Divestment Is (Still) a Bad Idea

Flickr/CC

It has been over a year since the Board of Managers announced it would not divest from fossil fuel stocks, and two classes of seniors have graduated since the ill-fated Board meeting that witnessed the death of the divestment movement’s last veneer of credibility. Yet the idea persists, driven by the passion of campus activists who misrepresent the costs and benefits associated with divestment. The passion is admirable—but ultimately misguided.

While Mountain Justice, the Phoenix and other divestment advocates emphasize the simplicity of the concept—let’s just divest from fossil fuel stocks and put that money into assets that satisfy our particular moral constraints—the reality is more complicated. It’s not as straightforward as making a trade on the floor of the New York Stock Exchange. Swarthmore’s $1.5 billion endowment outperforms the market by using a special asset class called commingled funds. This involves lumping together funds with other investors and sharing a common portfolio. With more investors comes more access to financial expertise, and thus a greater likelihood that the commingled fund will offer a higher return.

The flipside of this is that Swarthmore cannot divest from a particular stock—say ExxonMobil—without divesting from the entire commingled fund. Divestment would thus cause Swarthmore to lose its edge over the rest of the market, costing the College $10 to $15 million per year (the equivalent of full tuition for 150 to 250 students). Swarthmore’s generous financial aid policy and other important line items would be at risk.

Weighed against this should, of course, be the benefits of divestment. But these are small and come mostly in the form of cleaner consciences for Mountain Justice members. When an individual sells stock in a particular company, someone else will almost immediately buy it. As long as the companies are profitable, there will be plenty of willing buyers.

Divestment advocates like to cite that $50 billion has been “divested” from fossil fuel stocks. An important note: that number refers to the total wealth pledged to be fossil-free, not the actual amount divested; that number is much smaller. Regardless, though, other investors have almost certainly rebought the entire sum. The market value of the ten biggest oil and gas companies is $1.8 trillion. Over the last five years, the market capitalization of a single fossil fuel company—ExxonMobil—has increased $70 billion. The stock price has gone up by 41 percent, showing that demand for the stock is robust. Divestment is not only costly, but also ineffective.

The fundamental flaw in using divestment to fight climate change is that it ignores incentives. Fossil fuel companies are simply responding to demand—demand for transportation, demand for electricity, demand for diesel buses to attend climate marches in New York. It is we, the consumers, who create the demand. As long as we are willing to pay for oil and gas, fossil fuel companies have an incentive to meet our needs. And investors with an eye for profit will always supply financing to help them do it.

Taking the fight to fossil fuel companies is a feel-good strategy that will accomplish little in the fight against climate change. As consumers of fossil fuels, we are also responsible for carbon emissions. We derive enormous benefits from fossil fuels; our standard of living has grown exponentially since their advent during the Industrial Revolution. To deflect the responsibility for their environmental costs onto others is careless and hypocritical.

To clean up the environment, we have to change incentives so that our goals as economic actors cooperate with the needs of the planet. The best way to do this is to make pollution more expensive to incentivize the private sector to develop energy alternatives, such as nuclear power. “Making pollution more expensive” implies a range of policy options, each with their own benefits and drawbacks. These include a carbon tax swap or assigning property rights to the atmosphere.

Fossil fuel companies cannot be our enemies in this. After all, fossil fuel companies already have access to the capital necessary to make investments in sustainable energy. For better or worse, established energy companies are a major sector of the economy, and they must be part of the solution. If we enact policies that disincentivize pollution, Chevron and ExxonMobil will seek to protect their bottom line by plowing capital into alternative energy research rather than oil exploration, benefitting all of us.

Divestment is not a solution to climate change, nor is it part of any reasonable solution. Fossil fuels will not stop burning because Swarthmore has divested and put its finances in jeopardy. The divestment movement is a way for activists to clean their consciences without actually doing anything to help the planet. It implies intense pessimism—the message is that instead of trying to fix the environment, we should try to go down righteously on a sinking ship. I think our society can do better than that.

In Hiring Contractors, College Takes Everything Into Account–But the Most Important Factor

UN_CONSTRUCTION

Last Thursday’s Phoenix shed some light on the cryptic “Shame on Swarthmore College” banner that has hung outside the SEPTA station since early this summer. In construction of the Matchbox, the new theater and athletic space under construction near the Field House, Swarthmore has apparently committed the egregious error of hiring a contractor that uses non-union labor. Time to go to the barricades.

Stu Hain, Vice President for Facilities and Capital Projects, provided some sound reasoning for why the College chose not to use unionized labor for this particular project. From the Phoenix:

“The trickiest issue would have probably been around installation of the skin on the top of the building,” he said, referring to the red cement panels on the Matchbox’s rooftop. If the school had hired unionized workers, he said, there would have been a struggle about how many different trades would have to be involved in that process.

