SHORT TAKES


January 18, 2013

Feel-Good "Divestment" Campaigns Thrive on Campuses

College campuses abound in silly sentiments and enthusiasm for actions that make zealous students, professors, and administrators to feel good about themselves, but accomplish nothing. The current push to compel colleges and universities to divest their stock holdings in companies that produce fossil fuels -- discussed in this article in The Chronicle of Higher Education -- (subscriber content) is a good example.

Lots of college students think they need to devote time and energy to "saving the planet," which requires stopping the use of fossil fuels. They insist that college officials take "an ethical stand" against companies that produce and sell fossil fuels because those fuels contribute to global warming.

Instead of either ignoring the students or, better yet, telling them facts they would rather not hear, some college leaders are going along.

For example, Stephen Mulkey, president of Unity College in Maine (which modestly calls itself "America's environmental college") says that he supports divestment because it will "send a very strong signal that conservative investors have agreed that this is not an ethical investment."

What a perfect example of the cocoon in which academic leftists live.

No doubt Mr. Mulkey hopes to send that signal, but someone should tell him that when the stock trade is executed, there will be no "signal" at all. Suppose that Unity decides to sell its thousand shares of ExxonMobil. It will order whatever brokerage firm handles its account to offer its shares for sale. The broker will soon find a buyer who wants those shares and the trade will be executed - the shares going to the buyer and the buyer's cash going to Unity. The buyer will not know where the shares came from, much less that the former owner is dumping them to make a statement about the ethics of fossil fuels.

No, Unity can't paper clip a note to the stock saying, "It's bad of you to own this."

Furthermore, the act of selling the stock won't make the slightest bit of difference to ExxonMobil. The activist students and compliant officials evidently believe that divesting a college's stock somehow hurts the evil company and will make it change its ways or go out of business. It won't.

In equity markets, vast numbers of trades occur every day. Sellers part with stock because they (for whatever reason) want cash instead and buyers part with their money because they prefer to hold the stock. The firm that issued the stock is not affected by the trades. ExxonMobil's leaders don't care if a fraction of its shares are held in Unity College's portfolio or somewhere else. They will continue using the company's assets as profitably as possible to produce fuels that almost everyone wants.

The whole idea that it is "unethical" to continue using fossil fuels is nonsense and the divestment mania is a silly means to that nonsensical end. Typical of higher education these days.

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