The University of Cambridge’s wealthiest constituent college, Trinity College Cambridge, has decided to divest from all arms companies, Middle East Eye can reveal.
MEE has learnt from three well-informed sources close to Trinity’s student union that the college council, responsible for major financial and other decisions, voted to remove Trinity’s investments from arms companies in early March.
According to the sources, the college decided not to announce that it would divest from arms companies after an activist defaced a 1914 portrait of Lord Arthur Balfour - who authored the infamous Balfour Declaration - inside the college on 8 March.
one thing I’ve been learning from these protests is that US colleges are apparently investment bankers? Why would a university be sending money to any arms manufacturer? The ridiculous tuition costs should be more than enough income.
Note that this article has nothing to do with the USA.
whoops
Leaving aside the fact that this is about the UK, I’ll take a crack at this. Many large colleges in the US have what’s called an endowment, which is essentially a massive pot of money that they can’t spend, but can invest. I think they typically can spend the interest that the endowment accrues, so they invest it so it grows. Many of the Ivy League schools have endowments worth multiple billions of dollars. It’s a very strange system.
I could be wrong on some of the finer points, so folks can feel free to correct me.
The endowment management side does actually run like an investment bank, private equity, and asset management firm and is staffed by people who worked on those.
Activist investing is kind of pointless in that an efficient market reallocates funds around it. Like, if an investor chooses not to invest in X for some sort of reason other than the expected value of X, it reduces the value of X, sure – but also creates an incentive for others to invest in X. The actions of other investors are not independent of the actions of the activist investor.
I once heard it described as trying to “bail a hole in a lake.” New water goes right back into the spot where it was taken from.
The point is ideological. The main objective is but to cause financial hurt, but to declare moral bankruptcy on the Israeli institutions.
It’s also financial
Just like Apartheid South Africa got crushed under boycotts so must israel be completely economically isolated until their Apartheid state seizes to exist.
Academic boycotts are important since israel, like the Nazis, relies heavily on technology to make up for its shortcomings in manpower.
The person I responded to showed that the financial goal is hard to reach. Like I said the point isn’t too cause financial harm per se, just to show and expose the moral deficit of the state.
The voor is that such a boycott will result, or the Israeli state changing is course (however unlikely).
The bottom line is it’s not too cause any harm at all, be it financial or physical, it’s about stopping the war and the way Palestinians are treated by the Israeli state.
Money is very comparable to water. That’s why this is a real thing and not fiction
This also isnt minecraft. If you take water from a real lake then its actually gonna have less water after.
The value that these universities provided to israels war machine also cant just be replaced by money.
So… the stock market is weird and isn’t the economy.
So, when people divest from a company the company doesn’t actually suffer at all (unless their employees are regularly given options which, in the greedy modern world, is a rarity). Instead, what happens, is the executives of the company suffer - C level employees are nearly always given either shares, options or stock performance based incentives. When we divest we aren’t hurting the ability for these companies to produce arms - we’re just annoying the executives (and we actually are since other investors don’t just rush to fill the void - more on that later). Pissing off these executives has almost no effect until it does - each divestor isn’t slightly damaging the executives… instead, once a large enough mass of people have divested they get hit hard - it’ll come in waves as the market corrects.
On the topic of investors rushing to fill the void - if you individually decide to divest… nobody cares, the market is a large pool of wealth. However, the only value of stocks comes from other people’s willingness to buy it (the stock market is, practically, just a large pyramid-scheme like thing)… if it becomes socially unacceptable to hold these stocks then the people holding them want to get rid of them - even if just a portion of the market refuses to interact with these securities then the pool of available buyers will shrink - number goes down is self fulfilling so more investors will be cautious about holding onto the stock so buy orders freeze up more… it can be a vicious cycle.
So… divestment doesn’t hurt companies, but enough of it might hurt C-level folks that they’ll decide that arms deals with Isreal aren’t worth losing their fifth house in the Hamptons over.
The stock value is a relevant metric to assess the credit worthiness of a company. Large profitable companies run a lot of their business on loans. In fact in order to achieve high profit margins it is encouraged as the return on investment is a margin of equity.
If you invest 100 dollar and you do business giving you back 110 dollar, you have a 10% margin.
If you invest 200 dollar, of which 100 are your equity and 100 are borrowed and you get back 220 dollars and pay 5% interest on the borrowed money, you have 15 dollars on your 100 dollar equity. Now your margin is 15%.
So many companies run a significant portion of their business on borrowed money. You hurt their ability to borrow, you hurt their business directly. And this can create a downward spiral. Loans get more expensive to margin gets smaller so more people divest so loans get more expensive…
Big “If I don’t steal your house, someone else will” energy
This completely ignores how markets work. First of all real markets are not efficient. Then there is the psychological aspect. We see over-/undervaluation all the time. Then there is the fact that markets reflect back into policy. Many people divesting form arms companies complicit in the genocide creates a political incentive to limit those businesses abilities and hold them accountable. Then there is the effect that as more institutions publicly divest, it increases the motivation for others do divest. Now this can also create a panic where everyone tries to sell of the stocks asap to not lose too much of the value. If the stocks tank the credit rating goes down, business is directly impacted and goes down, so the “purely rational” expected value goes down, creating an incentive to divest…
Oh and also companies with lower stock values are at a higher risk of hostile takeovers, employees start looking for different employment opportunities…
