Maybe Divestment is the Answer

Princeton University president emeritus William G. Bowen argues in Sunday’s Washington Post against those calling for colleges and universities to divest their holdings in fossil fuel companies.  I have done the same here and here.  But after reading Bowen’s unconvincing justification for continued investment in the corporations responsible for our planet’s ever-worsening climate crisis, I am seriously reconsidering my position.

Bowen, unlike me, seems unconcerned with the efficacy of divestment strategy which I have concluded is actually counterproductive.  One reason, as set forth in a report from the Nathan Cummings Foundation, is that when an ecology-minded investor sells shares in a fossil fuel company, the practical result is that less altruistic investors select the corporate board.  Rather than sell holdings in bad actors, Cummings became an activist investor prodding and cajoling companies to be better corporate citizens.  This strategy proved successful for Cummings in its telling.

Bowen does not call for educational and eleemosynary institutions to be green activists – quite the contrary in fact.  First, he rejects claims that colleges are obligated to take stands on issue of broad social import that don’t directly impact them.  Second, Bowen expresses fear that taking a stand on divestment would open schools up to charges of hypocrisy since they, being human institutions, will invariably fail purity tests.

Third, he frets that the intent of donors will be frustrated if universities don’t seek out the highest reasonable returns on investments.  Fourth, Bowen questions whether divestment is too easy a solution for colleges and universities.  After divestment, might they not lose the will to reduce consumption and fight for political solutions.  Finally, Bowen worries that universities and colleges will be distracted from their core educational mission.

Bowen’s contention that colleges need not take a stand on issues involving the commonweal that do not directly impact on them is illogical since every issue of broad social import affects the university community.  This is clearly the case with global warming which, inter alia, impacts: 1) the university’s budget, e.g., it increases the air conditioning costs and flood insurance premiums, 2) students’ long-term career plans, 3) philosophical discussions on the nature of humankind and the meaning of life itself, and, 4) if the worst predicted impacts of climate change come to pass, the continuing viability of Princeton as an institution of higher learning.

Bowen’s claim that divesting opens the divestor up to the charge of hypocrisy if it fails “to reduce consumption of fossil fuels” is the obverse of the hypocrisy fallacy.  Bad actors often employ the hypocrisy fallacy to evade the logical consequences of an opponent’s argument.  Hence southern defenders of slavery sometimes claimed that some wealthy northern abolitionists were hypocrites since they didn’t always treat their factory workers very well.  Of course, this argument bore no relevance to the essential injustice of the peculiar institution and whether it should be abolished.  Likewise, the fear of being called a hypocrite for divesting because you’re still using a diesel-powered Zamboni to clean the hockey rink should carry no weight in the debate over whether to divest.

Bowen’s hypocrisy argument fails for another reason.  Presumably, schools can walk and chew gum at the same time.  They can sell holdings in fossil fuel companies and buy a solar-powered Zamboni.

At first blush, Bowen’s solicitude for the sensibilities of hypothetical donors who will be upset if assets they give for ongoing projects aren’t invested profitably enough seems almost legitimate.  After all, if the wildly successful creator of the Princeton Tiger Hedge Fund (not a real thing) decides to endow an economics chair, she may rightly specify that her $100 million gift be invested in a diversified basket of common stocks rather than short-term out-of-the-money pork belly puts.

Donors know, however, that universities exercise broad discretion in how they invest their endowment and that gifts, by definition, no longer remain in the donor’s control.  There is also good reason to believe that fossil fuel investments will underperform the broad market indexes as countries embrace policies incentivizing the production and consumption of clean green energy.

In any case, universities and colleges have an ethical duty, that they do not always follow, to reject gifts that contravene what should be their basic goal – an ongoing duty to educate people in a spirit of truly free and open inquiry.  Sadly, the University of Louisville just accepted over $6 million from the ultra-conservative Koch Brothers and “Papa John” Schnatter earmarked to fund a “center for free enterprise”.  Plausibly, a cash gift given with the stated or unstated assumption that it will be invested in Massey Coal would contravene a university’s mission to educate this and future generations.

Bowen’s final two arguments – divestment is the easy road out and it distracts from the academy’s core mission – contradict each other and also can be rejected for the same reason I mentioned in response to the hypocrisy argument.  Universities can walk and chew gum at the same time.

The two arguments are mutually exclusive.  If divestment supplants more time-consuming, expensive, and labor intensive solutions like retrofitting every structure on campus and installing a giant windmill on top of the library then it will prevent the latter distractions.  In any event, large, powerful, and very rich institutions, like Princeton which has an endowment of $18.8 billion, can surely afford to pay a few professors extra to focus on the best ways for the school to respond to global warming while still providing a world-class education.

The defining inter-related challenges the world faces today are global warming and economic injustice.  Divestment is a response to these challenges.  Charitable and educational institutions should remove themselves from the ranks of those enriching themselves at the expense of ecological stability say the divestors.   In this light, the only legitimate argument against the divestment movement is the one I have made in the past, namely that it is ineffective.

William Bowen does not attempt to support this contention and thereby does not unwittingly debunk it.  Nevertheless, I confess to a slight uneasiness as to the rightness of my position in light of his wholly unpersuasive support.  If such a luminous figure, as the president emeritus of the best national university in America cannot conjure up a semi-plausible reason against divesting, maybe it is a good idea after all.