they may still be putting your money towards something else that’s too entangled with those lucrative liquid dinosaur bones, so your money still can’t escape the taint.
Oil’s from the plants of that era, not the dinosaurs.
also… heh, heh! you said “taint”!
Or that fat trust fund will make your kids a fat target in what will be more than a “somewhat” dinged-up environment (and its attendant nasty economic and political environment). A 1.5-degree rise is now a given, and if we keep assuming that the Invisible Hand will solve all problems (with the convenient assumption of the traditional economist’s perfectly spherical cows/perfectly rational “free” markets) then we’re on track a 2-degree rise. That’s before we take into account ever-rising inequality that results from this behaviour and the rise of sado-populist movements that’s intertwined with both it and the climate emergency.
Fortunately, young people – including those with wealth, privilege, and Ivy League educations – understand they’re going to be left holding the bag and are less constrained by political-economic tunnel vision. are now looking beyond classical economic theory and market-based solutions and the neoliberal consensus they excuse to other options, including a return to Keynesian principles (incl. a Green New Deal), behavioural economics, greater regulation of markets, and MMT.
In climate change, a rising tide sinks all boats.
Yes, that would be the “flatly forbid” part of “The usual solution to this is to either flatly forbid things that result in negative externalities”.
Now, it turns out that it’s really hard to get international agreement to do this with things that combine high profitability with low damage. It may seem odd to describe the results of climate change as “low damage”, but all things are relative–and the comparison here is to things like rivers catching fire ( The Cuyahoga River Caught Fire at Least a Dozen Times, but No One Cared Until 1969 | History | Smithsonian Magazine ), or thousands of children with chronic mercury poisoning ( Minamata disease - Wikipedia ).
Fuck it - damage them.
Those alternative investments in Miami REITs don’t fare so well either, nor do the trust-fund portfolios that contain them. As with fossil fuel investments, there may always be another sucker (usually a Libertarian or conservative business “genius”) to pick them up with someone sells, but at a certain point an asset can become so toxic that its value goes into a death spiral.
I’m sympathetic to the “Bring back the guillotine” approach to inherited wealth. But if you haven’t seen it happen yet in the West, and you don’t see it happening in places with even higher Gini coefficients, I wouldn’t hold out any hope for it.
If the value of the Dow tumbles to 10%
and you’re the richest guy on the top of Mt Washington- you’re still going to miss the Met Gala, dining at Balthazar and amoxicillin.
I’m not. As has been discussed here many times before, anyone who invokes the image of the guillotine in anything other than an admonitory way has no idea of what actually happens after a violent revolution or coup against the perceived elites of the old regime (speaking of “negative externalities…”).
You don’t see it happening in those places because the elites have a crapload of guard labour – more than the estimated 20% of the U.S. labour force – enforcing the economic status quo with serious weapons and authoritarian laws. Trending in that direction, as much of the West is gradually doing (under the foolish delusion that all the temporarily embarrassed millionaires can be gulled forever), is not a smart move given that food shortages and mass economic and geographic displacements due to the climate emergency is on the horizon.
That’s what people who still think that a fat trust fund built on destroying the environment will save their children never understand. But then, I’ve found that people who think that way (esp. right-wingers and “free”-market fundies) don’t really understand the truly valuable things that kind of money can buy (hint: it isn’t a McMansion in a gated and guarded community).
Here’s a thing about food shortages: by the time a people have so little in the way of resources they can’t afford food, they also don’t have enough of anything for real weapons–let alone any sort of functioning command and control systems. Ditto for “geographic displacements”.
We don’t have to speculate about this; we can see cases where it’s already happening. The guys riding The Beast up north ( El tren de la muerte - Wikipedia ) are getting mugged by teenagers. They couldn’t do anything against publicly funded militaries OR privately funded guard labor even if they wanted to.
Those aren’t revolutionaries, they’re desperate economic migrants looking to escape the kind of chaos and authoritarianism that emerges in countries with high inequality where the challenge to the elites and their guard labour is already underway – not only by Commie revolutionaries but also genocidal movements and criminal warlords. At this point they’re crossing the border into what’s developing into the same situation thanks to establishment economists still insisting “there is no alternative” to neoliberalism even as its negative externalities (e.g. increasing inequality, an inability to deal with massive environmental problems that literally force people from their homes, the rise of right-wing sado-populist movements) have been laid bare by pandemic.
