From the Civil Rights and Vietnam movements in the 1960s to Occupy Wall Street in the 2010s, university protests are frequently used to capture the spirit of a political age. UT had a number of noteworthy protests throughout my undergraduate studies, including as Cocks Not Glocks in 2016 and Black Lives Matter in 2020.
The issue with a protest is usually its headline, but protesters also typically publicize a specific set of demands. One of the most common demands at UT is that the endowment divest from companies that activists believe to be problematic, such the oil companies involved in last year’s climate rallies.
The goal of endowments is to strike a balance between current and future interests. If we preserved all of the approximately $45 billion in the UT system, current students would suffer. Future students would suffer if we wasted it all. A management corporation, the University of Texas/Texas A&M Investment Management corporation, is appointed by the state to invest the remaining funds after the endowment distributes a portion of its assets annually.
Diversification recommends that UTIMCO make investments across a broad range of assets. Diversification increases the likelihood of criticism because what is politically optimal may not be economically optimal.
Since students are far closer to their university’s power than the federal government’s, it makes sense that activists would focus on the endowment. Despite this closeness, campaigners would be better off concentrating on alternative alternatives because the endowment is a red herring.
Every disposal necessitates a counterparty investment. Only the bank accounts where dividends are wired are affected when the ownership of Exxon Mobil is changed. Even if socially conscious investors succeeded in bringing down the price of Exxon’s stock, they might just be making a deal for a different investor who has other ideals.
Divestment might still be the incorrect course of action even if the endowment were handled with political goals in mind. Businesses pay attention to their present shareholders rather than their past ones. Ownership might put the endowment in a position to sway the businesses in its portfolio in ways that are more socially responsible. An activist firm, for example, purchased Exxon Mobil stock in 2021 and used a proxy battle to pressure the company to alter its climate approach.
The primary goal of UTIMCO is to support Texas A&M University Systems and The University of Texas by producing exceptional long-term investment returns. The endowment’s financial performance could be negatively impacted by non-financial issues. At the very least, the solution to an optimization problem is typically not improved by the addition of constraints. Every dollar of return that is given up for political signaling is a public resource that could have been used to pay for research and educational expenditures.
Of course, the endowment is being politicized by others besides UT activists.
Zoey Kaul, a recent graduate and the director of education for Students Fighting Climate Change, stated that Greg Abbott had declared last year that we needed to divest from all Chinese corporations. We observed that political factors could determine the distribution of financial assets.
Although an apolitical endowment would be ideal, we do not currently have one.
Symbolic divestitures provide catharsis rather than remedies to the difficult problems we protest. We should search for more workable answers as a student body. We can use a variety of tactics to bring about change, such as forming a club, contacting a member of Congress, volunteering for a campaign, or demonstrating in support of more general policy objectives.
Implementing workable solutions is just one of the numerous objectives of protests, according to a more altruistic perspective.
We strengthen our unity, spread our message globally, and build momentum for our cause to move forward toward that ultimate success, government, and strategy through protests. Junior Arshia Papari said, “I honor you.”
Even though visibility is crucial, it’s possible that the UT endowment is prominent because protesters are focusing on it. Other strategies, such as supporting financial restrictions, may be equally effective in bringing people together.
Student activists should think about whether their demands would advance their cause or have unforeseen consequences that outweigh the advantages when working to bring about change.
McKinley is a Houston, Texas-based second-year PhD student studying finance.
