Elite Colleges Walked Into the Israel Divestment Trap

Valid contrast:

…But there’s a key difference between avoiding fossil fuels and shunning Israel. The institutions that divested from oil and gas made sure to describe it as financially prudent, albeit sometimes with shallow investment logic. This time, Israel’s social license is the only thing that is on the table. And if Israel is on the table, what other countries should lose their social license? How many years must pass since what some believe to be a country’s settler colonialist period or messy wars that kill innocent civilians to make it investable?

And if divestment against Israel is carried out, when should it end? Oil and gas divesting is meant never to end; oil and gas consumption is meant to end. Divestment from South Africa ended with apartheid. So university leaders will be forced to ask an often heterogeneous group of students what would earn Israel its social license back. A cease-fire? A new Israeli government? A two-state solution? The end of Israel as a Jewish state?

The effort to identify every investment with ties to Israel is also fraught. Columbia activists could find information only on pocket-change-size ownership of certain companies, such as $69,000 of Microsoft stock. So protesters are also demanding that colleges disclose all their investments, presumably so students can research the morality of each one. However, some firms that manage parts of an endowment’s money, particularly hedge funds, don’t report individual holdings to investors: asking them for it is like asking for the secret recipe for Coke.

But even if an endowment could provide a list of every underlying investment, it would likely then be inundated for more calls to divest, for more discovered connections — however small — to Israel, and for reasons related to other offenses discoverable with an online search. Why would there not be a Taiwanese student group demanding divestment from China, to dissuade an invasion? Other students demanding divestment from Big Tech, citing students’ mental health? Others demanding divestment from all of it, the hedge funds and private equity funds whose asset managers are not exactly healing American income inequality?

The answer, of course, is that endowments can’t be in the moral adjudication business — and they should never have headed this way. This does not mean that investing should be a returns-at-any-cost exercise. But it does mean that the real world does not always provide objective answers to how to balance benefits and consequences of companies providing products and services: Carbon emissions are bad, but energy consumption is necessary. Microsoft software for the Israeli government may displease you, but Microsoft saying it won’t sell software to Israel would displease others — and probably get itself banned from working with New York State agencies.

Listen to the protesters on divestment. They will not stop. They will not rest.

But neither will the markets. They open every morning, Monday through Friday, and university budgets’ demands on endowments never go away. Tuitions are rising. Costs always go up. Colleges should debate deep moral issues and discuss the hard compromises to solve the world’s ills. But we should move those efforts to the lecture halls, away from the investment offices. Divesting is an easy chant. Investing is hard enough as it is…

Source: Elite Colleges Walked Into the Israel Divestment Trap