I initially regarded the Senior Class Gift (SCG) with suspicion. I’m not sure my four years have been worth the more than $200,000 this will end up costing my family and me, so why voluntarily spend another $20.12? We will never actually know how much positive peer pressure it would have taken for me to give, because I did, inspired by the recent theatrics of the Students for a Socially Responsible Investment Committee (SSRIC).
With posters and a petition, SSRIC is trying to get the Class of 2012 to boycott the annual SCG and withhold all giving until the University changes its investment policy to one that is “socially responsible.” Some have pointed out that the SCG doesn’t actually fund the endowment and in fact yields immediately expendable proceeds. SSRIC counters that the SCG is meant to inspire a lifetime of giving to the endowment—which is true.
The problem is not that SSRIC has not confused their target with the SCG, the problem is that “socially responsible” investment is a horrible target, an issue that could obliterate the Kalven Report—our institution’s second most salutary innovation, behind only the Core—for no real gain.
I approach this issue with two assumptions, which some might find altogether too radical. First, investment is more strategic and thoughtful than rolling dice. Second, those people who invest for the University of Chicago are not wicked.
If one combines these two assumptions, one must assume that the reason the U of C invests in HEI Hospitality, a company that avoids hiring unionized labor and pays lower wages than some advocates think the minimum should be, is not that the group who manages the investments picked HEI out of a hat or gets some satisfaction from the low wages of others. Rather, they invest in HEI because they think HEI will yield better returns than other investments. They reason that if the University were to invest in, say, an organic farm, the return would be worse. (And they tend to be pretty good, outdoing Harvard and Yale by five percentage points in the recession year of 2009).
The question, then, is what would we gain as a university in exchange for the potential cost to the endowment with a new policy. The most obvious possibility is that the company or nation we divest from will see that their policy is costing it investors and will make changes accordingly. Assuming the questionable policy was unjust, this would have social benefit.
That, however, is a major assumption. What is the level of health insurance that an employer must provide without violating the laws of cosmic justice? How much pollution is worth the reduction in heating expenses for families in poverty?
These are tough controversies, but fortunately society has a way of dealing with them. Our system of popular government makes and enforces laws concerning work environment and pollution. The two companies that SSRIC mentions, HEI and Arch Coal, have, as SSRIC actually notes in its petition, lost court cases and been forced to alter their practices, or have been directly fined by the federal government. Our deliberative systems have declared certain policies unjust, and have allotted and enforced what they feel are sufficient penalties. Perhaps those penalties should be more severe. If so, SSRIC has every right to lobby for that, but to hijack the University’s endowment to punish the business practices of others amounts to a mobocracy of the bleeding hearts.
A university, however, is designed to educate its attendees, not to decide which business practices are just and unjust and then mete out carrots and sticks. And how exactly will the U of C decide what is just and unjust? There are people on campus who oppose any minimum wage and those who support one several times larger than the current one. Someone’s opinion is always going to be marginalized.
A committee of administrators, faculty, and students formed to address University investments would merely draw the most gung-ho activists, who have the time and passion to regulate them. Combining power and passion often causes restraint to dissipate. One can imagine a situation in which the empowered body chooses to divest from Israel as, for example, Evergreen State College has done. SSRIC would like to conceive of a Socially Responsible Investment Committee as only targeting issues with a clear moral consensus. But the U of C should have taught them that more things are contentious than they realize.
Removing the Kalven Report and investing in companies and nations that a group of “socially conscious” people have blessed would cause campus political fights to be fought with much higher stakes, thereby increasing their ferociousness—a particularly unpleasant result.
But this line of argument is, in a way, secondary. As my two assumptions instruct, the University of Chicago invests in what it invests in because it expects from them the best possible return. I am a fundamentals major, not a finance guy, but it seems likely that if the University chooses to divest from a worthwhile investment, another investor will merely replace that investment—little penalty will be felt by the company. In the end, all we will have done is created a campus brouhaha, lost resources, and made a small group of activist students feel purified of the taint of benefitting from business practices they detest. That is hardly a trade I’m willing to make.
Jeremy Rozansky is a fourth-year in the College majoring in fundamentals and political science.
