Is this supposed to be a serious debate?

Published 3:00 am Thursday, November 27, 2014

College students crusade for many causes, some more worthy than others. College campuses debated in the 1980s the divestment of investments in companies doing business in South Africa, which was then ruled by the Apartheid regime. Universities have billions of dollars in endowments, and divestment proponents thought these dollars should not be invested in companies doing business in a nation where the government enforced racial segregation and discrimination.

The 1980s divestment debate turned over whether American and European businesses were making social change more or less likely by operating in South Africa. Proponents felt that divestment could pressure Western companies to stop doing business with South Africa. Isolating South Africa from the global economy would produce economic collapse, and lead the white rulers of the Apartheid regime to conclude that abandoning power would be in their economic self-interest.

Opponents of disagreed about whether the exit of Western companies would produce regime change. Further, much of the burden of the economic disruption that might produce regime change would fall on the very black South Africans we hoped to help. And Western companies might be helping to change the minds of whites about Apartheid by operating in South Africa.

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The debate involved enduring questions about what drives political and social change. It was a debate worth having.

Today some students and faculty are pressuring universities to divest from companies producing coal, oil and natural gas. I am in favor of people investing their money based on principle. We save and invest after all to improve our lives. If the guilt someone feels from investing in a questionable business outweighs the monetary return, she should invest elsewhere. Our economic choices allow us to register our disapproval of companies’ business practices.

But consider the moral equation proponents of energy divestment offer. The Apartheid regime used government force to limit the freedom of black South Africans and enforce discrimination. Energy companies force no one to buy and use their products, and acquire the rights to deposits to mine using the market. They do the work to supply us with the energy we want.

Does the contribution of fossil fuels to global warming merit make energy companies pariahs? This obviously depends on one’s assessment of the potential effects of human-caused warming. People who believe that human-caused climate warming will render the Earth uninhabitable could view energy companies as guilty of crimes against humanity. These people, however, should read the Intergovernmental Panel on Climate Change reports, which clearly demonstrate that warming will not end civilization. Or better, they should read the recent report of the Nongovernmental International Panel on Climate Change, which presents the scientific evidence against significant human-caused warming.

The animus of divestment proponents toward energy appears to me to extend beyond the impact of fossil fuels on global climate. A recent letter Amherst College faculty urging divestment by their Board of Trustees decries our addiction to fossil fuels. The harnessing of coal, oil and natural gas for transportation, industrial production, and electricity generation has fueled, literally, the industrial revolution, and the first increase in the average person’s living standard above the subsistence level in human history.

Harnessing fossil fuels has also perhaps surprisingly helped improve environmental quality. Before the use of electricity and natural gas for cooking and heating, people burned wood and coal in their homes, producing far worse air pollution, and indoors, which is particularly dangerous. The World Health Organization estimates that three billion people in developing countries today still burn wood, coal or animal dung for cooking and heating, leading to four million deaths from indoor air pollution annually. These conditions offer a glimpse into our past. The use of fossil fuels to bring cheaper and cleaner electric power to the developing world poor is a matter of life and death.

Coal, oil and natural gas have fueled modern economic prosperity and enormously improved human well-being. Are we supposed to seriously debate the proposition that the extraction of fossil fuels is the moral equivalent of government-enforced racial discrimination?


Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. Respond to him at and like the Johnson Center on Facebook.

About Dan Sutter

I am the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University.

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