Because most philosophies that frown on reproduction don't survive.

Monday, April 07, 2014

Hobby Lobby, Hypocrisy, Ethical Investing

Grant Gallicho of Commonweal believes that he's caught Hobby Lobby being inconsistent in their commitment to not supporting abortion. Citing a Mother Jones expose he notes that Hobby Lobby has a 401(k) retirement plan for its employees and that it provides matching contributions to that 401(k) (meaning that when employees contribute up to a certain percent of their incomes to the 401(k) savings plan, the company will provide additional contributions to the retirement plan, beyond that employee's normal earnings, to "match" the employee contribution.) This is actually pretty impressive for a retailer, and I would think that people who care about living wages and such would applaud such a step, but instead it has turned into a "gotcha". You see, Hobby Lobby's 401(k), like most others including the one I have at my employer, offers a short list of basic mutual funds between which employees can allocate their retirement funds. Research with the managers of these funds has revealed that some of these funds in turn invest in pharmaceutical companies which produce abortion drugs and implements.
These companies include Teva Pharmaceutical Industries, which makes Plan B and ParaGard, a copper IUD, and Actavis, which makes a generic version of Plan B and distributes Ella. Other stock holdings in the mutual funds selected by Hobby Lobby include Pfizer, the maker of Cytotec and Prostin E2, which are used to induce abortions; Bayer, which manufactures the hormonal IUDs Skyla and Mirena; AstraZeneca, which has an Indian subsidiary that manufactures Prostodin, Cerviprime, and Partocin, three drugs commonly used in abortions; and Forest Laboratories, which makes Cervidil, a drug used to induce abortions. Several funds in the Hobby Lobby retirement plan also invested in Aetna and Humana, two health insurance companies that cover surgical abortions, abortion drugs, and emergency contraception in many of the health care policies they sell. [source]
Gallicho seems to think this is some sort of damning proof that Hobby Lobby isn't being true to their claimed principles:
The problem for Hobby Lobby's argument is that investing in companies that manufacture drugs and devices that enable contraception and abortion is quite different from paying for insurance that enables an employee's choice to use services the Greens object to. Hobby Lobby selects the funds it invests in. As Redden points out, if the Greens wanted to, they could have chosen funds that screen out so-called sin stocks (they tend to perform as well as other funds). But they didn't. (Hobby Lobby's legal counsel, the Becket Fund, did not immediately reply to my request for comment.)

Hobby Lobby's employee health insurance used to include the contraception services the Greens don't want to cover anymore. Obamacare did the Greens the favor of waking them up to the realities of the health-insurance market, so before filing suit they canceled coverage of the services they consider morally objectionable. They seem not to have been so scrupulous with their investments--and investments are a different animal. The cooperation is more direct. Basically Hobby Lobby is saying to these funds: Here's our money. Make more of it for us doing what you do. From a moral-theological perspective, that brings Hobby Lobby significantly closer to the evil in question than would any premium payments that could allow employees to use contraceptive services. First, in the United States, benefits are considered part of an employee's compensation. Second, employees might not avail themselves of such services. Third, if the Greens decided to stop offering health coverage, employees would most likely end up buying plans that included contraception on the health-care exchanges. Obamacare doesn't require any employers to cover drugs designed to induce abortion.

What might last week's oral arguments have sounded like had this been reported earlier? Hard to say. But I wouldn't want to defend a plaintiff claiming that any role facilitating the use of potentially abortifacient drugs is inimical to its religious beliefs but can't be bothered to figure out whether the millions it invests annually directly supports the production of drugs that always cause abortions. One or two justices might start to wonder how sincerely Hobby Lobby holds those beliefs it says ought to exempt them from complying with the law.
I find this argument against Hobby Lobby unconvincing at two levels.

First, I think it's a reach to hold that someone is making a moral statement with their selection of a mutual fund. Mutual funds typically invest in a large number of companies, they change their portfolio relatively frequently, and the selection criteria, especially in the sort of funds offered in a typical 401(k), are often fairly rote: all stocks that are on a given index, for instance: all 500 stocks which are on the S&P 500 index. I do not think that you are any more morally endorsing the companies invested in by a mutual fund by investing in it via a 401(k) than you are endorsing every person and company which your bank makes loans to when you put money into a savings account and earn interest based on the success of the bank's loans. I can imagine some edge cases where this would not apply. For instance, if the selection criteria of a fund were specifically around some type of business activity that you object to morally (e.g. a fund specifically designed to invest in pornography, abortion providers and sweat shops) I think you would be considered to be violating your morals by investing in that fund. However, if the "Small Cap Index" fund turns out to include investments in a few companies you object to (simply because they fall within the market capitalization range the fund is designed to invest in) I don't think you're necessarily morally involving yourself in those companies activities. There are funds (such as Ave Maria Mutual Funds) which specifically seek to duplicate the criteria of other investment funds while leaving out companies involved in certain morally objectionable practices, and it might represent a conscientious choice for a company such as Hobby Lobby to choose a fund provider such as that instead, but I think Gallicho significantly over-estimates the moral involvement in a companies mission which an investor in a mutual fund has.

