Not everyone at the University of Chicago is an economic genius.
At least that's my conclusion after listening to four professors on a panel about divestment related to climate change tonight. One of the panelists was an economist, two were physical scientists, and one was a political scientist. They seemed united in their determination to tell the assembled crowd of polite (mostly) students that divestment of fossil fuel stocks didn't make sense.
What was striking to me was that, despite the U of C's reputation as a center of economic research and thinking and teaching, all four of the panelists appeared singularly uninterested in the central economic problem of the climate crisis: how will the supply and demand of goods and services change as a result of society's understanding of the climate crisis? and how will the market react to signals about such changes?
|Crescat scientia; vita excolatur.|
Let knowledge grow from more to more;
and so be human life enriched
Within minutes they were agreeing that, while it may not be possible for atmospheric warming to be held below 2 degrees, known world fossil fuel reserves couldn't all be commercialized (burned) without resulting in temperature changes of 10 times that -- a result that would be catastrophic. So . . . what, the market's already "taken into account" all of this? The market already reflects the equilibrium point where it's all going to end up? Where, pray tell, might that be?
No, far from being the case that the investment arm of the University of Chicago has nothing to bring to the table in all this, I submit that the University is in a position to assert an investment thesis that maximizes its advantage in light of projected future developments, and that by articulating its thesis, it can bring the market better into line with reality -- and, not incidentally, enjoy a near-term windfall as market values are adjusted.
(Contrary to the view hazarded by the economist on the panel, it is not the case that the U of C's action is somehow "less" valuable if it is the 3rd or 13th or 30th university to do so. Diminishing returns is not the issue here. The issue is whose investment thesis is articulated in a way that moves the market.)
The specifics of that investment thesis are fairly self-evident -- they go beyond short positions in fossil fuels and long positions renewables to include favoring public transit in favor of personal transportation, passive buildings, and low-energy food production.
My advice to the student activists at the University of Chicago: persist. Someday your alma mater will thank you.
(See The REALLY Big Short: The Jig is Up with Oil Companies)
(See How Do You Say "Suicide Narcissus" in Chinese?)
I have begun writing about how the fate of the Earth is intertwined with the ability of BOTH China AND the U.S. to reverse their addiction to carbon. I think this linkage is so critical that it deserves its own word: "chinaEARTHusa".
(See China + USA = Planetocide)
Other related links
"Yale Fund Takes Aim at Climate Change" by Geraldine Fabrikant in The New York Times) Another sign to me that the jig is up . . . .
November 1, 2014 - "The Missing Campus Climate Debate" by Evan J. Mandery in The New York Times: "[W]hat better forum than the university could there be for distinguishing among competing moral claims? Knowing students and professors, these debates would be prolonged, but it’s easy enough to structure the questions that would be asked and how they’d be answered regarding fossil fuels . . . . "