Phi Beta Cons

Re: Divestment

There are few worthier targets for divestment than Iran. Still, I wonder about the propriety of divestment in general. Its practical effects are few, and can in fact be counterproductive.
A share of stock is not just some wispy thing that disappears into the ether when you decide to sell it. Rather, if you decide to sell a share of stock without any reference to an economic context, you are probably doing someone else — the company, another investor, etc. — a big favor. If the practical consequence of a “moral” divestment is 1) an economic gain to some less moral party and 2) an economic loss to a fund meant to secure retirees’ livelihoods — well, someone who doesn’t march to the drum of Kant might begin to find the situation morally vague.
(Indeed, one consequence of the feel-good campaign that led to the divestment of many university endowments and pension funds from the Chinese oil companies that do business in Sudan was a reconsolidation of those shares into the hands of Chinese investors.)
For my part, as far as a basic moral question — sure, fine, whatever: Divest away. I certainly wouldn’t choose to invest in these things by my own initiative. (The most daring I get is ConAgra.) But as a moral statement, divestment is little more than a washing of hands, a play from the Pontius Pilate book of ambivalent morals. 
Finally, I take the word of a fund manager above that of an assemblyman when determining financial risk is the question. That particular argument for divestment strikes me as especially dubious.

Travis Kavulla is director of Energy and Environmental Policy at the R Street Institute. He is a former president of the National Association of Regulatory Utility Commissioners who held elected office as a Montana public service commissioner for eight years. Before that, he was an associate editor for National Review.

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