10:08 AM :: Stephen (contact)

"Harvard Stands to Profit from War": According to The Harvard Crimson, various faculty members at Harvard have accused the university of "war profiteering," as a whopping "nearly half a percent" of the endowment is invested in the defense industry. Religion lecturer Brian Palmer claims that the Harvard fund is "contributing to the death and suffering [of] thousands of people," while another faculty member surnamed "Bois" (Pulitzer Professor of Modern Art and Chair of the Department of the History of Art and Architecture Yve-Alain H. Bois, perhaps?) comments as follows:

"The idea that Harvard would get richer by the good fortune of these stocks is war profiteering," he said. "It should be discussed."

Let's put this claim in perspective. Harvard has less than 0.5 percent of its endowment invested in defense. In 2001, the most recent year for which all of the applicable statistics are available, U.S. GDP was $10.082 trillion. According to the Statistical Abstract of the United States, U.S. military spending in 2001 was $308.5 billion (PDF link), or 3.1 percent of GDP. Spending for goods and services likely to be performed or supplied by contractors (such as operation and maintenance, procurement, and military R&D) was $209.6 billion, or 2.1 percent of GDP.

Looking more specifically at investing, the current total market capitalization of all NYSE-listed aerospace and defense companies is $154 billion. For comparison, that's 1.2 percent of the $12.9 trillion total global market capitalization of the NYSE on Feb. 28 (the most recent date for which the data is available)--more than double the proportion of Harvard's investments.

So by a number of measures, Harvard is hardly in the pocket of the military-industrial complex. If anything, Harvard is underinvested in the defense industry, compared to its impact on the economy as a whole. What's more, there's no evidence that Harvard bought in on the assumption that fighting was about to break out, or that the Harvard Corporation used its nefarious influence to start a war for fun and profit. So what's the problem here?

Bois and Palmer seem to be arguing two different points: first, that investments in the defense industry contribute to death and suffering abroad, and second, that it's immoral to profit from other people's suffering in wartime.

On the first point, it's almost tedious to point out that the decision to start fighting in Iraq was made by President Bush, not by Lockheed. Once weapons are produced, the decision about how they are to be used (for good or ill) is ultimately a political one. And unless it's immoral to make weapons in the first place--which would mean that it's immoral for the U.S. to have a military, period--investments in that industry can't be wrong per se. (They might become wrong if the companies involved have been doing various other immoral actions, or if Harvard should expect the U.S. military to be used primarily for evil purposes, but neither of those points are argued by Palmer. Personally, I think the U.S. military brings more good than ill overall by providing security worldwide, and that it's a good thing that defense contractors exist to supply it.)

On the second point, it's true that the condition for other people's suffering (the fact that bombs are falling) is also the condition that might provide for Harvard's investments appreciating. But so long as Harvard hasn't done anything to cause or exacerbate that suffering (along the lines of the first point), the same would have been true if Harvard had been invested in just about anything during World War II, when the war substantially raised aggregate demand.

My brother adds that a similarly breathless article could be written about other tragedies that Harvard might "profit" from: just imagine the headline when Bois learns that some companies make medicines. ("Harvard Stands to Profit from Cancer, Heart Disease, Diabetes, Depression, and Impotence"...)