November 15, 2005

Joe just don't know

I post a lot on divestment, but I just can't help myself, so here's the truth to the latest bit of uninformed speculation to be vomited onto Dartblog.

1. As anyone who is familiar with divestment and the arguments that have been put forward understands that economic consequences are only generated by a massive nationwide divestment movement. While a boycott may be a more effective method of getting a corporation's attention, its just not a feasible strategy with oil companies, especially when their product is not sold in the US.

2. The ACIR recommendation was to divest from companies substantially and directly complicit in the genocide. Subsequent research revealed six companies fit this description. This list is subject to change pending new information. We are not currently invested in any of them, although the Investment Office can confirm we have been invested in at least one of these in the recent past.

3. Malchow says, "Regardless, they strike me as not-very-attractive investments for conservative institutional investors like Dartmouth."If you don't know what you're talking about, please try not to open your mouth, or type, as the case may be. Again, at least one of these companies has been viewed as lucrative in the recent past. Much of the investment in Sudan comes via emerging market index funds, which many institutional investors, from universities to state pension funds, are currently invested in. We hire investors out of the same applicant pool they do, so our investment practices are not significantly different.

4. Malchow then attempts to say that standard protocol was violated during divestment proceedings. See point 3 regarding ignorance. Here's how it works (and did work in this instance): The ACIR makes non-binding recommendations to the Board of Trustees. The Board of Trustees Investment Committee reviews these recommendations, and then brings them to the general Board for a vote. In this case, ACIR made a reccomendation on June 2nd. At the June Trustees meeting, this was referred to the investment committee. By August, ACIR produced a lengthy report summarizing its findings and research, including six different recommendations for possible action to be taken by the Trustees, ranging from the "neither retain nor acquire" position the Trustees voted for, to complete inaction. In the week before the Trustees meeting, their own investment committee reviewed these findings, and Saturday, the Trustees voted to approve.

5. While much is being made about the fact that Dartmouth has not actually withdrawn any funds, this decision is far more advanced than Harvard's or Stanford's. By creating a category responsive to changing conditions, Dartmouth's policy still fits the main goal of not investing in complicit corporations. Instead of choosing 1 or 4 companies to target, Dartmouth can continually decide on predetermined criteria when to re-invest, when to divest, and when to avoid acquisition.

6. Malchow's last leg is that, even if we did divest, we will still acquire these companies through mutual funds or other indirect means. Nope. This is going to be part of the difficulty the Investment Office will have drafting a satisfactory strategy, but this certain mutual funds will be ruled out.

In conclusion, Malchow is wrong, whether by willful ignorance or disingenuous speculation.


  1. Anonymous1:30 PM

    I'm not sure that Malchow's post really says anything. It has sort of a fluffy character to it, as though he's not really agreeing or disagreeing with anything, not taking a position, just sort of scoffing and admiring his words.

    On the actual divestment/non-investment thing, I think that the value of the decision is more symbolic than otherwise, but it still sets a good precedent. If there are only six companies, Dartmouth wasn't invested in them anyway, and not all of them were lucrative, then any divestment is unlikely to have much of an effect on the genocide situation.

    But even if it's just a lot of noise with a minuscule effect, I don't see why anyone would find it objectionable. It helps the situation a tiny bit, doesn't hurt anyone, and doesn't take much effort.

    It looks like Malchow might just feel disdain for the general idea of divestment. If so, he should address that.

  2. The impact of this, if there is any, will come in a snowball effect as other colleges divest.
    The day after Dartmouth's decision went public, UC's Sudan Divestment Taskforce successfully petitioned the regents to begin preparing a report on divestment to be voted on in January. They have $150 million of their $65 billion endowment invested in Sudan, so this could actually effect the financial community significantly.