Monday, April 17, 2017

Investing in Defense Contractors

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.


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.


  1. I would say that it is permissible as a libertarian to do this. If the measure was government involvement in a particular sector than a libertarian could not exist anywhere.

    That said I think that it is very unwise, as a libertarian, to invest in the MIC. Once you have personal financial interests that align with the MIC you will, as a human being, begin to rationalize the government's actions because humans have the infinite ability to rationalize as good what is in their own financial interests.

    1. It is difficult for me to reconcile being a libertarian with being an owner of a company that lobbies for war in order to make money from weapons that, inherently, kill non-combatants.

    2. BM, would it likewise be difficult for you to reconcile a libertarian owning stock in a company that supplies weapons to ICE?

      Liberty Mike

      PS, OT: RIP William Norman Grigg. BM, did you ever correspond with him?

    3. Mike, as you noted below, some degrees are closer than others; I personally could not do this. I had such an opportunity - even in support of local police. Let's just say I didn't take the job.

      But to me the big bright line...can the weapon be aimed at the individual in question? Virtually nothing produced by the MIC for the armed services fits this definition. Collateral damage is one of the most immoral terms to come from war.

      Rifles, hand guns, bow and arrow? A different story. Much (but not all) of the weaponry purchased by local law enforcement (and maybe ICE) is just such weaponry.

      As mentioned, I still wouldn't do it, but the line isn't as bright.

    4. BM, depending on how your finances are arranged you may own bits and pieces of the MIC via investments and not even be aware of it.

    5. Mike, I neglected to comment re Gregg; I did not correspond with him, but was saddened nonetheless. When I wrote several days ago about things I have not written about and in some of these cases the reason why is because the topic is well-covered by individuals more qualified on the topic than am I, I was specifically thinking of Grigg and the work he did.

    6. Matt, I think this point is reasonably well covered in my conclusion - aware or not aware, bits and pieces of mud can never be avoided when we are all swimming in it..

  2. Unless buying stock directly from an IPO or FPO, the company doesn't get your money. So you're not helping it are you? You would be simply placing a bet that war stocks rise in times of war. Also, if you own war stock with a dividend, then the company has to give you money. In effect, you'd be taking money away from a war company. If the stock rises, you could use the gains to help keep your anti-war website going, too. If you make enough, you could bribe a politician to vote for peace.

    Then again, any gains are taxable, so the government could use the collected money to buy war from the war company. Looking at the fungible aspect of money, then, gains from ANY stock could help war companies.

    Beats me.

    1. Imagine you were the sole shareholder - and you bought all of your shares on the open market, so the company didn't get your money.

      Is it consistent with libertarian theory to be an owner of a company that lobbies for war in order to make money from weapons that, inherently, kill non-combatants?

      You are the owner of the company; you are the lobbyist.

    2. "You are the owner of the company; you are the lobbyist."

      Imagine that. Now imagine what I, a peacenik, would do next before my limo turned back into a pumpkin. I'd retool from swords to plowshares, or missile-shaped garden planters or some-such. I'd expect any libertarian to do the same.

      Owning SOME shares, the amount of which precludes me from swaying the company in any way, would not benefit the company though. I would just be placing a bet versus other gamblers. I don't necessarily find that as personally acceptable, since there are other bets I could make without involving a war company.

      Also, if I owned a war company and wanted to stick to NAP, I could convince myself that the company is for "defense" and that I/we did not initiate the aggression (Someone is sure to whip up a false flag to that effect). I'm in like Flynn. Yes/no?

      Here's another thought: what about public companies that supply war companies with some of their widgets? Same thing? Or different? What about a trucking company that transports material to and from the war company? What if you owned stock in a company that supplied the war company its light bulbs? Work boots? Kind of a 'Six Degrees of Kevin Bacon' thing.

      Like I wrote earlier. Beats me.

    3. Brutus, some degrees, like Kyra Sedgwick, are closer than others :)

      Liberty Mike

    4. Brutus

      "what about public companies that supply war companies with some of their widgets? Same thing? Or different..."

      Yes, more gray. My thought? If what the company sells is a general product - used in multiple applications, one of which is military - I can live with it.

      This may not be true for others, just my thoughts.

    5. Good point, Bi-Mosq.

      Shame there isn't a more general disdain for war within society like there is in, say, the environment. Environmentally non-friendlies are pinpointed and shunned all the time. I guess that's why the state freely edumacates kids early on with the proper patriotic stance on military/war. (Not my three, heh heh.)

