March 13th, 2017

Boycotts and the law of unintended consequences

Boycotts can seem to be potent political tools. But they’re not an all-purpose tool; in organizing a boycott, the target gets a lot of free publicity. But although the intent is negative publicity, the word reaches both sides. And the opposition has buying power, too.

So if you want to boycott something and the two sides are roughly equal numerically, you might want to rethink that, because the result can just as easily be a spike in sales. This is particularly true when both sides are also equally energized in the political sense.

Thus we have this phenomenon being reported:

[Ivanca Trump’s] fashion line was famously dropped by several department stores, and some of the many foes of her father organized a boycott of her goods. The result is a remarkable spike in sales — to near record levels, according to her company…

“For several different retailers Ivanka Trump was a top performer online,” the brand’s spokeswoman says, “and in some of the categories it was the [brand’s] best performance ever. A lot of people support Ivanka, even across both political parties.” The publicity revealed to many shoppers that Ivanka had a shoe line, and a handbag line, and they bought those items, too.

Ivanka’s perfumes have become top sellers on Amazon.com. One of them sold all of its stock. Customer reviews online show that many of the buyers were persuaded to buy by the controversy, and many of them wanted to show support for Ivanka.

Now, I suppose it’s possible that some of this is hype. Has it been independently verified? However, it’s a phenomenon that’s been seen before in boycotts.

The question of whether boycotts work, and if so under what conditions, is treated here, in an article that analyzes some of the most successful (supposedly) boycotts in US and even world history. The issues involved were a lot different than in the boycott of Ivanka Trump’s clothing line, but even then it’s not easy to know whether the boycotts actually were “successful” or not:

The [Montgomery 1955] bus and [1960s] grape boycotts were not representative because why? For starters, these were boycotts that fed into an established movement, with many existing layers of activism and support. And, maybe most important, these were boycotts with good historical timing. Change was happening, and the boycotts reflected the appetite for that change. So did the boycotts cause the change? As Daniel Diermeier says:

DIERMEIER: It’s difficult to disentangle that…

…So what was the net effect of the [2012] Chick-fil-A boycott — at least the financial net effect? Did boycott plus buycott equal less than or more than zero, as measured by whatever rough measures you want to use – quarterly revenues, share price, etc.?

DIERMEIER: I don’t know of any kind of serious empirical work that looked at that.

…Now, remember, the Chick-fil-A boycott was a bit of a special case. But let’s ask another basic question: how well does this kind of boycott usually work?

IVO WELCH: Boycotts almost surely will never work…

Not only did the [1970s-1980s] South Africa divestment movement not seem to have played much of a role in ending apartheid, Welch says it didn’t even really hurt South African companies.

WELCH: So if you think about somebody who holds stock of a South African company, if they decide to sell their shares, it will take about a microsecond before there’s another buyer to be found in the public markets. So it’s very, very easy — the demand, supply of shares in the stock market is extremely elastic. And your decision to boycott — that is, to divest yourself of the shares — isn’t going to make a difference. Now, if you could make it so that everybody in the world who wanted to hold South African stocks wouldn’t have bought any shares from South Africa anymore, it would have made a difference. However, that wasn’t the case. In reality, in real life, there were just too many people that were willing to hold the shares, and they immediately snapped up all the shares that people were willing to sell.

So despite a coordinated global effort by activists and institutions, Welch and his colleagues found that South African firms were essentially unharmed by the boycott.

It’s a long article (it’s actually a transcript of a radio program) and I haven’t yet read the whole thing. But what I have read is fascinating, and contains quite a few surprises.

11 Responses to “Boycotts and the law of unintended consequences”

  1. delta6 Says:

    Wow, what a snoozer this subject is!
    imho, the idea that concept of a ‘boycott’ deserves/needs “serious empirical work ” is SNL material….like these gazillion $ govt/academic ‘studies’ into whether muskrats communicate thru facial expressions! What’s next, a UCLA study into “Does Throwing Rocks at Policemen Advance Social Justice?”?!

  2. Geoffrey Britain Says:

    Target’s reported multi-BILLION dollar loss demonstrates how effective boycotts can be with social conservatives boycotting the brand. While liberals who reactively support Target’s allowing confused men, rapists and opportunistic pedophiles into women’s bathrooms are now supporting a large, ‘souless’ CORPORATE entity… ah, the pc irony.

  3. y81 Says:

    The case for the efficacy of the Target boycott would be more compelling if bricks-and-mortar retailers weren’t having trouble across the board. That said, I don’t know why Target management doesn’t keep its mouth shut on controversial issues. If I were a shareholder, I’d be annoyed with them.

  4. David Says:

    the corporations most vocal in making political comments are usually those that are struggling business-wise. perhaps they think by virtual signaling to SJWs on the progressive agendas they can turn their under-performing businesses around.

  5. T Says:

    “[Welch] Now, if you could make it so that everybody in the world who wanted to hold South African stocks wouldn’t have bought any shares from South Africa anymore, it would have made a difference.”

    Except that, if your boycott is successful, then there wouldn’t be anyone (few people)out there willing to buy the stocks which would severely limit your ability to sell and require you to sell at a very deep discount. In other words, int he stock market, a boycott is either ineffective (Welch above) or self punishing.

    Furthermore the question I ask is whether the success of recent “buycotts” is really an attack on the leftists who agitate for a boycott more so than a show of support for any particular business. Perhaps this is yet another indication of the American public being fed up with the sanctimony and moral preening of the left.

  6. Tuvea Says:

    Geoffrey Britain,

    Target Corp. used to be Dayton-Hudson. The current far-left Governor of the People’s Republic of Minnesota is Mark Dayton. He is the grandson of the founder of that corporation.

  7. parker Says:

    We had Target stocks, the day we learned of their idiot pc policy we sold all shares; we didn’t wait for the decline in value, we knew there would be a decline in value. Some boycots work, some don’t; but those who bought the shares we sold have lost money.

  8. expat Says:

    The Chic-fil-A thing may ave initially brought in some new customers who decided they like the food. With Ivanka clothes and Target products, there will be changes every few months and lots of alternatives. I don’t think the boycotts will ave a lasting effect. I would be happy if they scared companies about getting in to the political arena.

  9. AesopFan Says:

    expat Says:
    March 13th, 2017 at 6:13 pm… I would be happy if they scared companies about getting in to the political arena.
    * * *
    Indeed. And I include media outlets and movie-makers in that wish.
    I really dislike having to proffer a loyalty oath to shop.
    Or having my shopping become a partisan litmus test.

  10. T Says:

    “I really dislike having to proffer a loyalty oath to shop.
    Or having my shopping become a partisan litmus test.” [Aesopfan @ 10:14]

    While I agree, there is an upside to this political taking of sides by corporations. Keep in mind that most corporations are making donations and supporting causes. That financial support doesn’t show up in the annual corporate report. So, when a company announces it’s political or social philosophies, guess where it’s unannounced money is going. I doubt that Chik-fil-A, for instance is donating to Planned Parenthood. I’m glad to know that so I can direct my business to companies that might support causes I agree with.

  11. T Says:

    A follow up to my comment above:

    http://www.nationalreview.com/article/445705/corporate-leaders-progressive-activists

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Previously a lifelong Democrat, born in New York and living in New England, surrounded by liberals on all sides, I've found myself slowly but surely leaving the fold and becoming that dread thing: a neocon.
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