Now, the various tasks necessary to install the panels can be done with one group, as opposed to several.

“There is more flexibility,” Hain said.

The College has not escaped the clutches of social justice warriors, however. From Monday’s Daily Gazette:

When asked about the Shame on Swarthmore union campaign, the administrators noted that the contracting company awarded the Matchbox bid hires a mix of union and non-union labor — and that this piece of information was taken into account during the bidding process. Additionally, the College is in the midst of implementing a plan to give firms owned by women, minority, or disabled individuals an advantage in the bidding process, which will hopefully give these firms a 10% leeway in terms of their bids.

Strangely absent from the discussion is any mention of the track records of the contractors, and whether they can get the jobs done on time for a reasonable price. The College has essentially advertised that it will pay a 10 percent premium over the fair value of contracting so it can pay homage to vague notions of social justice—hardly sound financial reasoning. And we wonder why tuition approaches $60,000 a year.

Instead of seeking to check certain boxes (woman-owned, minority-owned, unionized) unrelated to performance, the College ought to prioritize the most important factor: whether the company can do what we’re hiring them to do.

With the College squeezing extra students into dorm rooms not designed to fit them, it is imperative to finish construction of projects like the Danawell expansion on schedule. The College is developing a back-up plan in case the weather pushes completion of the new building past fall 2015, when new students will swell the size of the student body and further burden our already-strained housing resources. Foremost among the College’s considerations should be hiring a contractor that can complete the expansion on time, come hell or high water. We’d like to know where this ranks on the list of priorities.

When the College pays more to hire contractors that adhere to certain constraints, it is necessarily able to spend less on other worthy ventures—paying employees well, supporting student life, or reducing the burden of tuition on hardworking families. The best thing for the College and our community would be making efficiency our foremost consideration.

A Belated Farewell

It’s been three months since the Class of 2014 pierced the Swarthmore Bubble and, clearly woozy with my newfound freedom, I’ve put off writing this farewell to the Swarthmore Independent. But goodbyes and gratitude are much in order.10440896_10152516879206474_1667754027473281942_n

Our small cohort of Swarthmore conservatives, libertarians, moderates and other fringe counterculturists had murmured about founding an alternative student newspaper for a while. But after “the spring” of 2013, Tyler Becker ’14, Savannah Saunders ’16 and I knew it was past time to get started. Right-of-center perspectives definitely exist at Swarthmore but, like the Quakers, too often remain mum. So last July, the three of us met at a Collegiate Network conference to hatch a plan, and the blog was up and running well before the start of the school year. Preston Cooper ’14 emerged as our go-to managing editor, and Nat Frum ’16 and Joe Warren ’16 kept us laughing with their “Swat8” sketch comedy videos.

I’m proud that our writers provided much-needed reporting on Title IX and free speech issues. It was the Independent that first brought attention to the administration’s ill-conceived plan to solicit student activists to sit on sexual assault juries. And it was the Independent that covered the administration’s handbook breech, when the deans decided to reeducate the Phi Psi brothers for their lewd but legal pledge invitations. Our writers also offered a unique voice on the College’s ever-evolving alcohol policies, the Cornel West/Robert George symposia, and the notorious “fat justice” workshop, among other dustups.  

By now, I imagine the “Spring of our Discontent” is part distant memory and part myth—like that time in the 70’s when Bruce Springsteen supposedly held a concert in the Crum. These days, there are new deans in Parrish, and Rebecca Chopp is manifesting her administrative destiny out West.

But so long as there are students—and professors—who think free speech is “a shield” for the privileged or that “trigger warnings” should be slapped on the cover of every great work of literature, the Independent remains necessary. Thankfully, Tyler Becker and I leave you in good hands. The Independent’s writers are proud to contribute to the intellectual diversity of Swarthmore. Many students have told me they don’t always agree with our editorial stances but find our articles provocative and worth considering. That’s precisely our goal: good old-fashioned liberal discourse.

Last semester, I was inspired by the level-headed Q&A periods after John Tomasi’s “Free Market Fairness” lecture and Samantha Harris’s presentation on academic freedom. It is my hope that the Independent and Swarthmore Conservative Society will continue to sponsor such events. Better yet, I hope that Swarthmore students and faculty will consider adopting symposia akin to Brown’s Janus Forum or Yale’s Political Union in order to generate more consistent cross-campus discussion. Regular high-quality debate and conversation are the only cures for a student body that, too often, has regarded the prospect of controversial scholars as simply intolerable.  For every student who shouts her barbaric yawp of “intersectionality” from the rooftops of McCabe, there ought to be another Swattie crunching the economic effects of divestment or asking What Would Socrates Do?