The U.S. response to these immigrants, by the way, has reached cargo-cult proportions, best embodied by the Former Guy’s stupid wall that’s been embraced by most so-called conservatives. That should tell you how far along we are in the U.S. when it comes to the negative externalities of business as usual (e.g. not divesting from the fossil fuel industry).
Other Western countries (see the UK with Brexit or the Identitarian movements on the Continent) fare better only because they have more mixed economies and fewer firearms in the hands of Know-Nothings.
Actual militias attempting coups or revolutions (usually after being displaced in one or more way) may have a difficult time beating the guard labour of the elites – the U.S. military has been planning for a climate emergency future, including a Syrian-style civil war in Ameristan for decades. However, their very existence means that as long as they persist in their activities those elites are going to spend a lot more money than they’d like on guard labour (including keeping those enforcers from turning on them) and less on the nice things you get from a society that doesn’t pin all its hopes on supposedly free markets and fat trust funds.
Put another way, as a point of personal behavioural economics I’d rather spend money on going to the Met Gala or going to Balthazar than on an armed 'roid-rage case who doesn’t really like the body he’s guarding. That option is possible, but it takes political will on the part of the economic elites to do things like not support the fossil fuel industry with their investments and allocate some of their fortune toward a society that takes care of basic needs of all its citizens.
I agree that the wealthy pay more for guard labor than they would like. But–assuming for the sake of argument that 20% of the annual gains on a large estate have to be plowed right back into guarding that estate one way or the other–I also believe they’d far rather pay (for instance) 20% of their annual 7% gain on a ten million dollar estate than 0% of a 7% gain on a million dollar estate.
Note too that there’s no requirement for anyone in the society to pin any sort of HOPE on free markets and fat trust funds. The cheerleaders for inaction and deregulation are useful to the wealthy; the wealthy don’t have to go so far as to BELIEVE them. (In particular, it always turns out that my industry is over-regulated, your industry needs watching, and his industry needs to be brought to heel.)
Again, only if they’re foolish, unsophisticated or greedy enough not to know what the income from $10-million or even $1-million in investable capital buys one in terms of real value (another hint: it isn’t going to the Met Gala or Balthazar, either, nice as they are).
Under classical economic theory, wealthy people already pay for guard labour in the form of the portion of their taxes that support the police and the military. They could probably pay less if the former didn’t have a culture that saw “civilians” as the enemy and if the latter wasn’t mainly a whale customer for corporations, but until recently they could live with that. If we keep trending as we do, though, wealthy people are going to paying a lot more in taxes and in private funds for their guard labour while getting less benefit from it than they do now. One way or another that “fat trust fund” isn’t going to be as fat as they’d prefer.
Something Harvard has finally realised. To be fair, arseholes there like Larry Summers have been insisting for years that there absolutely is that requirement.
And yet at least half of the American electorate in that economic demographic do believe them (to paraphrase George Costanza, it’s not a just-so story if you believe it). Worse, the same proportion in the larger electorate have been conditioned over 40 years to believe it too even though they’ll never benefit from doing so.
The industry under discussion here is the fossil fuel industry. Right-wing UHNWIs who aren’t involved in that industry still support and make excuses for it, and oil and coal industry multi-millionaires like the Koch apply their “free”-market ideology to all for-profit corporations. These are proponents of is a powerful ideology, one that would sacrifice liberal democracy and the planet and – ultimately – their own well-being to “prove” that they were right all along. They shovel lots of money into that effort too, including buying academic chairs and department so their tame economists can smugly spout Econ 101 platitudes in support of the ideology and bamboozle the rubes.
Since the '70s, that’s been one of the fave investments of fossil fuel companies. If they can’t compete, they find ways to slow down development and widespread adoption of new methods or crush it through acquisition, control of raw materials/funding, regulations, and legislation. When the time comes that they can’t contain or control the alternatives anymore, they stand poised to profit. 
Serious question: what trends are you referring to? It’s probably going to be a hairy next few decades if you’re overexposed in coastal real estate, I suppose, or orchard operations that can’t quickly replant with crops better suited to whatever-the-new-local-climate turns out to be. But overexposure is always risky. For every guy who’s losing big in Miami real estate, there’s another who’s claiming to be a genius for having gone long lithium. Diversification covers a lot of sins.
Going from the global back down to the specific, I still can’t see any reason J. Random Wealthy Guy shouldn’t see Harvard committing to selling its fossil fuel industry holdings and respond with, “Great, and hopefully enough people are chasing the ESG certifications over the cliff that I’ll still be able to pick up still-profitable fossil fuel securities at fire sale prices.” It’s a gamble that the USA, and the developed world in general, won’t impose much in the way of real regulation. As bets go, that one doesn’t strike me as a long shot.
