Saturday, March 25, 2006

Ethical Investing: Moral Financing or Politically-Correct Posturing?

Samuel Gregg, D.Phil. of the Acton Institute asks that question in this Commentary.

Dr. Gregg observes that the causes for which the ethical investing movement advocates may leave something to be desired. Take a closer look:
The list of concerns promoted by most ethical investment funds is not especially coherent. They generally refrain, for example, from investing in businesses involved in armaments, tobacco, gambling, pornography, product-testing involving animal experimentation, inhumane farming, mining, and countries with oppressive regimes. The same funds often try to avoid corporations that do not have affirmative action programs. Equally reprehensible, according to many socially responsible investment guidelines, are corporations insufficiently involved in adequate “community involvement.”

Immediately, this raises problems. What, for example, constitutes “inadequate” community involvement? Concerning affirmative action programs, many perfectly orthodox Catholic theologians have argued that they suffer from several fundamental defects of justice. In other words, objecting to affirmative action does not make you a racist.

As the Catholic moral theologian Germain Grisez warns “while certain ethical investment vehicles are advertised as ‘socially responsible,’ the notion of socially responsible here may not reflect a judgment conformed to Christian principles.”

The standard list of ethical investment priorities also suggests that many “socially responsible” criteria have more to do with fashionable causes than with the objective moral life. Apart from pornography, the list reflects little interest in questions of sexual morality. Ethical investment funds rarely, for example, cater to those who believe that marriage is a basic good and that abortion is wrong.

A high degree of moral and political selectivity is apparent in these organizations. In the 1980s, for example, ethical investment funds invariably listed South Africa as a country to shun. But why did they not also list other countries with regimes at least as oppressive, such as Cuba, Nicaragua, East Germany, Iraq, Zimbabwe, Ethiopia, or Vietnam?

Investing in so-called socially responsible funds is thus no guarantee that the investment is moral. Naturally, if people want to further particular causes through encouraging us to invest in particular ways, there is little to prevent them from doing so. But one may protest their use of the word “ethical” to describe such investments.
What's a Fool with a conscience and a little money to invest to do? Dr. Gregg proposes the following:
First, they should know that the moral principles that inform and direct their investment decisions are no different from those that should inform and direct other choices. Their investments should be directed by maxims such as the Pauline principle(one should not do evil even if good may come of it) and the Golden Rule (do to others as you would have them do to you).

Catholics, in particular, should also know that the Church has declared that certain acts are always wrong. Intentions may be noble, people may claim to be acting in good conscience, and circumstances may mitigate personal responsibility. Nonetheless, certain acts (e.g., adultery) are always evil. The negative moral precepts of the Church’s teaching, as Veritatis Splendor—John Paul II’s 1993 encyclical—reminds us, do not allow for legitimate exception.

The greater the risk of corrupting ourselves, or of giving others the impression that we have no strong objection to an evil policy or activity, the more serious our reason for refraining from investing in organizations that engage in, or support, any activity that the Church has identified as evil.
Again, the Foolables that have Fundamental Optioned Post-Vatican II catechism on morality to a politically-correct menu of social justice "do's and don'ts" offer no genuine guidance. Their counsel will lead the unweary off the cliff. Meanwhile, the width and breadth of Catholic Social Teaching remains virtually untouched. This tremendous treasure offers us the road map we need to effectively negotiate around any morally-troubling investment opportunities.

Bottom line? Trust Christ. He has encouraged us to "make friends with dishonest wealth". He offers us the guidance we need in order to do so without compromising our honesty.