I'd like the Minnesota state plan for individuals. Of course. It's a different story. But in in the in the case of of Minnesota, the finances have to come first and if you want to consider that the moral element of it, I don't think it's inappropriate to to divorce that discussion. But just you have to recognize that the financial considerations come first and then if you want to have a debate on the on the ethics of it, I don't see any reason why that should be eliminated from the discussion because certainly ethics has is what's underlies all of the controversy of this particular product in this industry and is to say that that controversy doesn't exist is to is to basically deny all this been happening over the last 2 years. Frank in Burnsville, your question or comment and politics shouldn't even have a place every fact that we have a huge investment in tobacco stocks if we want to get have morals and say we don't want to do it. It shouldn't be a public issue that says look we're not going to buy any more. We may sell our portfolio. If you're truly measuring a portfolio on you have the investment we have they're all they're doing is probably hurting their own investment as they and a bunch of other politics or politicians. In other states. Take the same. Look at me. I'm a good guy kind of thing and I wouldn't support tobacco make these statements there for the depression stock. And then you already have their we're going to do it. We should just do it quietly like we would do any other investment if we change what we want to do. Mr. Cowan. Yeah, I mean Minnesota's case. We got the Attorney General the governor of the state auditor all you know, the clearly political positions at what channel is differently or if it's done in Most states. Actually. It's very different from state to state the heat state of course has the right to decide how its pension fund is administered and and who the trustees are whether they're elected officials or appointed officials. And sometimes it's a mix of the two some trustees are already know what small handful like the State of Florida with three elected officials and others like the California Public Employees Retirement System the biggest pension fund of them all with a hundred 35 billion dollars in assets as I believe 13 trustees some of pointed ends and some State elected officials self. Your caller is probably right that the politics shouldn't enter into the equation, but the fact of the matter that so often these trustees are elected officials means that Politics is right up there at the top of the list. It's just kind of a fact of life just have a couple of minutes left right? I get a couple of calls in a Beth in Edina. Go ahead. I just wanted to say that I think so far your discussion has been extremely myopic. My mother right now is dying of emphysema and I have no idea how many tens of thousands of dollars for emergency treatment has caused and daily upkeep of oxygen and Other Drugs, you're looking at a small amount of profit compared to the big cost to society to are the drain on our Healthcare System with people in my mother's generation. I know a number of people who have emphysema. They have cancer they have they've had lung one lung removed. You're looking at just a small amount of money. You're not looking at the actual cost of smoking and I think you can take all the morality out of it and look at it on the bottom line and you're losing if you're investing in something that The end of it causes more as a society not to mention the drain on our families and our loved ones. There's no comparison. We have talked a bit about that everything you want to comment on what she had to say like a backhoe in the effects. It has I lost my own father to cancer and who was a lifelong smoker. In fact what I think is happening and in case like Minnesota and in throughout the nation is that there is beginning to be this link between the social costs imposed by smoking invented tobacco products and and whether that should affect the investors and these companies that was really the essence of the Medicaid case in Minnesota. Should the industry be held responsible held liable for the cost of treating Medicaid smokers. A private individuals like your bets mother suffering from emphysema under current law have the opportunity to sue the tobacco industry. If they feel that they were at the industry was in some degree responsible for their illness is a very short time left on try to get one more color in Allen for Minneapolis. Go ahead on the decision being First Financial and the second timer ality from a theoretical point, you know, that's fine. But I think there are problems with that on more practical standpoint in that, you know, any board basically making a decision because the those stocks are expected to underperform they're making a basically a financial statement which gets into micromanaging which would really be responsible be up to the individual money managers. I would like to think that that could be turned around a little bit and this whole time we've been looking at it from a mutually exclusive. Standpoint and I would think you could have both or all things very much and Allen has the last word on the subject. So thanks very much I missed your call. Again. Thank you for joining us today. She appreciated Doug Colgan tracks the debate surrounding the cigarette industry and investments in tobacco companies as director of The Tobacco information service of the investor responsibility Research Center based in Washington DC that we should mention it is a nonpartisan the nonprofit research group funded by institutional investors, including Minnesota State Pension funds that will do it for this our thanks for joining us and thanks for all the calls. I'm Ray Suarez two planes missed each other by just 20 feet recently at LaGuardia Airport prompting the FAA to send 10,000 air traffic controllers back to school on Friday Air Force One disappeared from radar screens twice and according to FAA documents air. Traffic controller errors are up 20% this year joint Ira Flatow for look at Airline safety on the next Talk of the Nation Science Friday from NPR news. And you can hear Talk of the Nation right after midday at 1 right here on Minnesota Public Radio hits now 5 minutes before 12 noon time for Garrison Keillor and The Writer's Almanac.