In Real Clear Markets today, economist Ben Zycher of the American Enterprise Institute calls out the hypocrisy of the divestment movement.
The movement urges colleges, foundations, local governments, and other large investors to sell their stock in 200 coal, oil, and gas companies with the highest reported “carbon” reserves. Supposedly, this will depress the capitalization and asset value of the fossil-energy sector, hastening its demise.
Zycher skewers the hypocrisy of those pledging to divest their holdings but only over a 3-5 year period so they can sell energy stocks at the highest price, and of pledge takers whose families made their fortunes in oil or whose incomes derive from companies with fossil-fuel investments.
More importantly, Zycher exposes the misanthropic logic of the movement’s preening moralism.
Fossil energy companies exist only because other industries — manufacturing, agriculture, telecommunications, etc. — require energy to create products and services. Governments, too, are large energy consumers. So if investors have a moral imperative to bankrupt carbon-energy production, they should dump all their stocks and bonds.
Nor is that all. Companies that consume energy exist only because ordinary people want their products and services and are wealthy enough to buy them. So if bankrupting Big Carbon is a moral imperative, governments should adopt policies to make people poorer. Choking off access to affordable energy would, of course, do just that.
What’s more, since human capital formation leads to wealth creation and, thus, to carbon-fueled products and services, divestment logic demands that investors cancel their “investments in people, in particular in a third world desperate to emerge from grinding poverty.”
If I might embellish a bit, the irony cuts pretty close to home. Higher education is all about human capital formation, yet many college presidents, teachers, and students are in the divestment movement vanguard. Logically, they should demand that donors stop supporting college and university endowment funds.
Zycher’s reductio ad absurdum is worth reproducing in full: [click to continue…]