Regarding the May 10 news article “Endowments show few direct Israel or defense holdings”:
Northwestern trustees made token divestments. Apartheid fell five years later. That had far more to do with decades of South Africans’ willingness to risk their lives and liberty than with the protests of well-meaning college students.
After graduation, I made my career in the finance industry. I’ve talked to many people who have concerns about how their investments fit into the state of the world. Politically, I lean progressive, so I have a lot of sympathy for their goals. But I don’t think divestment is all that easy or all that effective.
Divestment is most effective in combination with more difficult work, such as that carried out by a multiethnic coalition of citizens of South Africa. When Archbishop Desmond Tutu came to the United States and asked for boycotts and divestment, it wasn’t because those tactics were the primary form of protest, but because such protests would raise awareness of the decades-long struggle within South Africa.
Even then, divestment campaigns must cause actual economic harm to the businesses targeted, and investors are only likely to participate if they can do so without an expensive or extensive rejiggering of their investment portfolios.
In hindsight, we know that divestment generated a lot of noise but not a lot of economic harm. In 1995, researchers Siew Hong Teoh, Ivo Welch and C. Paul Wazzan wrote a paper on the South African divestment movement. They found that it had no significant effect on either the targeted government or the larger freedom struggle. All divestment advocates succeeded in doing was transferring shares from a group of investors who cared about the cause to those who were indifferent to it.
The investment business has changed enormously since 1986. Financial theories that seemed esoteric, such as the risk-adjusted, fee-adjusted supremacy of index funds, have become accepted wisdom. Large, commingled funds — essentially mutual funds for institutional investors — have reduced the costs of portfolio management. The largest endowments can afford custom portfolio management and can do at least some divestment. But it is nearly impossible for an endowment with less than $1 billion in assets to do it without increasing costs, harming investment returns and placing the burden on the people who rely on its funds. You can’t call Vanguard and tell them that you would like only 499 of the companies in their 500 Index Fund.
A better approach might be investment in activism. Any individual or organization who owns shares in a company has a say in its corporate governance. A group of Catholic nuns has been buying shares in weapons manufacturers so that they can submit shareholder resolutions. They even sued Smith & Wesson, arguing that the company’s assault rifles business put their investment at risk.
In April, Northwestern students set up an encampment and asked, among other things, that university officials divest the endowment of companies that do business with the Israeli government. The university administration agreed to many student demands, including a review of the investment portfolio.
I doubt it matters. The suffering of the people in Gaza and Israel is unimaginable. However, the region is a flash point in a major geopolitical struggle, with plenty of governments and oligarchs willing to fund Hamas and the Israeli government. Trading stocks among different ownership groups won’t replace difficult diplomatic work or support rebuilding efforts on the ground.
Ann C. Logue, Chicago
The writer is the author of “Hedge Funds for Dummies.”
We are part of a cross-university working group made up of graduate and undergraduate students from the University of Michigan, Brown University, Yale University, Cornell University, University of Virginia, Georgia Institute of Technology and many other schools. Our research into our institutions’ endowments and their ties to military weapons manufacturers and other corporations implicated in the Israel-Gaza war suggest there are more promising targets for divestment than The Post acknowledged in its May 10 news article.
Take, for example, investments into companies associated with the University of California system such as Honeywell International and General Electric. Both companies do crucial work on the F-35 used in Israel’s bombing campaigns in Gaza. In February, a Dutch court ruled that the Netherlands should pause exporting F-35 parts because such equipment “might be used in the commission of serious violations of international humanitarian law.”
But the more consequential targets for divestment, omitted from the article, are asset managers in private equity and venture capital who make dangerous investments with little transparency. At Michigan, 201 firms are entrusted with the endowment; at Yale, 181 companies obscure the flow of money between New Haven and Wall Street. As the University of Michigan’s TAHRIR Coalition report revealed, these managers — some of whom are major donors to Michigan — often receive hundreds of millions of dollars in funding from universities and have significant influence over the companies they invest in.
These partnerships between universities and investment firms have helped pioneer an aggressive and morally risky approach to finance. Under the “Yale Model,” endowments accumulate wealth through investments in exploitative private markets for everything from Puerto Rican debt to Coloradan aquifers. And weapons are part of these firms’ portfolios: Farallon Capital, one of Yale’s closest investment partners, has at various points owned over $200 million of stock in Howmet Aerospace, the contractor that manufactures the “backbone” of F-35 jets used by the Israeli military. Universities may not be able to veto investments their portfolio managers make on behalf of other clients. But they can, and should, set clear limits on the use of their own funds.
Shareholder activism won’t convert defense contractors whose products are used to destroy universities, schools and livelihoods into peacemakers. Divestment is one small step toward building a university that prioritizes justice and democracy over profit.
Minali Aggarwal, New Haven, Conn.
Kian Braulik, Providence, R.I.
Nathan Kim, Ann Arbor, Mich.
Taran Samarth, New Haven, Conn.
I would like to propose a more effective strategy to the college students who are calling for their universities to divest from companies that do business with or in Israel.
1. Stop texting, given that the first protocols for sending such messages were Israeli inventions. Making that personal sacrifice will demonstrate that you are serious. Get rid of Microsoft Windows and anything with an Intel chip.
2. Be sure to never have a medical examination on any equipment either manufactured by Israel or even partially developed by Israeli workers.
3. Opt for expensive drugs when you’re sick instead of the lower-cost Israeli generics manufactured by Teva and sold in the United States.
4. While you are demonstrating, do your research on how much of your daily lives involves Israeli inventions and patents. Perhaps you can find Palestinian alternatives.
Peter Dunner, Bethesda
As a student protester in the 1960s against the Vietnam War, I was initially impressed by the energy and commitment shown by campus protests against Israel’s infliction of death and destruction on Palestinians. However, our protests were not offensive to other members of the campus community, and they were part of a much larger national movement in which students were joined by millions of ordinary citizens. While contemporary protests to date reflect great passion and admirable moral concern, no such equivalent national movement against Israel’s military campaign has yet occurred, and the country is much more divided than it was during the Vietnam War. The result has been a narrow focus on promoting divestment from companies supporting the Israeli military, a much less compelling objective and, unfortunately, even if successful, unlikely to have great impact.
Alan Miller, Rockville
Twelve million Uyghurs are facing systematic persecution in China. They have been imprisoned, raped and killed based solely on their religion. And though the United States has banned the import of cotton from the Xinjiang region, where many Uyghurs have been used for forced labor, the public silence surrounding the Chinese government’s actions is deafening; no widespread calls for divestment, no protests, no catchy slogans demanding justice.
Similarly, the Kurds’ struggle for self-determination and recognition as a sovereign nation has led to brutal suppression by the Turkish military. Yet there is no outcry for the arrest of President Recep Tayyip Erdogan, no public movement for a reevaluation of U.S. military sales to Turkey, a NATO member. This lack of response is mirrored in the face of Iran’s oppressive regime, Syria’s devastating civil war with more than 500,000 dead, Sudan’s endless conflicts and Russia’s aggression in Ukraine. Why is there such apathy toward these conflicts, which have claimed at least 1 million lives and displaced many more?
We should ask ourselves what drives the intense focus on Israel to the exclusion of other global conflicts. All innocent lives should be valued equally. The deaths of innocents, whether at the hands of the Israeli military or Hamas terrorists, are equally tragic. Why, then, is a Palestinian life lost in an Israeli attack seemingly valued more than a Kurdish life lost in Turkish aggression?
Keyvan Ghaytanchi, Great Neck, N.Y.
