George Washington’s Blog
Thursday, July 31, 2008
There are many good people spreading a lot of good messages of liberty and justice.
But trillions of dollars of investment capital is working against us and powering efforts to undermine freedom and justice. Specifically, trillions are invested into defense companies who push for new wars, and companies that torture on behalf of the U.S., and companies that spy on us, and companies that drive up food prices, destroy food safety, kill bees, and otherwise mess with our food supply.
In other words, all of the talk in the world won’t turn things around if all of the money is working against what we’re demanding.
Millions of us raised our voices and demanded that the U.S. not launch the Iraq war. Millions of us wrote to Congress and demanded that Bush and Cheney be impeached. But Congress listened to the large defense contractors and other well-financed companies (and flush lobbying groups, such as AIPAC), not to the American people. Actions speak louder than words, and money is
The Good News
The good news is that not all of the people investing the trillions of dollars are bad people. In fact, as of 2003, $2.16 trillion dollars – or 1 out of 9 dollars invested – was invested with the intent to be “socially responsible”. That is 240% more than in 1997, when attempts at socially responsible investing totaled $529 billion dollars. The numbers are still increasing.
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There are now numerous large mutual funds and other investment vehicles focusing on socially responsible investing (many of them get returns comparable to mainstream investments).
Some of the trillions invested through “socially responsible investing” (SRI) programs focus on big-picture issues like not investing in defense industry (others focus on things like tobacco, or wages). The motto of socially responsible investing is “doing well by doing good“.
Indeed, the father of modern capitalism – Adam Smith – “argued that the benefits of the free market should accrue not just to individuals but to society as a whole.”
There are also some banks that hold themselves out as “socially responsible banks“.
And many companies are starting to understand that they will be more profitable if they “place social responsibility at the core of their business strategy“. As one social investment manager notes:
“Thanks in part to the work of concerned investors, thousands of companies worldwide are publishing corporate social responsibility reports that lay out their codes of conduct, describe their progress on various issues and reveal where their products originate and who makes them. “
So there is a lot of money and a lot of interest flowing into investments which will do no harm, and maybe some good.
The Bad News
A lot of the social responsibility movement is a scam. A 2004 study found that the SRI industry has no standards or definitions, is unregulated and too often invests in the same companies as non-SRI mutual funds. Indeed, the study concludes that:
“The screening methodologies and exceptions employed by most SRI mutual funds allow practically any publicly-held company to be considered as an SRI portfolio company.”
For example, one SRI mutual fund invests in “hiqh-quality growth stocks with no investments in the tobacco, alcohol, gambling, or pharmaceutical companies”. That doesn’t necessarily mean they don’t invest in Halliburton. Another may stay away from defense companies, but that doesn’t mean that they don’t invest in companies that spy on Americans.
“As of December 30, 2003, 23 SRI funds are invested in Haliburton . . . weapons manufacturer Raytheon was held by 12 funds; ExxonMobil was held by 40 SRI funds; and Monsanto, maker of genetically modified seeds and Round Up weed killer, was held by 19 SRI funds.”
As entrepreneur and activist Paul Hawken notes, ‘The term socially responsible investing is so broad it is meaningless. If a fund doesn’t own companies involved with gambling and pornography, it can be called socially responsible.”
(You can research what criteria or “screens” self-proclaimed SRI companies use here.)
And as for corporate social responsibility reporting by corporations, this is obviously largely motivated by acting like the company is doing good so as to attract customers and employees.
Harnessing Investments for Good
The important thing to note is the trend for people to want to do the right thing, and the trillions of dollars which investors are willing to put towards that goal. In other words, the fact that most of the social responsibility professionals are scammers (although there are some good ones) does not mean that the desire among investors to do good isn’t there. It only means that unscrupulous people are trying to take advantage of the gullible (surprise surprise).
If we can harness the desire among trillion dollar investors to do good, it could go a long way towards supporting our struggle for liberty and justice. Specifically, if financial experts within the 9/11 truth, anti-war, impeachment, anti-torture and other patriotic movements set up socially responsible investment companies which can get reasonable returns for investors investing in things which promote our causes, then things could dramatically change for the better . . . since huge amounts of money would be working for our causes, instead of against them.
Don’t tell me why this won’t work. I can myself punch holes in the idea of harnessing huge investment sums to effect deep systemic change.My initial thoughts (I’m not an expert in any relevant area) are that we need a focused and coordinated effort to get this off the ground, including:
Instead, we need experts, visionaries and passionate activists to figure out how it can work and to make it happen.
Catherine Austin Fitts (managing director and director of the Wall Street investment bank Dillon, Read & Co. Inc., Assistant Secretary of Housing/Federal Housing Commissioner at the US Department of Housing and Urban Development, and president of Hamilton Securities Group, Inc., an investment bank) has written along these lines (see this, this and this). Fitts knows a lot more about investing than I do, but so far she has not been very direct in how to set up investment systems which will help promote liberty and justice. Fitts claims that the government has put a gag order on her, so that she can’t say what she knows. If that is true, it becomes even more important for a wide group of experts on money and investing – who aren’t gagged – to get active with creating systems of social investment which can improve our country.
This article was posted: Thursday, July 31, 2008 at 3:35 am