Second, and far more importantly, I think it's important to hold that if we believe in religious freedom at all, that religious freedom is not predicated on the consistency of the person seeking to assert his religious freedom. Let's think for a moment about what the idea of religious freedom is. I'd argue that it means that as a political society we believe that there is a value to not forcing people to violate their claimed religious/moral convictions, even if that means the rest of society having to incur some degree of inconvenience or inconsistency. (So, for example, the Amish requested and received an exemption to the Social Security system when it was instituted, because they believed that relying on a state run retirement plan violated the solidarity required of their communities.) As such, it seems to me that the granting of the leeway for religious freedom is very much dependent on what the believer claims is required by his beliefs -- not what outside observers think may be reasonable. Thus, the issue of whether Gallicho thinks it is consistent of the owners of Hobby Lobby to want to purchase health coverage that does not cover emergency contraception, while having standard mutual funds available in their company matched 401(k), really doesn't come into play. The key point is that the owners themselves assert that it would be a violation of their religious principles to purchase the health coverage in question.

One can imagine some interesting reverse examples of this. For instance, suppose that at some point in the future an "Ownership Society Retirement Act" is put in place, which requires all companies to offer a 401(k) with a minimum amount of matching, and specified certain index funds such as the S&P 500 which should be available in all such plans. Commonweal announces that they object to being forced to offer a retirement program which includes investments in petroleum companies and arms manufacturers. Should people who don't like the folks at Commonweal get to veto their claim by digging up some way in which Commonweal relies for its existence on the military and the conventional energy sector?

I would argue: No. Frankly, moral scruples can often look a bit odd to those who do not share them. I don't pretend to understand why the Amish are okay with some uses of modern technology and not okay with others, but I do think that it's important to not force them to violate the moral scruples which they say they have. Similarly, regardless of whether one thinks that Hobby Lobby ought to also change the investments available in their 401(k), I think that their religious objections to offering coverage for the morning after pill on their company health plan should be respected.


Brandon said...

Gallicho seems to play the gotcha game in one variety or another a lot; a truly astounding amount of his work is devoted to it.

We philosophers have a saying: One man's modus ponens is another man's modus tollens. The idea is that you can always go two directions from a problem. Gallicho is suggesting that since (if we grant his premise) HL is in some sense supporting abortion, there is something wrong with their insisting on their liberty not to do it in this other case. That's modus ponens. But you could just as easily go modus tollens: perhaps the 401(k) was an oversight nobody considered closely enough (it's not uncommon for people just to think of mutual funds as a block rather than at a finer grain of analysis, for all the reasons you note), and what they should actually do is stay the line on the health plan issue while rethinking how they handle retirement. Logically speaking, neither direction is more fundamental than the other; there's not really much sense in insisting on only one direction.

But I also agree that Gallicho overrepresents the amount of moral responsibility here; if HL is not specifically investing for the purpose, the nature of the investment on the part of the investor is a limited-knowledge, limited-input endeavor. The strongest the argument can get is that HL might be even more consistent with its moral principles if it looked into certain kinds of ethical funds.

Cminor said...

Will have to come back and read tomorrow , as it's late. Meanwhile, the following may be of interest:
Hobby Lobby Owners Can Have a 401(k) and First Amendment ...
5 days ago - Apparently, this also means that Hobby Lobby can't have a 401(k) plan for their employees. Why? Well, according to Redden and Ungar, the ...

Brandon said...

Thinking about this further, one of the serious problems with Gallicho's argument is that it lacks all sense of remoteness/proximity and directness/indirectness. We aren't talking about HL actually investing in something that has the objectionable drugs for its purpose -- it is massively more removed than that. HL is matching contributions, for the purpose of stable retirement benefits, that its employees invest in a mutual fund (the 'ownership' of these kinds of retirement funds is itself not a straightforward matter -- it is heavily constrained by law, certain employee choices, and the limitations of what funds are available); the mutual fund is administered by another party who invests on a large scale, in what are usually going to be hundreds of companies, for the purpose of diversifying the investment and keeping it stable (even ethical funds don't, and can't, avoid objectionable investments, they just reduce them by avoiding obvious cases); among these companies there happen to be some significant holdings in general pharmaceutical companies, who research, develop, and produce a very large number of drugs and medicines; and among some of these drugs and medicines there happen to be a small percentage that are objectionable. If anybody at Commonweal ever buys an item from GE or Hewlett-Packard, like a toaster or a printer, they have a much closer relation to arms sales, which both companies do, than Hobby Lobby has to these particular drugs by way of mutual fund.

Jenny said...

"First, I think it's a reach to hold that someone is making a moral statement with their selection of a mutual fund."

I don't disagree, but some might make the same argument about insurance.

"Second, and far more importantly, I think it's important to hold that if we believe in religious freedom at all, that religious freedom is not predicated on the consistency of the person seeking to assert his religious freedom."