Our summer, as Emily Dickinson once wrote, “has made her light escape / Into the Beautiful—.” But, for Swarthmore students, the autumn leap into rigorous seminars and late-night study sessions has its own beauty. No matter how stressed or frazzled or politically persecuted you may feel, a four year liberal arts education at Swarthmore is truly a privilege. I trust the Independent’s writers will uphold that privilege with intelligence and wit. To quote the Class of 1927, Use Well Thy Freedom. 

Danielle Charette ’14 is beginning a Ph.D with the University of Chicago’s Committee on Social Thought and busy contemplating whether or not she’ll have to vote for Rahm Emanuel. 

GOP Loses Young Conservatives on Foreign Policy

peace_patriot_classic_thong

 I’ll never forget Michele Bachmann’s speech at CPAC 2013, which unveiled her idea for a new type of conservatism, one that would boost the platform of “care and compassion.” Between criticizing the President for his lavish vacations, exposing the atrocity of employing a White House dog walker on the taxpayers’ dime, and preaching the message of conservative-love-for-all, I found myself clapping. I stood and enthusiastically cheered along with 200 other CPAC-ers. It wasn’t until Bachmann exited the stage and the clouds of group-think parted, that I realized she had said absolutely nothing of life-giving potential for the conservative movement. More recently, Republicans across the spectrum have taken a liking to compassionate conservatism, with high hopes of revitalizing the party’s image with a makeover. The GOP is worried about its appearance, and has good reason to be. Polls show the party performing poorly among women and young voters. Republicans have traditionally struggled with securing those demographics, but now the GOP faces a new obstacle–a stronger libertarian movement. Sweeping across college campuses and gaining momentum, libertarianism is cementing itself as a more attractive option for thousands of young conservatives. Caught between an admiration of tradition and a necessity for change, GOP leaders have misdiagnosed what’s killing conservatism in America. They continue to promote ideas of American exceptionalism and argue for hawkish military expansions, promising a revival of Reagan conservatism.

But that’s the GOP’s problem. Young conservatives don’t want another Reagan regime.

Since the 1980’s, conservatism has seemed conflicted in carrying out one of its most basic tenets: change can be a good thing, but should be approached prudently, not zealously. Conservatives have sought to preserve tradition at home, but have intervened in foreign affairs like fanatics hell-bent on spreading democracy. Last week, a group of GOP senators took the Senate floor and spoke for an hour about President Obama’s failures abroad. Senators John McCain and Lindsey Graham pointed to the current unrest in Iraq as evidence that the US should be doing more to secure peace in the Middle East, and Senate minority leader Mitch McConnell accused the President of weakening America’s national security by withdrawing troops from the country. In May, after his opening remarks at a dinner for Republican donors, Senator Rand Paul faced an onslaught of tough questions about his positions on foreign policy. Paul’s non-interventionist views make him an outlier on foreign policy, and although he connects well with younger voters, he risks losing the support of some powerful Republicans. Center-right Republicans seem receptive to Paul’s stance on foreign policy, but a large chunk of the GOP resists moving in a non-interventionist direction. Many Republicans are standing firm against pressure from the libertarian movement, hoping for a war hawk front-runner in 2016. GOP leaders are out of touch with twenty-somethings, preaching compassion but holding onto an offensive, uncompassionate take on foreign policy–an issue close to the heart of Generation Y.

Today’s young conservatives have a healthy distrust of government, and unlike earlier generations of conservatives, it doesn’t go away when the Republican guy is in power. Perhaps this is because we came of age watching the Bush administration fumble situation after situation, and expand the size of government to ensure more comprehensive screw-ups. Promises of lower taxes and a strong defense don’t satisfy us, because we know all too well that GOP governments can be very big governments. We grew up in the midst of a war based on lies, and have realized the devastating futility of our involvement. The Iraq war is a tragic mistake that continues to play out, and is a major reason for Generation Y’s fervent distrust of government intervention. We don’t want to expand the military budget, we don’t want to spread democracy or police the world, or claim anything that resembles the Bush Doctrine. Generation Y Conservatives don’t look favorably upon much of what the GOP aims to do abroad.

Republicans have a deep-rooted addiction to interventionism, leaving many young conservatives hungry for new options. The hype surrounding the “Ron Paul Revolution” was not taken seriously by the GOP, but Ron Paul’s refreshing stance on foreign policy lit a fire that’s not likely to simmer down anytime soon. With the recent announcement of turmoil in Iraq, young voters are reminded of the follies of imperialism. For decades, the United States has “spread democracy” by assisting in coups of other nations’ leaders, and then placing U.S.-approved dictators in power. In fact, the United States gave so much money and military support to Saddam Hussein, his leadership was practically handed to him on a red, white, and blue platter. By sticking its nose into other nations’ business, the United States forges powerful alliances in every corner of the world, gains access to more resources, and feels good by making the less enlightened world a little more American.

