Monday, July 24, 2017

Blogger Candidate Forum: The New Divestment Movement

Hello Everyone:

Time for the weekly edition of Blogger Candidate Forum.  First, a big shout out to the Senate Democrats and Republicans who opposed the Senate Health Care bill and Senate Majority Leader Mitch McConnell's (R-KY) futile attempt to call for a "repeal now, replace later" vote.  Seriously, did anyone think that a bill, crafted in secret, without any bipartisan input was going to pass?  Blogger did not think so.  Remember when the Affordable Care Act was making its way through Congress?  Remember all the debates, the way President Barack Obama traveled around the country promoting it, the way the administration was able to get the insurance companies on board?  Where was that this time?  Now, President Donald Trump announced that he was washing his hands of ACA, the Republicans were not responsible for it, and POTUS was simply going to let it fail through mismanagement and cutting subsidies.  He even "ordered" the Senate to stay in Washington D.C. to work on the bill.  Really?  Good luck with that one.  A final word to the Senate Minority Leader Charles Schumer (D-NY), House of Representatives Minority Leader Nancy Pelosi (D-CA), and all the Congressional Democrats:  Enjoy your victory.  You won the battle but not the war.  The federal budget and tax reform are next.  Eyes on the prize.  On to today's subject: divesting from POTUS.

On June 8, 2017, prison investment company GEO group published a press release in Wall Street Journal:

The federal prison population is expected to grow next year by 4,171 to a total of 191,493 as the the Trump administration steps up prosecutions of illegal immigrants and drug offenders, reversing the trend toward a smaller prison population under former President Barack Obama...(; June 8, 2017; date accessed July 19, 2017)

This, according to Brentin Mock in his CityLab article "A New Divestment Movement Trump Gears Up," is an approximate two percent increase by 2018, reversing the decarceration patterns under President Obama.

GEO attributes the upswing in incarceration to a POTUS and Attorney General Jeff Sessions's proposed budget that will increase the number of federal prosecutions, pursuit of drug dealers and alleged immigrants (; May 12, 2017; date accessed July 19, 2017).  The company also recently won a $110 million contract with the United States Immigrants and Customs Enforcement to construct a new 1,000-bed detention facility in the state of Texas.  Since the election, GEO Group's share prices have doubled.  Canaccord Genuity financial analyst Michael Kodesch observed,

This is an opportunity for private prison, absolutely.

However, if the cities have their way, this may not be the case.  The same day the GEO Group released its announcement, the New York Daily News reported,

New York City's pension system has become the first in the nation to fully divest from private prisons, Controller Scott Stringer will announce Thursday.

The city has sold off about $48 million in stocks and bonds of three private prison companies, according to the controller's office, after a unanimous vote from the fund' trustees...(; June 8, 2017; date accessed July 19, 2017)

Mr. Mock writes, "This was the completion of a process that began in mid-May, when pension funds trustees approved this maneuver (; May 15, 2017; date accessed July 19, 2017) in response to several reports and I humane treatment of inmates and detained immigrants in private corrections facilities (; Jan. 28, 2016; date accessed July 19, 2017)." Since that announcement, New York City has "sold off nearly $48 million in stocks and bonds from several prison companies, including the GEO Group."

The divestment move was not simply a rebuke of the private prison industry-it also targeted the federal administration that is driving its resurgence.

Mr. Stringer said in press release, available on the New York State comptroller's website: 

With Donald Trump in the White House, we're seeing more and more industries try to profit from backwards policies at the expense of immigrants and communities of color... (; June 8, 2017; date accessed July 19, 2017)

As POTUS continues to fuel hateful rhetoric and increases deportations, the private prison companies are going to experience greater damage to their reputation-which means they will be considered a riskier investment.  Mr. Stringer continues, 

Morally, the industry wants to turn to back the clock on years of progress on criminal justice, and we can't sit idly by and watch that happen.  Divesting is simply the right thing to do-financially and morally.   (Ibid)

Other cities are following the same strategy.  The same week, Tucson, Arizona's city council voted to divest from companies involved in building the Border Wall (; June 7, 2017; date accessed July 19, 2017).  In March, Berkeley, California became the first city to completely divest from any company involved in The Wall ( March 17, 2017; date accessed July 19, 2017), , prior to that, Seattle, Washington chose to cut ties with Wells Fargo Bank, "citing the bank's financing of fossil fuel companies and the controversial Dakota Access Pipeline project (; Aug. 18,2017; date accessed July 19, 2017), which Trump approved just weeks into office ( ; Feb. 7, 2017; date accessed July 19, 2017)."

