Monday, February 15, 2016

Historically, Have Boycotts Ever Really Worked -- And What Does That Mean For BDS and Israel?

With all the talk of boycotts, especially talk of the BDS movement against Israel, it has been a given that boycotts work. So leave it to Freakonomics to ask the question: Do Boycotts Work?. The entire broadcast is embedded below at the end of this post, but there are some key points worth highlighting.

The podcast starts with the Montgomery Bus Boycott in response to the treatment of Rosa Parks, quoting a political scientist on the difficulty of tracing a causal connection between the boycott and the Supreme Court decision declaring bus segregation to be unconstitutional:
the bus company was ready to cave in early. It was the politicians who held out. The holdout was followed by more and more press coverage, which was followed by the Supreme Court case, which was followed by desegregation of the Montgomery buses. So how much credit should be given to the boycott?
The bus on which en:Rosa Parks refused to give up her seat sparking the
Montgomery Bus Boycott Credit: Rmhermen, Wiki Commons

Another boycott with even more questionable effect is the one carried out against Chic-fil-A, where the boycott led to a pushback -- a buycott -- which had the opposite effect of leading to record-breaking sales numbers for the company. Buycotts have been used to counter boycotts of Israel as well.

Which leads to what is arguably the mother of all boycotts: the boycott against South Africa, which is generally assumed to have had a significant effect on change in that country. After all, the boycotts and divestments called for against South Africa were wide-ranging and intensive. According to Ivo Welch, a professor of economics and finance at the Anderson School at UCLA:
In the early 1980s and before then, it was a very large movement to divest all sorts of holdings and break all sorts of business and sports ties with South Africa. South Africa, at the time, had an apartheid regime that was institutionalized racism and about as abominable as it gets. So there were a lot of protests by students on campuses — at Columbia, which is where I was at the time. There were sit-ins. There was a big movement to divest the pension holdings. Banks actually had to have different requirements if they wanted to invest in South Africa. The tax laws were changed. There were all sorts of coordinated actions that were not just in the United States, but all over the world, all designed to bring the South African regime to its knees. Or to at least have an influence on the perception of the public about South Africa.
Credit: Djembayz, Wiki Commons

But Welch is not convinced that boycotts had a significant effect. He was involved in a 1999 study in of the South African boycott that concluded:
In sum, despite the publicity of the boycott and the multitude of divesting companies, political pressure had little visible effect on the financial markets.
Why not?

Because despite the public outrage and the apparent vigorousness with which it was pursued, the boycott was never fully enforced and it was relatively easy to get around it. Not only was the divestment movement relatively ineffectual, the South African companies were not really hurt -- the minute one stockholder got rid of his shares, there was always someone else willing to snap them up.

This of course is relevant to the issue of anti-Israel boycotts too, and how effective they can actually be.

Another question of course is how boycotts targeting Israel can have a negative effect on the Palestinian Arabs who are employed by Israeli companies. This can be assessed by comparing to another example of a boycott. During 2003, there was a backlash against the French who refused to support the US during the war to get rid of Saddam Hussein. That is when people referred to French fries as “freedom fries” -- and others starting boycotting Le Cirque, the famous French restaurant in New York.

The problem? The French restaurant was actually owned by Italians. 90% of its employees were New Yorkers, who themselves were from all over the world. The restaurant suppliers were likewise from all over. The boycotters completely missed their target -- and hurt others.

So if the effectiveness of boycotts is so uncertain, why are they still being used as a tool of protest? The answer to that may be pretty straightforward, and have as much to do with those publicizing boycotts as with those actually carrying then out:
boycotts get a lot of attention — they’re a good, easy, spicy story for journalists to cover — which gives the impression that the outrage is larger than it really is.
That is why on more than one occasion the BDS has been accused of jumping the gun and bragging about divestments from Israel based on their influence, when in fact purely business considerations were involved.

This smaller impact of boycotts is consistent with the general failure of the anti-Israel BDS movement, where their greatest influence is with institutions driven by emotion as opposed to those whose actions are dictated by rules and results. As Alex Joffee notes, Healthy Institutions Don’t Boycott Israel.
  • Global industries have shown no interest in excluding Israel. Instead investment in Israel is rising, especially from Asia -- and even trade with Europe is continuing.
  • Universities and corporations have not sold their stocks in companies doing business in Israel, such as like Intel or Caterpillar -- claims by the BDS movement to the contrary
  • The backlash against boycotts is growing at the state level, where legislators in Florida, California, Ohio, Illinois and South Carolina are proposing laws to prohibit anti-Israel discrimination by state agencies
  • In Europe, the Conservative Party in Great Britain proposed restrictions on local councils and pension funds from discriminating against Israel based on political grounds.
  • Despite successes where the BDS movement has manipulated the passage of boycott and divestment resolutions by student governments, the university administrations have denounced the resolutions rather than follow suit.
All one has to do is  read the list on UK Media Watch for specific examples of failures of the anti-Israel BDS movement in the political, economic and cultural areas.

This is not to say that boycotts have zero impact or that boycotts directed against specific companies cannot have an effect, but the bottom line is that there is no way to really know how much effect a boycott can have:
Here’s what the evidence seems to suggest: The typical boycott is more smoke than fire. And it doesn’t often seem to financially hurt the targeted company. But, humans being human, and the court of public opinion working as it does, a boycott can color the reputation of a given firm..
There is nothing here that is going to dissuade anyone who is intent on boycotting -- or to convince anyone opposing it to just sit back and ignore it.

But by the very least, here is an opportunity to rationally view the history and concept of boycotts without the hype, especially when it comes to the BDS movement against Israel.

Below is the complete podcast.
You can also read the complete transcript of Do Boycotts Work?

If you found this post interesting or informative, please it below. Thanks!

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