Center-right Republicans seem open to taking a new stance on foreign policy, but a large chunk of the GOP resists moving in a non-interventionist direction. Many Republicans are standing firm against pressure from the libertarian movement, hoping for a war hawk front-runner in 2016.The GOP declares that “a strong national defense is the pathway to peace.” America is exceptional, and has a responsibility to change the rest of the world whether they like it or not. Reform at home should be considered with caution, but reform abroad–go for it. What the GOP doesn’t realize is that to Generation Y, America’s interventionist policies just look like excuses for more power at the hands of careless politicians. Because at the end of the day, the Iraq war has cost about $1 trillion, the United States spends about $600 billion a year on the military, Guantanamo Bay is still going strong, and drone strikes have killed an estimated 273 innocent civilians. If the GOP wants to reclaim the hearts of libertarian converts and prove its compassion, what it needs is a foreign policy makeover.

Employee survey reveals irrationality of SLAP childcare campaign

DCF 1.0

Two weeks ago, the Swarthmore Office of Human Resources released the results of a survey, conducted in conjunction with the Swarthmore Labor Action Project (SLAP), of faculty and staff regarding the issue of dependent care. Along with protesting such colossal injustices as $30 proposed parking fees, SLAP has made childcare for Swarthmore College employees the subject of its latest paternalistic crusade. The survey results were discussed in this week’s Phoenix, in an article that unsurprisingly included not a single negative quote or criticism of the SLAP campaign.

To begin, the voluntary-response survey called forth responses from just 23% of all faculty and staff at the College – hardly a representative sample. If the well-known laws of statistics we were taught in Stat 11 are true, it’s likely that only employees most passionate about the issue of childcare would respond to the survey, biasing the results. Using the survey as evidence that there is widespread employee demand for childcare is akin to polling KFC patrons to gauge public opinion on vegetarianism.

The survey results proudly proclaim that 63% of respondents agree the “College should consider offering additional childcare benefits.” Putting aside the fact that this “63%” is actually 14% of all employees at the College, the wording of this question is itself geared to generate more positive responses. The inclusion of the word “consider” will naturally make respondents more eager to answer in the affirmative, since it does not imply a commitment to support the movement, just to consider it. As one respondent said: “My response is not an endorsement of a proposal to DO it [provide dependent care benefits], just to consider it.”

I agree that the College should consider adding childcare benefits, in the loosest sense of the word. We should always be looking for ways to more efficiently compensate our employees. But it’s ridiculous to extrapolate this result into a mandate to provide immediate and universal childcare benefits to College employees, as SLAP would have us do. And a close reading of the survey results suggests childcare is far from the best thing we could do for our employees.

Indeed, actually reading some of the open responses to the survey provided by College employees paint a much different picture. Among them:

“As much as I wish our resources were unlimited, I don’t see how it‘s possible to offer the full-time, quality, licensed, and insured care I would want for my child at a cost that makes it even remotely possible.”

“I feel it would be completely ridiculous for the College to pay for any kind of child care. The College could spend its money in other needed areas. YOUR children are not your employer’s responsibility.”

“Child care and adult dependent [care] are family issues that are personal matters. … I am aware of the pressures that are involved, but I do not feel it is an employer’s responsibility to cover the cost of child care or adult dependent care.”

Moreover, when the issue of funding is brought up (finding ways to pay for things does, after all, often vex leftist fantasies), the responses are even more suggestive of the idea that childcare issomething that is simply not in the best interests of the community at the present time. Cutting back on other employee benefits, reducing employee headcount, and raising tuition all garnered more than three-quarters negative replies from survey respondents. The only funding suggestion to win a positive majority was “fundraising to create an endowment for childcare” – a nice idea, if not realistic. Donors are interested in endowing a world-renowned college, not a preschool.

SLAP’s unyielding campaign for universal childcare is at best paternalistic and at worst downright arrogant. It is clear that this push is based more in the self-righteousness of campus activists than a real, critical examination of the needs of community members. Worse, the two professors who publicly support SLAP’s campaign in the Phoenix, Carol Nackenoff and Donna Jo Napoli, are both full professors who make significantly more than many families who are asked to pay full or near-full tuition. Why should families who have saved for decades to send their students to Swarthmore subsidize free childcare for professors’ children?

I have not heard any suggestions from SLAP or the Phoenix for how to pay for childcare benefits, and in all likelihood provision of universal childcare would entail a cut in other employee benefits—which would likely impact many staff workers who do not have the same clout as full professors or idealistic SLAP activists. What Swarthmore employees need is a campaign based around their actual preferences, not what a group of students thinks they ought to have.