Executive Deception: Four Fallacies About Divestment, and One Big Mistake

Dave Cutler for The Chronicle

It pains this old logic professor to read university officials’ arguments against divesting their institutions of investments in fossil fuels, not because their refusal to divest is wrong-headed, although I believe it is, but because their logic is so awful.

A sample of Ivy League universities’ antidivestment statements offers a primer in the fallacies that students are warned against in Logic 101. Here are four:

The ad hominem argument: “I find a troubling inconsistency in the notion that, as an investor, we should boycott [the oil-and-gas industry, while we] are extensively relying on those companies’ products and services,” writes Drew Faust, president of Harvard University.

The assumption is that those who rely on fossil fuels do not have the moral authority to take a stand against them. This is an ad hominem (to the man) attack, which turns the focus from the argument itself to the person or institution making the argument. The attack might be fair if the university had freely chosen fossil fuels from an array of options. It did not. Over generations, fossil fuels have been built into the structure of our lives, our buildings, our cities. Big Oil works hard to perpetuate that dependency and to radically constrict choices, as it lobbies against renewable energies, influences the election of officials who will vote against alternative transportation, hires hacks to confuse the public about the scientific consensus on climate change, making sure that colleges (and all the rest of us) are forced to use fossil fuels. It’s the ultimate triumph of the industry that even as it is externalizing its environmental costs, it is also externalizing its shame. And university officials making this argument haplessly cooperate to disempower their own moral voices and those of their students.

The straw argument: “Brown’s holdings are much too small for divestiture to reduce corporate profits,” writes Christina Paxson, president of Brown University.

Of course Brown’s divestment, or anyone else’s, will not cripple the fossil-fuel industry. The author and divestment leader Bill McKibben publicly affirms that it will not. Divestment isn’t designed to destroy. It is designed to save, and what is imperiled here is the integrity of the university. A university has an overriding responsibility to advance the well-being of its students, which means that it is flat wrong to profit from industries that will devastate their future.

The Ivy League response is a classic straw argument, a cynical or careless misconstruing of the divestment argument. Instead of addressing the real issue of moral integrity, the president substitutes a scarecrow so flimsy that it might be made of straw. Easy enough to knock down the bogus argument, but the serious one remains.

The false dichotomy: “Yale will have its greatest impact in meeting the climate challenges through its core mission: research, scholarship, and education,” claims the Yale Corporation Committee on Investor Responsibility.

Maybe so. But that doesn’t mean that Yale should not study, educate, and at the same time divest from fossil fuels. Divest or educate? This is not a forced choice between alternatives. In fact, divestment may be a university’s greatest opportunity for moral education, for instruction in the foundational moral imperative to let your values guide your decisions.

“Climate change is a grave threat to human welfare,” the committee goes on to say. If so, then Yale should throw everything it’s got at the threat. Research? Yes. Scholarship? Yes. Education? Beyond a doubt. Divestment? Absolutely, and anything else it can pull out of the hat. Addressing climate change is going to require the greatest exercise of the moral and technological imagination the world has ever seen. The future is no place for slackers.

The hasty generalization. “Logic and experience indicate that barring investments in [fossil fuels] would — especially for a large endowment reliant on sophisticated investment techniques, pooled funds, and broad diversification — come at a substantial economic cost.” Harvard again.

It’s sometimes logical to make predictions about the future on the basis of past experience, but only if you can assume that the future will resemble the past. When the future threatens to be staggeringly different from the past, reliance on experience is a hasty, often expensive mistake in reasoning.

Never before has life on the planet been so deeply threatened by a single energy technology — burning fossil fuels. And never before have there been so many alternative ways to generate energy. Never have the costs of alternatives fallen so rapidly.

It’s a new world. Whether because of new technologies, new regulations, a global crisis of conscience, a global economy utterly devastated by climate change, or who knows what, the world will divest itself of the fossil-fuel economy, and probably sooner rather than later. The investors who quickly respond to a changing world have the best chance to prosper; the laggards will be left holding the bag.

And so we come to the big mistake: “The [university] endowment is a resource, not an instrument to impel social or political change.” Harvard.

Oh, yes it is. By profiting from Big Oil, the university endowment casts a very public vote for short-term, short-sighted profit and against the victims of that business plan — future generations, plants and animals, the world’s poor and displaced — and the university’s own students. Shame.