Group studies African divestmentRobert Zevin, vice president of the United States Trust Company, and Roy Shotland, professor of law at Georgetown University, debated the issue of divestment from South Africa at Ashdown House in a workshop entitled "Immorality, Ineffectiveness, and the Illegality of Absolute Divestment."
The argument that capitalism will promote liberalism in South Africa "may have had some merit in the 1950s or 1960s," Zavin said. "Apartheid has shown itself to be an extremely durable institution."
American companies have done less to stop apartheid than South African companies, Zevin said. "A guest is more law-abiding than a native," he said. An analogy was drawn with American oil regulations. Shell, a foreign company, is the most compliant, Zevin said.
"It would be a moral thing for companies to leave South Africa," Zevin continued. Some stockholders feel it is not right to walk away from a problem, he said. "I favor selling your stock and sending a loud message to the companies." Neither position is immoral, Zevin added.
It is reasonable for investors to say there are certain events they will not profit from, Zevin said. The drug trade is an example, he explained.
"It is a surprising counterintuitive fact that this exclusion [by universities of companies present (Please turn to page 3)
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in South Africa] has little effect [on their portfolio]," Zevin said. Investors will have as much flexibility after divestment, he added. This fact is fairly obvious to all who have studied the data, he claimed.
Schotland was happy Coca-Cola was not served as a refreshment, because he would not want to be morally corrupted by drinking a product of a company that is in South Africa. "Many of you shouldn't be drinking Coke," he said. "I suspected snake oil would be served," Schotland added.
The question is what are appropiate measures against apartheid, Schotland said. "We could drop nukes, but that would not be appropriate."
The goals of the movement against apartheid are as follows, he said: to end apartheid, to end it soon and peacefully, to let South Africans know the United States is not dedicated to the status quo and to maintain a stable society.
The proponents of total divestment can be categorized into three groups: the simplifiers, the salesmen, and the sincere, he said.
The proponents of the divestment bill in New Jersey are examples of simplifiers, Schotland said. He said the proposal was a sham to ripoff the pension fund. The bill divested all investments of the New Jersey state government employee pension program from companies in South Africa.
Some of the salesman are stockbrokers who say divestment can work to bring money to their own firms, Schotland said.
Proponents of absolute divestment are prejudiced, he said. "To brand different firms the same because of one characteristic [presence in South Africa] is the essence of prejudice," he said.
A more reasonable approach would be to selectively divest of companies that are not working against apartheid in South Africa, Schotland said.
Advocates of absolute divestment hypocritical as well, Schotland said. "There are 5700 companies who make their living buying from and selling to South Africa -- that's okay. If you have 11 people there you are immoral," he said.
These activists should stop using cars, drinking Coke, and using IBM and General Electric products, Schotland said. Divestment advocates would be limited to Time magazine, he said. A proponent of divestment should not work for these firms either. "How many individuals are willing or able to be this pure?" he asked.
Divestment is comparable to playing poker when you cannot draw aces or face cards, Schotland said. Investors would move to less liquidity and higher risk, he added.
Zevin countered this claim by saying that it was intuitive, but incorrect.
MIT would lose $5 million per year if it divested, said Schotland. He indicated that this money would be better spent helping education in South Africa. "Only 300 black South Africans attend college in the United States."
Several members of the audience countered that this proposal was not practical. One sited the fact that black enrollment at [el1p]MIT was dropping as evidence that the Institute would not help black foreign education.
Several from the audience questioned Schotland on the morality of supporting a racist regime. He countered that many of the companies were breaking the law and working against apartheid.
Many audience comments complained both speakers reduced the issue to dollars and cents.
One member of the audience asked if it would be moral to divest, because jobs would be lost. The speakers agreed that American corporations employ only 70,000 black South Africans.
Zavin concluded by calling divestment a positive, worthwhile contribution. "A country that is supposed to be a liberal democracy will not invest in repressive regimes," he said.
Schotland called the debate a question over "the best way to get things done. Our disagreement is on what is effective."