If the divestment movement succeeds, will it have an economic impact?
If the divestment movement succeeds, will it have an economic impact?
At many institutions of higher education across the country, student protesters are calling for their schools to divest their endowments from companies that do business with Israel.
This isn’t the first divestment movement on college campuses we’ve seen. In the 1970s and 1980s, there was a student movement to divest from South Africa as a protest of apartheid, that nation’s oppressive system of racial separation. In the 2010s through today, students have called on their colleges to divest from fossil fuel companies. But how effective have these movements been?
“Over the short term, there is not a lot of evidence, for example, that divestment campaigns hit stock prices,” said Alison Taylor, clinical associate professor at New York University’s Stern School of Business. “But the evidence that divestment does work is more about shifting hearts and minds.”
Taylor joined “Marketplace” host Kai Ryssdal for a conversation about divestment. Below is an edited transcript of their conversation.
Kai Ryssdal: Could you do a little compare and contrast, just to start? The case study of divestment and student protests is South Africa in the 1970s and 1980s. How was that similar to or dissimilar to what is happening now on college campuses?
Alison Taylor: Well, I mean, the first point to make is that many of the protesters are framing this as very, very similar to apartheid. So, there are many people trying to draw direct comparisons. There is also a history in the anti-apartheid movement. It is important to flag upfront that it took several decades to succeed. But a lot of elements of that movement focused on divestment and focused on college endowment. That said, there was a lot of consensus that apartheid needed to end and just questions about how much divestment would work or not work in driving that goal. Here, we’ve got a much, much more contentious and divisive situation.
Ryssdal: I wonder if you could also comment on just the nature of the global economy 40 or 50 years ago versus today?
Taylor: Well, I mean, yeah, it’s much harder, I think, to target particular companies. Many investments are in big index funds. There are also wider questions about the degree to which you target companies directly. And many of the protesters are saying target Boeing, target Airbnb, versus targeting the banks and other entities that fund these corporations.
Ryssdal: You mentioned endowments. Let’s discuss that for a moment because based on the information we have, and we should say that endowments are notoriously not transparent. But it does seem that the companies and the endowments in question make up just decimal-point percentages or single-digit percentages of these endowments.
Taylor: Yeah, absolutely. And so there’s a real question of whether the students are trying to achieve just, I do not want my university to be associated with this entity, or whether they’re actually trying to get something concrete done with money or political decision-making. And I think, depending on what your goal is, you would take a very different approach to these endowments.
Ryssdal: Right. So, it’s using the economic threat to leverage policy. That’s what they’re trying to do.
Taylor: I think they’re also trying to shift hearts and minds. The other point here is that there is a debate about whether divestment works. Over the short term, there is not a lot of evidence, for example, that divestment campaigns hit stock prices. But the evidence that divestment does work is more about shifting hearts and minds and social norms. And so if you can, over time, make a particular sort of investment or a particular sort of business decision morally unacceptable, then you can move the needle and money will move too. But this is a very, very long-term goal. And it requires, you know, there to be a fair amount of societal consensus around whatever the issue is over time.
Ryssdal: So as the scholar in this conversation, and that long duration that you’re talking about, do you think this moment sustains? Apartheid, as you said, was a fairly clear-cut issue. This is on virtually every level not clear cut.
Taylor: Well, I think that’s right. And so, I think it is a difficult argument to make. But what we’re going to see is a widespread shift in, you know, how Americans or how American universities see this issue. I think there’s also certainly a scenario where these protests actually have the opposite effect of the protesters’ intent.
Ryssdal: Discuss that.
Taylor: Well, because I think the way that the protests are being seen and treated by the media is certainly having the impact of convincing people that this is just a position that the students are taking that is not productive. You know, why this issue? Why now? Why this country? Why not the other human rights violations going on? What exactly are we trying to achieve and how and so you’ve got both the conversation about whether divestment works and then the conversation about what the ultimate goals are.
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