Divestment Advocates Push Their Cause With Other People’s Money

For the past year, the City of San Diego has been enmeshed in the foreign policy controversy of apartheid and divestiture.

Everyone agrees that apartheid is inherently evil and, for that reason, we would all welcome its end. However, the means to the end of apartheid has taken on the single focus of divestiture. As an elected representative, I have agonized over the policy questions borne of divestment and I have reluctantly come to the conclusion that divestment is intellectually dishonest.

The ethical bankruptcy of divestment as a policy is not immediately apparent. On the surface, someone complains that we should not be doing business with countries that condone and practice racial segregation and discrimination. Initially, that seems reasonable; however, closer inspection reveals that the rights of many must be ignored and trampled in order to enable divestment advocates to charge forth under the banner of self-righteous indignation.

While the proponents of divestment may be well intentioned, it seems to me that they are profoundly naive. They would have us believe that we live in a simple world of simple solutions and that we merely have to tell South Africa to play ball by our rules or we’ll take our ball and go home.

They theorize that such an ultimatum will shape up Pretoria and force the government there to see the error of its ways. But, realistically, the “game” is much more complex. Any armchair quarterback can pontificate about how the game should be played; but, unless you’re on the field with a 340-pound “Refrigerator” staring you down, you haven’t an inkling of what the risks really are. And they are considerable.

Following the time-honored traditions of radical chic, the proponents of divestment have nothing to lose and refuse to place themselves at risk. “Sending a message” is their single-minded purpose, forgetting about who may suffer in the process.

When I came to the council in 1979, the pension fund totalled approximately $300 million and was 65% funded. The fund has since grown to $625 million and the prospects are good that by 1990--if the investment policies are not altered--the fund will be 100% funded. What this means in real terms is that city employees’ contributions to the fund will be reduced by $10 million per year and the city’s taxpayers will be relieved of an additional $10-million-a-year financial burden. That money can be used to fill potholes, acquire open space, or strengthen our Police Department.

I’ve found politicians who loudly proclaim that retirement boards should divest from any company doing business in South Africa--Sullivan Principles or not--often own portfolios that cannot survive the same scrutiny. Far from showing any willingness to make an honorable sacrifice themselves, they are balancing their idealism on the backs of the taxpayers.

The disregard for pensioners who are caught in the middle is equally unconscionable. They are at risk of losing not only the needed and anticipated profits of their pension plan but, also, they live with the danger that divestment will be a precedent-setting issue that could fling open the heretofore locked door and make pension funds a political grab-bag for all sorts of social and political causes. There is little difference if I raid your bank account and gamble it away to prove the point that one should not gamble with one’s life savings. It’s not my money I’m risking; it’s yours. It would be only natural for you to resent such a manipulation and I submit, for the same reasons, it is only natural for pensioners to resent the advocates of divestment. Even so, pensioners are not the only ones at risk.

The Retirement Board is also in jeopardy. As it should, the law holds each member personally liable for any investment losses that occur due to a lack of fiduciary responsibility; and, they are forbidden to make their investment decisions on the whims of political expediency or even on the value of social issues. The members of the board have no defense against losses suffered by their fund if they sell blue chip stocks to satisfy the proponents of divestment.

Anyone with the competence to serve on a Retirement Board takes the obligation to his beneficiaries seriously and will not be so foolish as to put his own home, car, bank accounts and child’s college fund in peril to accommodate the illegality of divestiture.

While you can find any number of divestment advocates leading the crusade to squander the life savings of others, you won’t find many of them who refuse to drive a General Motors car, or enjoy the convenience and efficiency of IBM products, or Scotch tape and those little yellow 3M sticky pads that keep everything in place for secretaries and their bosses. Supporting these companies with consumer dollars in the marketplace while demanding that those who invest in their capital formation through the stock market must cease and desist for moral reasons is utter hypocrisy.

Perhaps the most profound indication of the advocates’ intellectual duplicity dawned on me when I read of Prime Minister Botha’s threat to halt U.S. grain shipments (not only to South Africa but to all African states that rely on South Africa’s shipping and transportation routes) if the U.S. Senate reversed President Reagan’s veto of sanctions. Squeals and cries rose from the Senate floor that this was an improper foreign intrusion into the U.S. legislative process.

“It’s an affront to the decency of the American people,” huffed the chairman of the Senate Foreign Relations Committee. Indeed. He declares war and then becomes indignant when his adversary arms himself.

It occurs to me that there have been a few unwarranted intrusions from our side of the fence during this entire debate about which nothing has been said:

1. The intrusion of political considerations upon fiduciary responsibilities.

2. The intrusion of state and local governments into the areas of foreign policy.

3. The intrusion of American cultural values into the domestic policies of a sovereign nation.

4. The intrusion of advocates not-at-risk into areas of diplomacy, foreign policy, fiduciary responsibility, financial security for the elderly, capital markets and corporate planning--all of which are interwoven with risks and consequences unimaginable to the blind idealist.

We cannot allow the risk-free to ride roughshod over the rights and legitimate concerns of others in this controversy. Not only do we damage our own constituencies but there is considerable evidence that we bring further suffering and duress to those we want to help, the blacks in South Africa. And, as the unjustifiable means squander the end, even the blind idealists will find themselves the target of resentment, bitterness and outrage that will be due them from those whose welfare has been unfairly imperiled and who are forced to live with consequences not of their own making.

In short, don’t put everyone else at risk so you can make your point. It’s not right.