(Incidentally, as far as “real value” goes, it turns out money does buy happiness. It’s just not linear. https://www.pnas.org/content/118/4/e2016976118 .)
The effects of global warming, mainly, in a society where most people can’t cover a $400 emergency payment let alone diversify their (non-existent) portfolio. Harvard as a prominent institutional investor deserves some credit for finally divesting from the industry that contributed the most to the climate emergency, more than just someone rolling their eyes and sighing that it doesn’t mean much because some greedy and short-sighted speculator will just pick up the same stock at a slightly lower price.
What seems like a bargain for that fat trust fund now has a good chance of losing value (not necessarily financial value, though that’s a possibility as well) in the longer term, assuming one understands what real value is.
It’s not happiness either, though you’re getting closer with that well-known study (which really just indicates a threshold rather than a scale for meeting material needs).
Just think - it only took damn near a decade to convince them.
WHICH effects? I mean, specifically with regards to “If we keep trending as we do, though, wealthy people are going to paying a lot more in taxes and in private funds for their guard labour while getting less benefit from it than they do now.” I mean, you could triple the annual natural disaster losses and the number of climate refugees arriving at the USA’s borders tomorrow without doing more than annoying, say, the Walton family. I’d argue you could bring it up by a factor of ten, per my the-guys-at-the-bottom-have-no-military-power argument. I’m not AS certain about that, though; quantity has a quality all it’s own.
Incidentally, for the purposes of inferring something about whoever happens to be buying on the day Harvard is selling: it wouldn’t necessarily matter if the relevant securities were doomed to–and KNOWN FOR CERTAIN to be doomed to–go to a value of zero at some specific point in the future. Pull out the calculator and the textbook on discounting ( Discounting Definition ), and you can compute a reasonable price on anything in today’s dollars. Admitted, this tends to become a war of duelling models–one guy values it per a belief it’ll pay dividend D for the next N years, the other guy thinks it’s D - 2% and N + 4 years, or whatever–and someone turns out to wrong. But someone turns out to be right, too.
As noted above, mass movement of peoples displaced by more frequent and intense extreme weather and its effects, especially from areas that have been starved of infrastructure spending by the same right-wingers who will continue investing in and propping up the fossil fuel industry. Since you’re unfamiliar with what happens when high winds, flooding, sea level rise, droughts, extreme cold and heat decimates a community, I’ll leave it to you to look at past events and extrapolate (at far more than 3x the current annual rate, according to estimates from organisations like NASA, NOAA and the U.S. military).
People in comparatively safe areas – especially wealthy people – don’t like it when they arrive at their literal and/or metaphorical doorsteps asking for help (or in conservative parlance, they don’t like it when the “undeserving” ask for “handouts”). I could cite the reaction of affluent Californians to refugees from the Oklahoma Dustbowl during the 1930s, but I don’t have to go back that far. You might remember the response of the wealthy white suburbs to people from New Orleans fleeing Hurricane Katrina (if you don’t, it involved firearms and ugly threats and the “n-word”).
In the 2-degree climate scenario I’m anticipating, scary dark-skinned people won’t be the only climate refugees the wealthy and comfortable have to worry about. There will also be far-right white supremacist climate refugees looking to take back what they feel they’re entitled to from “the elites” and (again) “the undeserving”. We got a political preview of that on 6 January and the worst effects .
And that’s only internal climate refugees, and not the ones coming in from outside the U.S. border (assuming they haven’t wised up at that point. Most likely the Waltons and their wealthy conservative ilk would welcome them, as they always have, as both cheap labour and also as political scapegoats for racist and nativist voters.
I understand discounting and calculating it, and not just because I took Econ 101. That someone turns out to be wrong and someone else turns out to be right just means that the people who aren’t qualified investors might as well throw darts at the stock report page or put their money into a no-fee fund rather than try their hand at stock-picking and timing the market.
But as I’ve tried to explain, I don’t reduce the value of money --present or future – to mere dollars (which, as I also said, is a non-issue for most Americans when it comes to direct investment in the markets), especially in the long term and especially when a climate emergency is already upon us. Part of the problem right now is that a lot of Americans, even those who think they know more about finance than they do, can’t or won’t see things that way. Which is why we’re in this mess and also why I don’t see us diverting from the path to 2-degrees+ despite praiseworthy divestitures like this.
