Wednesday, July 3, 2013

The False God of Profit

Our unbridled faith in the power of profit to build a better world reared its head for me this weekend. At the American Library Association annual conference in Chicago, with some 14,000 librarians flittering between programs and meetings there was a resolution offered through the governance structure to move ALA to divest its endowment holdings from fossil fuels. This resolution was offered at the midwinter meeting of the association and referred to an Endowment Trustees Committee and then to a Budget Analysis and Review Committee (BARC) for review.

I don't want to believe the individuals who pulled this report together were nefariously trying to make the numbers support their position, but the way the report was written, and especially the executive summary, any naive reader would be nudged to reject the resolution. According to the executive summary the resolution if enacted would "severely limit theTrustees" and that it would  have a "negative financial impact". The Endowment Trustees report referred in a discrediting voice to a recent study by Aperio Group, yet admitted the report suggested the risk would be 'relatively minor". If you look at the Aperio Report that 'relatively minor' risk was in fact - 0.0006%. The Endowment Trustees, without sharing any information about how they pulled the number out of thin air, managed to claim a projected $1.2 million dollar loss (over three years) to the association if they had divested from fossil fuels three years earlier. Yet as any investor knows - "past performance is no guarantee of future performance". But for an association that is hurting financially, any threat of a reduced return on investment is a red flag.

The Trustees then proceeded to counter the 'biased' Aperio Group report with their saintly Merrill Lynch (you know the ones with a record of bad practices) report that investing in renewables was a bad deal. Of course they don't give enough details to compare anything and when they offer any they are simply not from the comparable time periods. So while I find the financial arguments lame at best, it was the complete lack of any other measure of economic, social or environmental cost in their equations (all externalities in neo-liberal economics jargon) that drew my ire.

So the librarian councillors, few if any would have either had the time, interest, or knowledge to challenge these findings, allowed them to go chiefly unchallenged. To their credit, many librarians did rise to support the resolution on the grounds of a number of the unspoken 'externalities' and the expected increased costs of climate disruption, natural disasters, degradation of communities. But the narrow, distorted, short-term financial argument held sway. It almost always does in a society so mesmerized by the neo-liberal religion/myth that while bringing great wealth to some, has accelerated both the ecological unraveling and the growing human inequality towards an abyss our grandchildren will face all too soon.
I don't believe anyone in that room wants to do that. But the myth of the failed economic system that suggests that chasing profit at all costs will somehow bring us to a better world holds most of our society in its grasp - the Thatcher-ian mantra that "There is no alternative". I left with a sense that I had just watched a transfer of 30 pieces of silver in the modern era.

Before I headed for the train station I managed to catch the talk by author, poet, activist Alice Walker. Walker writes and speaks from a depth and honesty that is compelling. She also read selections from her two newest books, The World Will Follow Joy (poetry) and Cushion in the Road (nonfiction). She spoke of the challenges/hurts present in the world and her anguish at the tug between retiring to a life of gardening, cooking, writing when she reached 60 and the struggle with the injustice, pain, and destruction unleashed on mother nature and her inhabitants. Among some notes I recorded from her talk were the following:
“Libraries teach the expansion of being”
Libraries are essential for the teaching of fairness.
Unless we have a new system of governing we will never have fairness.
Libraries expand compassion
She accused the human family of executing the ‘brutal murder of our common mother’ and called for what she named as “Democratic Womanism” in response to her assertion that “there is no system now in force that can prevent disaster”. She concluded with reading a short piece on Bradley Manning ending with the sentiment about being ‘sad that someone is punished for doing what he was taught was right”.
I couldn’t help but wonder if ALA Council had heard her speak before they voted on the three resolutions mentioned earlier, if each would have passed. There is some bright light that shines from souls of wisdom and integrity that when shined on us, makes us better. I’m better for having listened to Alice Walker.
The divestment from fossil fuels scene is being repeated in cities and across campuses where divestment actions from fossil fuels are mounting. Can these myths be shattered?  As Pax World Funds President and CEO, Joe Keefe noted recently,
The flimsy rebuttal we sometimes hear, that an endowment's fiduciary duty means that its only obligation is to maximize return, regardless of the consequences or externalities, is utter nonsense. There is now a substantial body of research underscoring that companies with better environmental performance also tend to enjoy better financial performance. It is ignoring these issues, rather than integrating them, which most likely constitutes a breach of fiduciary duty [emphasis added].

According to First Affirmative Financial Network's Fossil Fuels Divestment, over half of sustainable, responsible, impact (SRI) investment industry professionals say that retail investors (65 percent) and institutional investors are currently expressing interest in fossil fuel-free portfolios in the face of growing signs of climate change, Survey. (PR Newswire [New York] 16 May 2013.)

 The growing commitment of institutional investors, (more than 1,000 with assets over $30 trillion-estimated to represent 20 percent of the total value of global capital markets) to the global Principles of Responsible Investment (PRI).

A growing body of research that finds companies that aim to be socially and environmentally responsible are safer and of equal or better performance (e.g. S. Prakash Sethi (2005). Investing in Socially Responsible Companies is a Must for Public Pension Funds – Because There is No Better Alternative. Journal of Business Ethics 56 (2): 99-129.

The myths can be challenged. They must be challenged. And in fact a growing stream of economists and others are offering alternatives that could lead to more shared prosperity while restoring and preserving our biosphere to a balance that can offer a sustainable future for the entire human family on this single finite planet we share. There is no single way to shake the edifice of neo-liberal economics, but the divestment from fossil fuels is certainly a useful one.

Perhaps Swedish medical doctor and academic Hans Rosling explains the what needs to happen here in this three minute video.