Investing in Defense Contractors

A question for Walter Block (condensed):

My question is, would it be a violation of the NAP or libertarian principles for anti-war libertarians to own stock in companies such as those, either through index funds or by purchasing individual shares in a brokerage account?

Would a libertarian be in violation of the NAP or libertarian principle by working for any of those companies as well, in a capacity not directly related to warfare?

Before specifically getting to Walter’s reply…I have dealt with this topic before, long ago in the very early days of bionic mosquito.  At the time, the point was raised by Richard Maybury at The Daily Bell.  I have a series of posts on this topic of investing in defense contractors, but offer the following as the most relevant:

Richard Maybury: The Ugly: This post expands, in a somewhat crude way given bionic was just a pup at the time, my initial comments on the view that it is not consistent with the NAP for a libertarian to own defense stocks.

Richard Maybury at The Daily Bell: this post furthers the dialogue, including a back-and-forth between bionic and whoever was dealing with feedback at The Daily Bell that day.  This post continues that same dialogue with TDB.

Now, on to Walter’s reply (condensed):

The problem with “owning stock” in a bad company is that you are sort of stuck. Stipulate that it is bad to do so. Well, then, what are you going to do? If you sell your shares, you besmirch the person who purchases them from you. Ditto for giving them away to someone else. How about if you just burn your stock certificates? Then, everyone else’s shares rise in value, with the same result. Stuck, I say.

I see no problem here.  What someone else does with his capital and given his principles is his business.  I am responsible for my own behavior; heaven help me if I am also responsible for the behavior of everyone else.

Yet, I see no answer to the underlying question; for example, what if I don’t own such stock today – therefore none of Walter’s concerns arise?  Is it a violation of the NAP to purchase such stock?

I offer one portion of my earlier posts, linked above; it should be noted, Marbury uses examples of handguns and the like when discussing the ethics of investing in Lockheed Martin or General Dynamics:

Maybury’s position on investing in things that do well in wartime is corrupt.  Maybury advocates profiting from the most hideous outward manifestation of the state: war.  Almost every weapon produced by such investments is one of mass destruction – not able to be aimed solely at the intended target (assuming you even trust the state’s judgment on the intended target, individuals half-way around the world that pose no harm to Americans).

One will say that the weapon cannot be immoral, only the operator.  This is correct for a rifle or bow and arrow.  It can be aimed at the intended target.  Not so for weapons of modern warfare.  All such weapons produce what is sanitarily called “collateral damage.”  These cannot be used in a moral manner.

I go on to cite a Rothbard passage on this same point.

Returning to Walter:

What about working for an evil firm, or, for the government? Well, I was employed by several public universities. One justification is that such schools are not evil per se, since colleges would also exist in the free society.

This is a confusing statement.  Why intersperse teaching at a university with the answer to the question at hand?  In any case, I generally agree with Walter’s conclusion – colleges would exist in a free society.  Further, as colleges are virtually all captured by the state, one who has a calling to be a professor has little choice about the funding nature of his employer; most colleges and universities receive significant state funding – directly and indirectly.

What about working for a governmental institution totally incompatible with liberty, such as the Fed or the CIA. Here, I would say that a libertarian could do so, but, only if he undermined the mission of these institutions, not promoted them.

I cannot disagree with this, although I am personally not very comfortable with this.  What can one say about an Edward Snowden, for example?  That such as he is so rare and that such efforts result in negligible fundamental change suggests how difficult it is to destroy from the inside. 

Otherwise, stay clear – there is nothing compatible with liberty here; such entities would never exist in anything even remotely resembling their current form absent government.

And I say the same for today’s defense contractors; and I conclude that investing in these is a violation of the NAP.

Conclusion

I offer below my responses to the nuanced portions of the original questions.  I realize these are delving deep into the gray areas, so I offer my replies with this caveat:

What about investing in defense contractors through an index fund?  If the index is a broad-based industrial index, I do not see an issue; if it is a focused defense and aerospace index, I think not.

What about taking a non-warfare-related position in a defense contractor?  If it is in the washing machine division, I see no problem.  If it is general corporate G&A or overhead, then I see it as a problem.