Your article raised some unique and persuasive points against the formation of a SRIC. However, if you are going to suggest flaws in the logic of the Senior Gift boycott, you need to recognize the inherent flaws of the document you call “our institution’s second most salutary innovation”.
“A university”, the report says, “if it is to be true to its faith in intellectual inquiry, must embrace, be hospitable to, and encourage the widest diversity of views within its own community…It cannot insist that all of its members favor a given view of a social policy…[I]t does so at the price of censuring any minority who do not agree with the view adopted.”
These are indeed laudable goals for any institution that wants to foster a healthy environment for intellectual growth, and I will advocate that the University strives for them wherever possible. However, to assume that our investments do not take sides on political issues is short sighted and callow. Our monetary support of companies SSRIC find objectionable does not have less impact simply because there was no discussion of the matter within the larger campus community. The University’s silence and continued investment in these companies is, by definition, a political stance on a divisive issue. Regardless of the ideals the Kalven Report lays out, our investments inescapably make statements about our values and the kind of institution we want to be.
Furthermore, it is naive to assume that conversations about the politics and optics of our investment strategies simply do not occur, subsumed completely by a myopic quest for profit. You say that our University “invest[s] in HEI because they think HEI will yield better returns than other investments” and this surely a major component. However, it only appears that the University is focused on their margins because the political discussions have always occurred behind closed doors. The Board of Trustees knows that the University of Chicago has a reputation to protect and there are most certainly more profitable investments out there that the University has passed over in the interest of ethics and the public face of the institution. Companies the University of Chicago invests in meet a set of political and ethical standards shaped by the Board of Trustees. What should be troubling to all of us, who support the University with our tuition dollars and our academic achievements, is that we are not having a conversation about what those standards are.
I applaud last quarter’s forum on the Kalven Report. I believe we would all benefit from a more honest and ongoing discussion over the gap between our goals as a university and the real repercussions of our investments. I hope that Student Government and the Administration can continue to foster the many, many conversations that still need to happen. But if we are going make any progress, the unrealistic expectations of the Kalven Report need to be addressed and the values that do govern our investments should be examined.
You claim that socially responsible investment “could obliterate the Kalven Report.” Clearly you haven’t been paying attention; the University has used the Kalven Report fraudulently for many years now. For example, one of the statements in the Report is “the University is not a lobby.” And yet when the University created the post of Vice President for Civic Engagement in 2008, one of the explicit duties of the first appointee was to lobby for holding the Olympics in Chicago in 2016. Whatever your view of the wisdom of that position, taking a political stand on this contentious issue was prima facie in violation of the Kalven Report, but the Kalven Report wasn’t even considered. The University uses the Kalven Report as a gimmick to invoke – and hide behind – or to ignore, at its convenience.
More than anything, I think it is absurd for students to refrain from giving to SCG because the University has some “unseemly” investments. Gifts to SCG go to the College Fund, which, among other things, supports Financial Aid and Study Abroad. Witholding your donation won’t coerce the University in the slightest bit. In the end, this movement isn’t hurting the University, it’s hurting the students who attend it by witholding funds that go directly towards financing their education.
Interesting point…but a short-sighted view. Not donating to the SCG is a way for the university students to show that donations are conditional on what will be done with them. I understand that you think UChicago divesting would only be appeasing a portion of the student body, but the support they are building is in a democratic fashion with many opinions, signatures, and the support of many students.
Investing is just as much of a statement as divesting, so perhaps if you feel strongly that money is the most important thing for the university over the opinions of its students or its contribution to a better world, then maybe the university should rid itself of RSO’s, the community service center, the sustainability office, and anything else that extends beyond ‘education’.
Theory has to stop somewhere.
This is a reply to two things that Calvin said:
First, “however, to assume that our investments do not take sides on political issues is short sighted and callow.”
On the contrary, what’s short-sighted and callow is assuming that every action one takes (including investment) is necessarily a political statement–experience in the real world suggests otherwise. Actions and political viewpoints are not always causally related.
Second, “The University’s silence and continued investment in these companies is, by definition, a political stance on a divisive issue.”
It is only a political stance “by definition” if you define all actions to be political, which–as I noted above–is a short-sighted and callow definition.
Robert Michaelson – damn good point.