PCUSA Divestment: anti-semitism, bad economics and politics, and a breach of fiduciary duty

H/T to Jon at Divest this, for pointing out this essay.

Stephen Bainbridge is the William D. Warren Distinguished Professor of Law at the UCLA School of Law in Los Angeles, where he currently teaches Business Associations, Advanced Corporation Law and a seminar on corporate governance. In past years, he has also taught Corporate Finance, Securities Regulation, Mergers and Acquisitions, and Unincorporated Business Associations. Professor Bainbridge previously taught at the University of Illinois Law School (1988-1996). He has also taught at Harvard Law School as the Joseph Flom Visiting Professor of Law and Business (2000-2001), La Trobe University in Melbourne (2005 and 2007) and at Aoyama Gakuin University in Tokyo (1999).

From his essay: Here we go again: PCUSA considering Israel divestment: Anti-semitic, bad economics and politics, and a breach of fiduciary duty

Once again, the Presbyterian Church (USA) is considering divesting from certain companies that do business with the Israeli government. As I explained the last time the church went down this road, it's a bad, anti-semitic idea:
Let's start with a basic question: Will the PC(USA)'s decision "work"? In other words, do divestment campaigns tend to achieve their proponent's goals? The clear answer from the empirical literature is "no."

A London Business School Institute of Finance and Accounting working paper called "The Effect Of Socially Activist Investment Policies On The Financial Markets: Evidence From The South African Boycott concluded:

"We find that the announcement of legislative/shareholder pressure of voluntary divestment from South Africa had little discernible effect either on the valuation of banks and corporations with South African operations or on the South African financial markets. There is weak evidence that institutional shareholdings increased when corporations divested. In sum, despite the public significance of the boycott and the multitude of divesting companies, financial markets seem to have perceived the boycott to be merely a 'sideshow...'"

In sum, divestment may make activists feel all warm and fuzzy, but the evidence is that
(1) it has no significant effect on the target of the divestment campaign but
(2) likely does harm the activists' portfolios...

As for whether the divestment proposal is anti-semitic, I use a standard proposed by Jay Lefkowitz:

A more nuanced standard, and one that properly recognizes that legitimate criticism of Israel is perfectly appropriate, was articulated last year by Natan Sharansky. A member of the Israeli cabinet who for years had been a prisoner of conscience in the Soviet gulag, Mr. Sharansky defined one current expression of anti- Semitism by three features: the application of double standards to Israel, the demonization of Israel and the delegitimization of Israel.
Applying it back in 2004 to the last time the PC(USA) got into the divestment game, Lefkowitz made a persuasive case that the Presbyterian divestment plan was anti-Semitic:

The recent action by the Presbyterian Church sadly satisfies Mr. Sharansky's test. The church has singled out Israel, alone among all the nations of the world, for divestment. It has demonized Israel's treatment of the Palestinians, and it has delegitimized Israel's right to self- defense...


Nothing's changed in the meanwhile to change that conclusion. If the PC(USA) in its finite wisdom (that's not a typo--as a collective, the PC(USA)'s wisdom is not just finite, it is minuscule) decides to go forward, it will once again be committing anti-semitism, bad economics and politics, and a breach of fiduciary duty simultaneously. That's quite a hat trick.

Read this important essay in its entirety here

PCUSA Unbecoming

"What this General Assembly decides will shape the character of the PC(USA) for many years to come. It will shape the future of interfaith relations; it will shape the reputations of Presbyterians. It will commit Presbyterians one way or another – to BDS, to increased toleration of antisemitism, to bias and double standards, to radicalization – or to fairness, honesty, humility, and wisdom."

Will Spotts


From Presbyterian General Assembly The PC(USA) on Israel and Palestine – 2012, written by Will Spotts

In Between Days
149 years ago tonight, in a Pennsylvania town there was relative calm between the second and third days of the Battle of Gettysburg. Nothing had yet been decided. Few at the time on either side grasped the degree to which this was a watershed moment. It would have taken very little – a different decision here or there – for our entire national history to have been re-written.

Tonight, also in Pennsylvania, there is relative calm between the second and third days of the deliberations of the Middle East and Peacemaking Issues Committee (Committee 15) of the PC(USA)’s 220th General Assembly. Nothing has yet been decided – though things already trend heavily in one diabolical direction.

So far, committee activities seem to have a surreal cast. Observers will seldom have the opportunity to witness so many peculiar notions and odd discussions assembled in one place. Two in particular merit a closer look.

Commissioners seemed to have great difficulty with the Board of Pensions comment. The fact is the bulk of assets under discussion are pension assets. These do not really belong to the PC(USA) but to plan members. The Board of Pensions has a fiduciary duty to those members. It seems that the majority of discussion in Committee 15 so far has centered around what the committee wants to do with other people’s money.

Committee 15 also seems to be operating under the bizarre idea that people don’t like the word “divestment”. They were looking for ways to frame the exact same proposal – i.e. to divest from CAT, HPQ, and MSI – in a way that didn’t sound like divestment.

Let me make this perfectly clear: no one cares whether you call it “divestment” or “fluffy kitten tails”. It is the thing itself to which people object. Taken in isolation, Presbyterian divestment will have virtually no effect; nonetheless, its advocates hope to use the PC(USA)’s credibility to enhance their own. Of greater significance, however, divestment is a symbolic gesture, and the objection is to what that gesture represents. By divestment … even in only three companies … the PC(USA) is rhetorically placing Israel in the same category as Sudan and South Africa. Israel is cast as uniquely evil – and anyone with a sense of fairness will call foul.

Perhaps more importantly, as we move into day three, very few people seem to grasp just how much of a watershed moment this is for the PC(USA). What this General Assembly decides will shape the character of the PC(USA) for many years to come. It will shape the future of interfaith relations; it will shape the reputations of Presbyterians. It will commit Presbyterians one way or another – to BDS, to increased toleration of antisemitism, to bias and double standards, to radicalization – or to fairness, honesty, humility, and wisdom.

Will Spotts