I’m stealing ideas from an argument that has gone on between me and others in the last couple of days. The ideas come from readers and colleagues; only the data, rather scanty, is from me. .
Here’s what one reader wrote about the pro-Palestinian protestors who demand divestment from companies supplying weapons to Israel:
This brought up the question aboout why are they not protesting about Ukraine? That’s easy. The US is supporting and sending arms to Ukraine, so no. Which brought up the realization that these are the very same arms manufacturers producing arms for Israel that the university’s investment portfolio supports in some way. Do the SJP want the US to also stop aid to Ukraine? Because their goal is to stop arms production so that Israel cannot bomb Gaza. I realize that’s a rhetorical question, but brings up the thorny issue of calling for and actually boycotting industries that have multiple roles in world politics.
That raised the question that I spent about half an hour investigating. And, it turns out, the very same companies who make most of the weapons we send to Ukraine also make weapons we send to Israel. My cursory survey didn’t find one company that was an exception.
Here’s a list of seven companies I found that make weapons we send to Ukraine:
The long list of private US companies involved in supplying Israel with arms includes Lockheed Martin, Boeing; Northrop Grumman, General Dynamics, Ametek, UTC Aerospace, and Raytheon, according to CAAT.
It’s easier to find lists of companies that make arms that we send to Israel than to Ukraine, because nobody cares about Ukraine much any more, but I looked up each of those seven companies on the Internet (just Google the name of the company and add “Israel” or “arms for Israel”. Every one of them makes arms for both countries. That, of course, is not surprising given the concentration of effort in the defense industry, but it does raise the question: if we hurt Israel by divesting from US companies that supply it with weapons, do we not hurt Ukraine as well?
And that raises another question that’s above my pay grade: “How much does divestment from Israel involving U.S. weapons manufacturers really hurt Israel?” As I said, that’s a complex question, but it’s mostly theoretical because this divestment is not going to happen.
But one of my colleagues wrote me about the impracticality of divestment (all quotes are with permission):
I am sure that most of the arms manufacturers’ products are also used to fight other terrorists throughout the Middle East, North Africa, and Asia, as well as to defend US and European interests. There may be exceptions, but most big arms manufacturers sell to the US military as well. And their job is to fight terrorists and tyrants.
This is one reason that, if it worked (see below), divestment in arms manufacturers would be a bad idea.
However, it is my understanding that divestment would have no effect: if every university in the US sold all their shares to all arms manufacturers, someone else would buy them. And the value of the companies and their ability to make arms would be completely unaffected. (We have economists on this thread who will correct me if I’m wrong.)
Now let’s consider calls for divestment from Israel and Zionism. How would the decision be made and by whom? (Should Emam Abdelhadi be making decisions on investments? That seems like a bad idea.) What’s the litmus test? Should we stop investing in companies that are owned by Jews? Or just Zionists? And how do you tell? Is that the route we want to go down? That seems an awful lot like 1930s Germany to me.
And divestment violates the Kalven Principles.
So, IMO, divestment from arms manufacturers and Israel is anti-Semitic virtue signalling that violates Kalven and is either ineffective or would impact the West’s ability to wage war against terrorists and tyrants world wide.
The lessons, if all this is true: divestment from weapons companies is not an effective way to damage Israel, if that’s your goal; and it has bad effects on both the U.S. and Ukrainian military. Perhaps it’s better to just divest from Ben & Jerry’s.
I am not sure that the goal of the divestment push is really about divestment. I think it’s more about getting the universities to appear to be making a big concession, as well as getting them in the habit of being blackmailed. Let’s face it, if they were really concerned about arm manufacturers, wouldn’t it make more sense to protest them directly or the transportation companies they use? As we’ve seen, though, when they are at universities, they are on essentially friendly ground.
Good point.
I rather doubt that those calling for divestment have looked for empirical evidence that (i) divestment could target Israel alone without harming others, or that divestment (ii) could be effective. They may have the model of a “boycott” in mind here, where a boycott might under some circumstances be both targeted and effective. Or, as DrBrydon says above, they might simply be trying to extract a concession from the university, even if such a concession would be largely for its publicity value.
