Banning Investment in Rogue Nations

Austin-American Statesman: Divesting state of its Sudan ties in question

Texas lawmaker wants public investments pulled out of companies with links to troubled African nation.

In 1997, former Sen. Bill Ratliff, a Republican from small-town East Texas, slipped an amendment into the state appropriations bill to force public pension funds in Texas to rid their portfolios of any company that published music that "describes, glamorizes or advocates" activities such as drug use and criminal violence.

The measure was quickly dubbed the "Snoop Dogg rider."

This session, the target is much more distant: the war-ravaged country of Sudan.

But these types of socially motivated investment regulations have a long record of questionable effectiveness and legality.

Michael Williams, a Republican railroad commissioner from the oil patch, and state Rep. Lon Burnam, a Democrat who represents inner-city Fort Worth, are focusing on Sudan because of that country's long civil war and its more recent support for "ethnic cleansing" in the Darfur region. The House Pensions and Investments Committee has approved Burnam's House Bill 815, which would prohibit state pension and investment funds from investing in companies that do business in Sudan.

It's hard to argue against such a ban, and so far no one has dared to try.

The 21-year-old civil war in Sudan, now in a cease-fire, has claimed more than 2 million lives. In Darfur, in western Sudan, government-sponsored militias have slaughtered citizens in their assault on rebel tribes. The region has suffered 180,000 deaths, and more than 2 million people have been displaced from their homes over the past two years.

For someone from a free market anti-state background, stories like this provide some conflict.

My first instinct is to simply shake my head at legislators who want to end suffering in a country or send a message of their displeasure with that country's leadership. It's another of those attempts to use government to force compliance with the personal beliefs of the politician. Before the opponent even gets into the merits of such proposals, he must first come out against them. Before you can say "Gotcha!," the opponent is labeled a supporter of the Other Side; a person to whom suffering does not matter; a "do-nothing" who would rather see people live in pain and die than help.

My second instinct is a reflection of my old Republican past: why give money to these vicious murdering bastards over there? Surely, as someone who, at the very least, possesses a vibrant skepticism of the state, I must oppose positively aiding the least pleasant of the lot. I can't be for the assistance of openly brutal regimes.

My third reaction is to consider what is being discussed here. Is this not a law intended to hinder free trade? Ought I to oppose it on those grounds?

Then things begin to sort themselves out.

Sudan demands "a coordinated response" of disinvestment, Williams said. That tactic will help persuade Sudan's rulers to stop killing their own people and to sever ties with Islamic terrorists, he said.

Perhaps, but this assumes the rulers in Sudan are rational people who place high value in the investment and business activities Texas companies provide.

A cynic like myself might also mention that believing this implies a deeper problems. Why would this investment mean so much to the rulers of Sudan? Are they unequivocally in disinterested favor of economic growth? Or do they look to the foreign wealth as a means to their own ends?

Burnam cites the Center for Security Policy's claim that the two biggest Texas pension funds - for teachers and state employees - hold stock in 61 companies that do business in Sudan.

But certifying that claim borders on the impossible.

The center won't disclose the names of the companies. It buys the information from an investment advisory firm, Conflict Securities Advisory Group of Washington, which says its investing screens are proprietary information that must be purchased.

Colin Leyden, a spokesman for Burnam, said any questions about the merits of the center's list are irrelevant to the larger point: that selling the stock of companies doing business in Sudan will force them, and others, to consider human rights as part of their business strategy.

Copyright 2001-2005 Cox Texas Newspapers, L.P. All rights reserved.

Classic, just classic. They want to shoot something, but when someone points out that the target cannot be seen clearly and moves fast, they want to shoot anyway because it sends a message to the target.

These aren't private businesses under discussion here. These are the pension and investment funds that government uses. Ideally, they wouldn't even exist because they wouldn't be financed with tax money. These are hardly players in a free market.

However, ought the "owner" of such funds be the one to direct their activities? Certainly, provided that ownership is legitimate. In the case of what the state nominally possesses, that isn't necessarily so.

So, do I oppose the proposed law?

Sec. 2264.002. PROHIBITION ON INVESTMENT IN SUDAN. State funds may not be invested in equities or obligations of a private
corporation or other private business entity doing business in the
Democratic Republic of Sudan.

I oppose restraints on free, voluntary trade as a matter of principle. I therefore oppose government as a matter of principle. This law would act as a restraint of trade against businesses in Sudan. However, it is a government entity that would be restrained. Therefore, an activity and a power of government would be weakened. Unfortunately, I have no doubt that investment in the private sector in Sudan is at least partly necessary for the people living there to enjoy a greater standard of living.

Gawddamn states screw everything up, don't they?

I support the law because, to the extent the investors aren't investing with money given to them voluntarily, they are using property that isn't theirs and any reduction in the scope and activities of government is something I support. In essence, I support the state when it strangles itself. I invite comments on this stance.

Posted by Drizzten at April 18, 2005 09:35 AM