Having claimed the lives of 400,000 people and turned millions into refugees, the conflict and subsequent genocide in Darfur has progressed to the extent that few can deny it is an atrocity to humanity that must be stopped with strong action. But an important question remains: How should we proceed?
A widespread movement has emerged to encourage investment funds to sell stock in companies with ties to Sudan, in the hope that putting pressure on entities indirectly related to the genocide will trickle down to those responsible. In Texas, Sen. Rodney Ellis, D-Houston, and Rep. Corbin Van Arsdale, R-Houston, have proposed two bills, S.B. 247 and H.B. 667, which call for state pension funds to divest in companies with relations to Khartoum.
They speculate that this pressure will encourage companies to cease operations in Sudan, which will reduce the amount of money it receives from foreign companies.
Yet it is Sudan's morally bankrupt government and war criminals that are directly responsible for perpetrating this genocide. It is they who should be brought to justice and penalized, not indirectly related parties, because there are countless entities indirectly related to anything. Trying to pin responsibility on an indirectly related party opens up a subjective moral grey area.
Once a chain of relationships has been made, it is difficult to determine where to stop. Is UT responsible for genocide, because it bought the stock of a company that paid royalties to extract oil in Sudan? If I pay tuition to such an institution, have I done something wrong?
Another important consideration to be made is the relationship between owning a company's stock and the company's operations. When an investor buys stock on the market, the company in question does not see a penny - only the previous owners of the shares does. So unless your broker runs guns to Sudan when he isn't selling stock, you are not financing genocide, but rather you are a faceless investor who owned the stock before. And when you sell the stock, nothing changes, because the stock still exists. You've only transmitted your guilt to someone else.
Even if divestment was successful in dropping the value of the offending companies, and ends up motivating their management to change course, the question of who would be harmed should be considered. Owners of the stock, who have nothing to do with genocide, will lose wealth in the pursuit of someone else's social goal. Many of the companies in question are Chinese and Indian energy producers, who use Sudanese oil to fuel those countries' amazing emergence from poverty.
The companies also build facilities that give jobs to Sudanese civilians and sell products the people need. The fact that these companies pay taxes or royalties to the Sudanese government does not imply an investment in genocide.
An investor losing money is not even close to being as serious as the current genocide, but using any innocent individual as a means to your own end is wrong, especially when those directly responsible are so plainly in sight and can be stopped.
Even worse is the precedent set by a government-mandated divestment. Although the goal of stopping genocide is very serious, there is nothing to stop the government or interest groups from using divestments to promote other social ideas in the future, such as anti-tobacco or environmental agendas.
There is no line to determine what goals can or cannot be pursued in divestments. Once one divestment has been mandated, anything else is up for grabs. Divestments could in the future be linked to any number of important social goals without limit, compromising both the ability of pension and investment funds to effectively manage money and the freedom of capital markets.
The goal of an investment fund is to maximize the resources available to its investors, who in this case have their retirements on the line. The sole goal of its managers should thus be to bring strong returns, not promote social or political viewpoints. Not only are consistent and effective guidelines hard to set, they also impose subjective measures of ethics that would only complicate the management of the fund and restrict its options.
If an investor chooses to pursue individual social goals by personal divestiture, they are free to do so, but it is rather unfair to impose your own ideas, no matter how right you think they are, on someone else's money. This is particularly relevant since the legislators who have introduced the bills don't have a personal stake in the pensions' funds.
Before assuming a binary viewpoint that all things related to Sudan are bad and thus must be punished, those who support mandatory divestment should consider the consequences of such a strong action.
Manning is a finance and economics junior.
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