Can a good person also be a capitalist?
Sunday, October 28, 2007 | Ethan Roberts Is this Spam?I am a baby boomer who came of age during the late 1960's to mid 1970's. This was the late Vietnam war to Watergate era. In those days, if you were politically liberal, life was pretty simple. People were basically good, while corporations were seen as evil. If you made a lot of money, particularly at someone else's expense, you were likely to be called a "capitalist pig" or something even more pejorative.
The worst offender during Vietnam was probably Dow Chemical, the makers of napalm, agent orange, and other deadly toxins. Political protests were not only aimed at ending the war, but also at bringing national attention to companies like Dow.
It was also said that politicians benefited directly or indirectly from the evil corporations, either through campaign contributions or through their own investments. It has been hinted that then President Lyndon Johnson was a holder of many defense stocks, such as Bell Helicopter, but always in Lady Bird Johnson's name.
Eventually the war ended, Watergate came and went, Nixon was replaced by Ford, Carter, et. al, and we all grew up and cut our hair. We finished our education, gained jobs and got married. And then one day someone told us that if we do not want to eat dog food in retirement, we had better invest a portion of our money in stocks and mutual funds through something called a 401k or an IRA.
But what stocks could we buy, since so many of them were instruments of those evil corporations? Certainly not Dow, for we remembered the lessons of Vietnam. Philip Morris/aka Altria group (MO) was also an easy one to shun, since they manufactured the evil cigarettes that kill people. The Dow Chemical of today seems to be Haliburton (HAL), that scourge of liberals everywhere. Some people say we are in Iraq just to make Haliburton rich. That seems rather simplistic to me, but then again the stock has had a tremendous price surge during the last five years.
So what else can one buy: Wal-Mart? Are they not mean to their employees? Home builder stocks? No way, those companies are tearing up the environment. Drug company stocks? Well, they save lives, but then again, people say they are guilty of price gouging little old ladies! Mining stocks? No, they are stripping the Earth for profits. It all seems so futile.
Many people who would be horrified at the thought of owning a cigarette or chemical company stock, do not realize that these stocks are frequently holdings of the mutual funds they buy through their 401k or IRA. They may not even read the annual reports, so they have no clue how the mutual funds are investing their money. Is their ignorance an excuse for hypocrisy?
Over the years, there have been a few so called "green" mutual funds. They invest only in companies that seem to be doing good things for the environment or for people. For many years, these sort of funds made people feel good, but they were rather mediocre investments, with returns that did not match the S&P 500.
That may be changing. One fund that is the exception is the Winslow Green Growth Fund (WGGFX), up 15.67% year to date, and almost 27 percent annualized return over the past five years. Morningstar gives it a five star rating.
One question that I would like to raise is how do we know that all of the so called nice guy companies are really doing good things for Mother Earth? Who monitors everything? What if those companies have 401k plans that contain funds which invest in Altria and Haliburton?
In addition to stocks, I am also a Real Estate investor. I often buy homes that other people have lost to foreclosure. Some people will say that I am taking advantage of someone else's terrible loss. But I had nothing to do with them losing their home. They would have lost it whether or not I eventually buy it from the bank.
Every time you sell a stock and then the stock goes down, you have sold it to someone who will lose money on it. Does that mean you are responsible for their suffering?
So I am putting these questions out to the Tycoon readers and staff writers. Can we be so called "good people" and still be capitalists? Is capitalism by definition an economic system that puts profits above everything else, including what is good for the Earth? Is it OK to invest in stocks of companies that are polluters or exploit their workers? Is that our responsibility or not?
I look forward to seeing your responses.