I absolutely agree here, but there is one thing that has bothered me about this whole Hobby Lobby issue. It's isn't about the case per se or the fight against the contraceptive mandate in general, but about who has latched onto it. Specifically I do not understand why the Southern Baptist Convention is actively suing the federal government about the mandate. Southern Baptists do not morally object to contraception, quite the opposite actually. I understand why they might support another party's suit, but I don't understand why they are pursuing one themselves.

The argument seems to be "You are infringing on my religious liberties by requiring me to buy a product I don't really care if anyone uses or not. Well actually I do care, you should probably use it with in marriage to be responsible. You sure wouldn't want to have any children you can't afford."

In my mind it muddies the water and makes the more generalized opposition seem politically rather than morally motivated.

Brandon said...

With the SBC we have to be somewhat careful, because the SBC is a bottom-up organization -- the Southern Baptist Convention has no authority of its own, it's merely the instrument of its member churches, which in turn only have authority from individual Baptists in their congregations. So to say that the Southern Baptists don't object to contraception is only to say that there aren't enough local churches in the convention who think it an important enough issue. But religious liberty is a Baptist distinctive, a common doctrinal point for all Baptist organizations, and Baptists understand this in terms of individual liberty of conscience. And a lot of Baptists, while not having a problem with contraception, have moral problems with certain kinds of contraception. (Hobby Lobby is actually a good instance -- their own health plan already covered certain kinds of contraception, like prophylactics. But under the new regime they would be required to fund plans that cover particular kinds of emergency contraception that they regard as functionally equivalent to abortion, which they are arguing is inconsistent with their Baptist principles.) Thus from their perspective there's no need for any general position on contraception -- the case still directly affects religious liberty as they understand it.

Foxfier said...

Specifically I do not understand why the Southern Baptist Convention is actively suing the federal government about the mandate. Southern Baptists do not morally object to contraception, quite the opposite actually.

Possibly because they're abortion causing drugs, not sterility causing drugs?


I can see two possible themes in the "gotcha" style:
no sense of proportion (doing business with someone who does business with someone who does the objectionable thing is the same as doing the thing yourself)
a sort of...contamination? Maybe purity?... based attempt to engage things. Where there's no difference recognized between eating something with .0001% of a dose of cyanide in it (apple seed, say) and drinking a glass with enough cyanide to kill an elephant.

Jenny said...

I understand the distinction about where the SBC derives its authority, but I would say that contraception is so off their collective radars that I would be surprised if any of the local churches thought it to be an important issue. Like I said, I do not support the mandate at all and think that employers should not be required to cover items against their consciences. But I can't be the only one who did a double-take when the SBC jumped into the fray and on the side of Catholics?!

Foxfier said...

But I can't be the only one who did a double-take when the SBC jumped into the fray and on the side of Catholics?!

Reminds me of a joke.

Pope was visiting America, and he really wanted to drive. So once they got to an empty part of the freeway, he talked the driver into getting into the back, and he took off.
Unfortunately, he really took off, and before long a policeman pulled him over.
The policeman had his ride-along wait in the car, went up and talked to the Pope, then came back.
"So," asked his ride-along, "who was it and why didn't you write him a ticket?"
"I have no idea who it was," said the first cop, "but whoever it was has the Pope driving him around!"


'Cus if it's something important enough to get the Baptists to voluntarily work with the Catholics, gotta be a pretty big deal.....

Brandon said...
This comment has been removed by the author.
Brandon said...

It could very well be that it looks odd from certain angles, but I was raised Southern Baptist and it didn't surprise me at all. Baptists have always been fairly active in religious liberty issues in general; and in this particular case, they themselves do have a moral objection, just not the same as the Catholic one. For them it's not an avoiding-contraception issue -- as Foxfier suggests, it's an avoiding-anything-too-close-to-abortion issue, and a lot of Baptists have become convinced in the past thirty years (partly due to the work of Catholics) that some kinds of contraception are too close to abortion to be complacent about. It's become a pretty common view among Southern Baptists.

Anonymous said...

Since I work in the ugly intersection of the academic and business worlds (transitional medical research) I have to fill out a yearly conflict of interest disclosure.

For instance, I can't own stock in a pharmaceutical company, like GlaxoSmithKline. Even though I'm a lowly technician with no power whatsoever, it's a conflict of interest.

But I can use a mutual fund that might own shares of GlaxoSmithKline, because I have no control over the mutual fund's stock portfolio.

This is the basic way COI and mutual funds interact. I can't see that Hobby Lobby has done anything improper here.

Art Deco said...

Gallicho seems to play the gotcha game in one variety or another a lot; a truly astounding amount of his work is devoted to it.

Beats having to discuss the doctrinal and moral teachings he does not adhere to (while spending a nice slice of his life as a salaried 'Catholic' journalist.

Cojuanco said...


Any evidence of that? I'm not saying it's false, just want proof.