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Divestment and its discontents

To the Editor:

Divestment seems to be the new activist fad. Stanford needs to divest from fossil fuel companies. The Gates Foundation needs to divest from G4S. This is now the “cause” for which elections are held and petitions are signed. This movement, however well-intentioned, is a new high point in activist naiveté.

One major problem with so-called “ethical investing” is that in an institution as large as Stanford, there are disagreements about what is ethical and what is not. When Stanford divested from coal mining companies and threatened to go further, it alienated a large share of students and faculty who had no qualms with fossil fuel companies – companies that provide abundant, cheap energy without which our economy would not function. But who is right on the issue is not the point; the point is that there are two sides within Stanford on the issue. And Stanford chose to use its endowment to make a political statement, endorse one group’s opinion and simultaneously denounce the other’s. (And it seems that more than anything, Stanford’s choice was a petty move to look “better” than Harvard.)

That is not the purpose of an endowment.

The true purpose of an endowment, like it or not, is to make money. It is not to make political statements. It is not to endorse one opinion over another. It has one purpose and one purpose alone: make money. Nothing else should factor into the decision-making, however much you personally find making money repugnant.

Consider, moreover, what divesting does: nothing, besides making a little statement and cutting off our nose to spite our face. Does ExxonMobil care whether Stanford is an investor? Absolutely not. Its stock is bought and sold all the time. All divesting means is that Stanford sells it stock to someone else who wants it. All it can do is hurt the divestor, if its returns suffer, and with a set of profitable options having been eliminated, presumably they will. Furthermore, divesting gives up the divestor’s voice in the company from which he has divested. Shareholders control the company. When those shares are sold, so is the control within that company and the only hope of changing the company from within.

Ultimately, the divestment movement is a cop-out. It is a way for some people to feel self-righteous without having to do anything. Students can celebrate that Stanford divested from coal without having to make any real changes in their lives. The investors in Peabody Energy Corp. may change, but that company mines coal just the same as it always has. If the divestment protestors really believed in their cause, they wouldn’t even be divestment protestors – instead, they would be working harder to reduce their own fossil fuel consumption. If the G4S protestors actually cared about human rights, they would be trying to protect human rights instead of changing the investors in a security company, a goal which does absolutely nothing for human rights.

There are many reasons to question the causes of today’s activists, but it’s quite clear that divestment movements are not movements for any real cause that could be questioned – they’re here because of laziness, stupidity, or both.

 

Daniel Wright ’17

Contact Daniel Wright at [email protected]

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