  3. I worked for the government active duty military for 6 years. I got out because I decided it was evil. I didn't realize it was evil at the time I went in but came to that conclusion after begining to read classic literature during my down time while "serving". I vowed to never work for the US federal government again. I also agressively practice tax avoidance in an effort not to support the US federal government. I own a lot of gold. I don't even want to invest in major US financial institutions for the same reason. They are as evil as the military industrial complex... of course they are actually a major part of it. I honestly hope it all collapses. The US will suffer horribly but the rest of the world will be better off.

  4. You guys are overthinking this. Investing in a company is an inherently supportive act. Working for a company is also a supportive act, if a trivial one, because refusing to work for a company, removing yourself from its labor market, is inherently negative.

    You can argue all day about whether universities and bomb-makers are inherently evil or not, but whatever they are, working for an investing in them is supporting them.

  5. What about investing in the shares of a private weapons contractor in a NAP libertarian society? Such a company would presumably be making potentially collateral damaging things for defensive purposes of greater firepower than mere rifles and handguns.

    It seems to me that if many small scale libertarian communities pooled their resources to purchase defense services for protection against nation states hostile to a libertarian society, they would need weapons like jets, tanks, artillery and the like, all weapons capable by their nature of "collateral" damage to noncombatants. Is it even possible to morally defend a libertarian society under such circumstances?

    1. A very interesting question...I am not sure we even need to go to an NAP libertarian society.

      Can a North Korea or Iran be blamed for wanting / having nuclear weapons, considering that they have been continuously under existential threat for decades? Nukes being perhaps the least expensive means of deterrence for the significantly weaker side.

      Something to contemplate.

  6. "Imagine you were the sole shareholder - and you bought all of your shares on the open market, so the company didn't get your money.

    Is it consistent with libertarian theory to be an owner of a company that lobbies for war in order to make money from weapons that, inherently, kill non-combatants?

    You are the owner of the company; you are the lobbyist."

    I've faced this decision, in the middle of actually becoming a libertarian. It was a very difficult time for me.(back in 2006)

    My company was struggling and I had called on British Aerospace for YEARS trying to get in the door. As I was making the transition philosophically, I got in finally during this first project was to design/build a weld fixture for a prototype Humvee hood to accommodate a larger engine.

    The project was rife with graft and mismanagement. My original quote $12K, doubled to $24K by the project end due to general incompetence on BAE's part.

    I didn't sleep for several nights in anticipation of having to inform the purchasing agent of what the overruns were going to cost. When I told her the final amount she said, "Well, that's better than $100k, don't worry about it, we're "cost plus""

    I wrestled with my transition to libertarianism and shortly after that project I flushed BAE down the drain-giving up not just the potential for wealth but flusing down years of sales work. In all honesty, BAE would have made me very wealthy. I never gave them an explanation, I just told them them I was heading in a different direction because I was afraid I would end up on some government list of "unpatriotics" or something...but make no mistake a paid a very heavy economic price by walking away and I have a family to support.

    On the flip side, I can look at myself in the mirror and know I can make the difficult ethical/moral choices when necessary and that brings me some comfort.

    1. Now there's a libertarian. A hearty electronic handshake to ya'. Beyond comfort, I hope your choices bring you some future wealth, too.

  7. The state is involved in almost every aspect of society, and thus any company that does business with the state voluntarily (e.g., road contractors, food producers, private universities [except Hillsdale], etc.) is "guilty" of handling stolen funds.

    Are those that work in the defense industry also guilty of additional NAP violations because they produce weapons that can only be used to kill indiscriminately? I would argue that these weapons are inert until a human chooses to deploy them, and thus their mere production is not a separate NAP violation. It's possible in a libertarian society that private protection agencies may acquire these weapons for deterrence purposes against aggressors who also have them.

    Of course companies cannot commit NAP violations, only individuals can, and thus we have to go one step deeper.

    The question regarding an employee or shareholder of these entities is whether he is responsible for the NAP violation or of aiding or abetting these NAP violations. I suspect each legal system might develop different nuances around these concepts, but most probably require specific intent and/or knowing direct participation. Thus top management would probably be guilty if they are involved in soliciting government contracts or subsidies, but the janitor and maybe even HR director might not. I see minority shareholders as being too far removed, but equally I could see a legal system developing the concept that if you help finance an NAP violation then you too are guilty.

    Certainly working within these companies to undermine their NAP violations would not itself be a violation.

  8. Here's an alternative view: Betting on a horse doesn't mean you're morally or legally responsible if the horse kills someone.

    I'm already coerced into financing the warfare/welfare state through taxation and money printing. I vote and donate money to further libertarian policies and values.

    If a libertarian thinks Lockheed Martin is a good bet, he should do it. Buying stock isn't an initiation of force and it could be a decent hedge against the damage inflicted by the state.

    I can only speak for myself, but I'll be damned if I'm going to martyr myself for a dubious "extension" of the NAP.