Hear no Evil See no Evil
by shannon ikebe and annie lukins
As a community that prides itself to be ethically conscious, the socioeconomic impact of the College’s activities and resource use is often a topic of heated contention at Oberlin. The coal plant and bottled water, bananas and Coke - student activists have not hesitated in our efforts to ensure that the College does not purchase products with detrimental human and environmental impact. The investment policy has also attracted a fair degree of scrutiny; calls for divestment from Apartheid South Africa and Sudan have been successfully adopted, and the controversy over divestment from Israeli occupations of Palestinian territories is a recurrent theme. The information on the list of companies that the College is investing in is a pivotal piece of information which empowers student activists and any Obie who believes that the College should always behave in accordance with the values we purport. The Student Socially Responsible Investment Committee (see: Socially Responsible Investment) fulfills a valuable role, yet the absence of real power for the SSRIC in the College’s decision-making process is too structural to be easily overcome.
Investment of the endowment is by far the largest economic activity that the College undertakes. Even after the precipitous decline in its value, the College holds more than $600 million worth of assets as of June 2010, which is nearly as four times larger than its entire annual operating budget. How the College invests its $600 million should be of foremost concern to the socially-engaged community of Oberlin, but what the information on the investment of the College’s Endowment reveals is more disturbing than particular instances of unethical economic involvements in forms of the purchase of exploitative or polluting products or investments in egregious human rights violators. The College’s heavy reliance on hedge funds indicates that Oberlin College actively participates in creating, while being trapped by, the trends and dictates of global capitalism.
34% of College’s endowment ($241 million) is invested in hedge funds – lightly regulated investment funds that use complex financial instruments originally developed to “hedge” risks, such as derivative and swaps, to maximize return for the wealthy investors. The development of hedge funds are closely connected with financial deregulation and globalization since the 1980s. Hedge funds and other mobile financial capital have inflicted numerous forms of structural damages to people’s welfare. They significantly constrain the scope of democratic politics, as billions of dollars of capital chase around conditions that generate highest return and hence impose capital-friendly policies through their financial power (countries can’t construct an economy that prioritizes people’s welfare, for fear of losing investment capital); the economy is deprived of resources to invest in socially beneficial forms of production, as the investment capital is wasted on speculation aimed to maximize short-term profitability. Since complicated financial tools hardly produce anything beneficial to the entire economy, the gains they generate for the wealthiest investors would have to result in loss for those with weaker market power and/or posterity. Hedge funds are simply the strongest players in the zero-sum game of global financial market. Furthermore, most of the hedge funds are located in the offshore tax havens, contributing to the increasingly regressive structures of tax revenue and the continuous trend towards retrenchment and assault upon public services. Mobile financial capital, which hedge funds form a crucial part, might not be as photogenic as coal plants and bottled water, but the structural damage it inflicts is probably greater.
Hedge funds and other speculative financial investment pose us a profound ethical dilemma. College’s strong financial position is indeed of great importance to the entire community, including its students and workers, and the progressive role that the College has played. Considering the very real and substantial financial gains that the College made through hedge funds – $86 million gain out of the original value of $155 million, as of June 2010 (pp. 23) - the wholesale transformation of the College’s investment policy would probably have a significantly negative impact on College’s financial positions. However, it is at least incumbent upon the student body to be well-informed about the College’s significant investment in hedge funds and other financial schemes, which are the most pernicious instruments of global finance that subjugated people throughout the world under the aegis of neoliberal capitalism. Oberlin College’s endowment investment indicates the contradictions of aspiring to “change the world” while being constrained by the tremendous forces of the capitalist logic.
So what do we do with this information?
one option is to drop out, as many have done for similar reasons. Another option is to protest. See Oberlin's radical history on the side-bar. (oops, soon to come)