Seattle city council member Michael O'Brien recent said at press call assembled by the Make The Road New York ( and the Center for Popular Democracy (, organizations advocating or urban divestment strategies:

Cities across this country are recognizing that we can no longer simply work on policies and laws that reflect our values while we're simultaneously investing billions of dollars in businesses that are actively trying to undermine the very values we stand for.

Cities divesting from companies doing businesses with policies that do not reflect their values has its foundation in the 1980s, when anti-apartheid activists successfully convinced dozens of cities to joins universities and businesses in "pulling funds from companies tied to South Africa's apartheid government."  (; Jan. 27, 2013; date accessed July 19, 2017).  William MacAskill, writing in The New Yorker looked the affects of mass divestment of South Africa-affiliated companies, focused on a group of economists who concluded that this strategy had very little impact on the bottom line:

The economists Siew Hong Teoh, Ivo Welch, and C. Paul Wazzan studied how divestment movements affect he South African financial market and the share prices of U.S. companies with South African operations.  Divestments were expected, on average, to decrease share prices, but the study found that, in fact, political pressure turned out to have no discernible effect on shares' public market valuation.  According to the authors, a possible explanation of this finding is that "the boycott primarily  reallocated shares and operations from 'socially responsible' to more indifferent investors and countries."  (; Oct. 20, 2017; date accessed July 19, 2017)

What this translates into " cities and other institutions stopped buying shares in the companies in questions, those shares were just purchased by other investors who didn't care about all that social and racial justice stuff."

Although divestment may not have hurt the bottom line as much as activists hoped for, it did play a crucial role in attaching a stigma to those companies and sent a very clear signal to the American over meant.

The Ronald Reagan administration was livid, to the point of willing to withhold federal funds to cities, about their participation in the anti-apartheid  divestment movement during the eighties.  (; My 24, 2017; date accessed July 19, 2017). On June 27 the nonprofit Jobs to Move America ( released a report on how "the fight between Reagan and the cities over apartheid and how it mirrors current battles with the Trump administration City particularly tested the Reagan administration with mixed results.

Brentin Mock reports, "When New York City passed a law in 1984 that imposed sanctions any business with financial interests in South Africa, Reagan stepped in and threatened to yank U.S. Department of Transportation funds."  This forced the city to back off enforcing the ordinance.  Yet, when Baltimore passed a similar ordinance in 1986 (; Dec. 6, 2013; date accessed July 19, 2017), it survived numerous court challenges and eventually prevailed.  "Business leaders and Reagan officials in the National Security Council and State Department were unable to persuade the U.S. Justice Department to mount a proper attack of Baltimore's divestment ordinance.  According to the Jobs to Move America report, DOJ lawyers were unable or unwilling to find a legal reason why Baltimore couldn't enact such an ordinance."

President Donald Trump may find a more willing partner in Attorney General Jeff Sessions's  DOJ.  For the looks of things, AG Sessions has been quite willing to indulge his boss's every order, regardless of how dubious or incoherent they may be.  This is why a cities's position on divestment is important, particularly in a nation where  much of their political power has been hamstrung by gerrymandering.

Seattle council member Michael O'Brien once again in the press call:

While shifting billions of dollars in business investment might make a modest difference...we can amplify those changes through collective action, across cities so that citizens understand that there is a movement  taking place that they cant participate in.  That's when I believe we will get attention of those companies.  They will either have to respond and adapt to this new environment, or they will go out of business and new ones will replace them     

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