As the Biden administration grapples with foreign policy in preparation for the 2024 election, former Trump national security adviser KT McFarland reflects on the fractured relationship between the United States and Israel.
An economist has warned US students who want their universities to “divest from Israel” that such a move is “nearly impossible.”
Robert Stein, deputy chief economist at First Trust, said in an interview with Fox News Digital that Boycott, Divestment, and Sanctions (BDS) supporters have a misunderstanding of what divestment from Israeli companies means. I explained that I was doing it.
“The investments that terrorist supporters would like universities not to make are index funds, where universities invest in a very broad range of stocks,” Stein explained.
Because index funds include a wide variety of stocks, the task of finding a fund that does not include stocks of Israeli companies and American companies that do business with Israeli companies is impossible.
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Anti-Israel demonstrators at Pomona College in Claremont on Thursday, May 9, 2024. (Will Lester/MediaNews Group/Inland Valley Daily Bulletin via Getty Images/Getty Images)
“Thus, any attempt to divest from Israel or companies that do business with Israel assumes there is a similar broad-based index fund or ETF that universities can invest in,” the economist continued. “And frankly, I can’t think of anything.”
“Fundamentally, implementing BDS would be almost impossible… Logistically, it would be necessary to create a market for funds that do not aim to invest in Israel.”
Universities will need to abandon index funds altogether and focus on individual stocks. Therefore, you lose out on the benefits offered by index funds.
“Basically, universities would be required to invest in individual stocks and very specific indexes, which would result in higher costs for universities making the investments,” Stein added.
There has been speculation that tuition would rise if the university were to withdraw completely from Israel, but Stein acknowledged that this is unlikely because the nature of the endowment is subject to investment movements.
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Graduates protest while holding white T-shirts that say “Divest” during the graduation ceremony at the University of California, Berkeley, Saturday, May 11, 2024, in Berkeley, California. (Yaronda M. James/San Francisco Chronicle via Getty Images/Getty Images)
“Even if BDS were imposed, I don’t think tuition would go up,” Stein explained. “Because I don’t believe that endowments are used to reduce tuition costs. Endowments are used to hire more administrators. Endowments are used to increase academic salaries. …Academic institutions use endowments to selfishly enrich themselves.”
Stein, who previously worked for the Treasury Department and the Senate Budget Committee, stressed that the idea of selling companies to Israel is unrealistic.
“Many of these groups are calling for a withdrawal from Israel, knowing how difficult it is to do so, but frankly I don’t think they care,” Stein said. “After all, their movement is about gaining attention for themselves and enabling them to become leaders of social activist groups in the future.”
Anti-Israel camp at the University of Toronto in Toronto, Ontario, Canada, May 12, 2024. (Kyle Mazza/Anadolu via Getty Images/Getty Images)
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“This is not really about divestment, and even if divestment were logically possible, if the university was able to compromise on that issue, they would have other reasons for choosing Israel. They will find other excuses to blame and attack Jews, because they are clearly inclined to do so,” he added.