Jerry is surely right. If universities sold shares in arms companies because of intimidation by student activists, the sales would cause those share prices to drop, even if only slightly (or rise more slowly than the booming business would otherwise predict.) This would create a buying opportunity for investors. The market would know that the shares weren’t being dumped out of worry about the financial health of the companies or the economy generally, the usual reasons for a large sell-off of stocks. There would be no reason for a buyer not to snap those shares up at a bargain price as soon as they were offered for sale in the market, causing the prices to return to their pre-divestment levels.
When the market truly has the jitters, a stock’s price often has to fall a long way before the bargain seekers will start buying it on the hope of profiting from an upturn. But in this virtue-signaling exercise, there would be no actual downward pressure on the stock price other than the temporary effect of the large sale itself.
Now, if President Biden were to order those American companies to stop selling arms to Israel, that could cause market jitters, depending on how much of their business depends on the Israeli market. But on the other hand, terrorists have to be shot and bombed somewhere, by someone, so an imposed “peace” is not necessarily a cause for alarm in the arms business.
I have divested from Ben & Jerry’s by not eating any. We have several excellent ice-cream companies here in Ontario, including one in the town my wife grew up in.
Yes I had this discussion with my wife concerning Israel/Ukraine a while ago. The other points to consider are:
1. Best I can figure out, which comes from economist/historian Adam Tooze (definitely not an Israel supporter) is the actual amounts invested in such companies is pretty small.
2. The divestment crowd fails to understand how investing by universities works these days. Investments are bundled and you can’t just pick and choose a company to chuck here and there, at least not easily,
So it is all performance. As Mark Rudd said about the 68 protests “we knew these demand were bullsh*t.”
If the protesters actually believe that divestment would damage Israel or the defense companies supplying arms, then our educational system is truly in a sad state. As nicely pointed out in other comments, as well as in the post, there would be no effect.
Additionally, being a direct shareholder confers voting rights to the individual holding the stock. Owning a stock provides an opportunity commensurate with the size of the holding to be able to influence company policy. Divesting (selling) the stock gives someone else that voting right. Therefore it could be a better tactic to become activist investors and to buy MORE stock to have more say in what goes on in the firms.
University divestment from US arms companies would not hurt Israel, neither would it hurt Ukraine, neither the arms companies who get supported by state actors anyway (at most the income of their top management would shrink a little if the movement to divest became broader).
But I have grave doubts that the US’s military interventions in MENA were done to fight “tyrants” or “terrorists”. Why is it always the tyrants from the Baath party with traditional geopolitical ties to Russia who have to be fought and not the current brutal military dictator of Egypt or the tyrants and financiers of Islamism the world over in the gulf states? The US has no problem whatsoever with tyrants as long as they are US allies. Same with terrorists. The US has sponsored terrorists from the Afghan mujahiddeen to Sunni takfiri Islamists in Syria plus the PKK in Syria and Shia terror militias in Iraq or the Iranian people’s mojahedin. The US supported terrorists including the young Osama bin Laden whenever they could be used to fight for US geopolitical aims. I also very much doubt that any good at all has come from US military interventions in MENA for 30 years.
The USA stopped sending arms to Ukraine for nearly half a year, because of the attitude of Congress Republicans. Before and after this pause, the USA sends too little aid, and with strings attached that make it impossible for Ukraine to win. But I don’t see any US university students giving a damn. They seem to regard Ukraine as they regard Israel, and are OK with the destruction of Ukraine and the wholesale slaughter of Ukrainians. I suppose that, because Ukrainians are white, they qualify as oppressors and are not entitled to living.
My conspiracy theory, which is mine. Iran sponsor Hamas, Iran are allies with Russia. Russians are being killed by weapons that come from America.
Hamas launch an attack which triggers an Israeli response. Israel attack an Iranian embassy which triggers a response by Iran. This response is doomed to fail but uses up a lot of air defense assets which have to be replaced from countries which are supplied by the US. If you want to reduce supply of weapons to Ukraine and try and sow dissent between nations why not ignite the middle east?
Iran also sponsor the Houthi rebels who are also causing a lot of ordinance to be used up.
Anyway that’s my conspiracy theory.
The protesters know that the “divestment” doesn’t make sense, they just used it as an excuse because they needed to silence and harass the Jews, who had become, after Oct 7, victim Nro. 1. They’re going to invent more excuses in the future.