Indianapolis Star: War-related stock picks can yield an ethical dilemma


Somebody’s going to make money off a war with Iraq.p. With Uncle Sam footing the bill for $100 billion or more, every dollar he peels off will end up in somebody’s pocket.

Among others, the pockets of stock investors soon may — and underline that word “may” — be lined with a little extra profit.

In some people’s minds that may raise questions about investing and ethics.

No one knows which way the stock market will bounce as this conflict becomes resolved.

But markets hate uncertainty, and even the violent end of uncertainty in Iraq could spark a rally. At least that’s what market optimists are hoping.

If that happens, with millions of Americans invested in stocks through 401(k) accounts and taxable holdings, does that make us a nation of war profiteers?

That’s a question too tough even for a columnist to attempt to answer. It’s time then to seek out the wisdom of Solomon.

Since the biblical king isn’t available for comment, let’s turn instead to David Solomon, a philosopher and director of the University of Notre Dame Center for Ethics and Culture.

Solomon’s specialty is bioethics, not business. But he’s a personal investor, too, and no stranger to questions about ethics and investing.

“We’ve been working on some very similar questions about people and institutions who make a lot of money on investments they later find out involve practices that are deeply unethical,” he says.

For the record: Solomon says he is not a pacifist, but he is ambivalent about the use of military force to oust Saddam Hussein.

Now, his quick take on investing, and war with Iraq: “None of us is going to emerge from this situation with clean hands. If the market goes up, most boats will be lifted.”

Some hands, Solomon suggests, may be dirtier than others. The distinction lies in the investor’s intent. “What’s wrong,” he says, “is the intention of using the market to make money off the unfortunate side effects of morally dubious enterprises.”

That creates some distance between a passive index investor and, say, an investor who buys shares in a munitions maker who soon may get orders to replenish stores of bombs.

But it’s not that simple, either.

Suppose an investor avoids the munitions shares, Solomon says, but buys shares in a financial institution that lends money to the munitions maker. The munitions maker still benefits from the investment, if only indirectly.

Or how about this: A company that makes orthopedic surgical devices - artificial hips and knees, screws to repair broken bones- helps injured people resume normal lives.

One such company, Biomet Inc. of Warsaw, appears in the Domini 400 Social Index, a list of companies identified by Domini Social Investments as a socially responsible company.

But what if an investor buys shares in Biomet on a bet that the needs of wounded GIs and Iraqi civilians will boost demand for Biomet products, and boost the stock?

“I suppose there are investors right now trying to make exactly those decisions,” Solomon says. “That’s repugnant to me, personally.”

Maybe not to others, though. Even Solomon admits, “Everything gets hard in ethics.” And he adds, “It’s very hard to be good.”

But we’re all trying, right?

Contact Thomas P. Wyman at 1-317-444-6424 or via e-mail at

March 20,2003

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