Is this investment opportunity ethical (for me?)
November 2, 2021 7:25 AM Subscribe
Or would it be hypocritical?
I am 50, and work as support staff for an investment firm (think human resources, or accounting, as opposed to making deals). I'm somewhere between capitalist and socialist; I want to have some nice things, but I want everyone to have that opportunity before the 1% has the opportunity to have more. I am entirely for a redistribution of wealth.
I struggle ethically with working for my firm. I don't get paid so much that I have ethical issues there; it's more that I've sold my working hours to a firm in an industry that I would say is part of the problem. I do think the firm is one of the better actors in the industry (though I'm sure they all say that), but I think that just means here that it's been guilty of the typical sins in this industry less often than most firms -- not never.
I've rationalized a percentage of this with the positions that not all the investors were greedy rich people -- some are pension funds, for example, so the firm's success does help some fortunate 'regular people' -- and that my role is peripheral to the firm's success (what I do doesn't make the firm more profitable, and none of my decisions affect someone else's job), and that if I didn't do this job, someone else would, while I would make less for me and my family.
I'm now being given the opportunity to invest in the firm. Historically, such an investment would yield much more than I could achieve otherwise -- call it twice or three times as much. The amount of my investment would be comparatively minuscule, but would still be money in a pool that enabled the firm to make acquisitions, some of which would lead to downsizing, and maybe two or three of which would be in companies with at least some practices that I find reprehensible.
Maybe the question is better put as Is there any way making this investment *wouldn't* be hypocritical?
I am 50, and work as support staff for an investment firm (think human resources, or accounting, as opposed to making deals). I'm somewhere between capitalist and socialist; I want to have some nice things, but I want everyone to have that opportunity before the 1% has the opportunity to have more. I am entirely for a redistribution of wealth.
I struggle ethically with working for my firm. I don't get paid so much that I have ethical issues there; it's more that I've sold my working hours to a firm in an industry that I would say is part of the problem. I do think the firm is one of the better actors in the industry (though I'm sure they all say that), but I think that just means here that it's been guilty of the typical sins in this industry less often than most firms -- not never.
I've rationalized a percentage of this with the positions that not all the investors were greedy rich people -- some are pension funds, for example, so the firm's success does help some fortunate 'regular people' -- and that my role is peripheral to the firm's success (what I do doesn't make the firm more profitable, and none of my decisions affect someone else's job), and that if I didn't do this job, someone else would, while I would make less for me and my family.
I'm now being given the opportunity to invest in the firm. Historically, such an investment would yield much more than I could achieve otherwise -- call it twice or three times as much. The amount of my investment would be comparatively minuscule, but would still be money in a pool that enabled the firm to make acquisitions, some of which would lead to downsizing, and maybe two or three of which would be in companies with at least some practices that I find reprehensible.
Maybe the question is better put as Is there any way making this investment *wouldn't* be hypocritical?
In our house, the rule is "We take money from X, we do not give money to X."
X can be Nazis, Trump supporters, Amazon, Republicans, whatever. I realise the application of this rule is complex but it is an very clarifying starting point. So in a role that doesn't generate income for the firm, I would have no issues. The fact that we live in a capitalist dystopia does not negate Maslow's Hierarchy of Needs, an d we all need to eat.
posted by DarlingBri at 7:40 AM on November 2, 2021 [16 favorites]
X can be Nazis, Trump supporters, Amazon, Republicans, whatever. I realise the application of this rule is complex but it is an very clarifying starting point. So in a role that doesn't generate income for the firm, I would have no issues. The fact that we live in a capitalist dystopia does not negate Maslow's Hierarchy of Needs, an d we all need to eat.
posted by DarlingBri at 7:40 AM on November 2, 2021 [16 favorites]
To me the investment in them with some of your cash is paltry compared to working there for however many years.
So if you're ok with working there indefinitely, you're ok investing in them, because you already have been investing your labor (for a while?)
On the contrary, if this investment opportunity gives you such qualms, maybe you'd feel better if you started seeking employment more suited to your values. Every industry (and non-profits, and eduction, and govt) needs support staff along the lines of HR, accounting, etc.
posted by SaltySalticid at 7:41 AM on November 2, 2021 [7 favorites]
So if you're ok with working there indefinitely, you're ok investing in them, because you already have been investing your labor (for a while?)
On the contrary, if this investment opportunity gives you such qualms, maybe you'd feel better if you started seeking employment more suited to your values. Every industry (and non-profits, and eduction, and govt) needs support staff along the lines of HR, accounting, etc.
posted by SaltySalticid at 7:41 AM on November 2, 2021 [7 favorites]
To simplify the question:
Is your money going to do more good than bad? And at what ratio do you find it "acceptable"?
Your firm is making money for its investors, and that's a good thing.
But your firm's acquisitions *may* lead to streamlining and layoffs and whatnot, which is a bad thing... if it happens, and if those affected did not "deserve" it.
posted by kschang at 7:42 AM on November 2, 2021
Is your money going to do more good than bad? And at what ratio do you find it "acceptable"?
Your firm is making money for its investors, and that's a good thing.
But your firm's acquisitions *may* lead to streamlining and layoffs and whatnot, which is a bad thing... if it happens, and if those affected did not "deserve" it.
posted by kschang at 7:42 AM on November 2, 2021
For many years I was the assistant to the CEO of a large wine distributor in the southern United States. My boss was an elderly gentlemen who had been raised in a rural Southern Baptist family. He told me that when he bought the wine distributor, his extremely religious grandmother said, "Well, Billy, I guess somebody's going to sell the wine so I'm glad it's going to be you." I always think about this - especially because my jobs after that have been in the pesticides and gambling industries! - but you know, I have always worked for really wonderful people who try to do the best they can. This is all to say: Financial services companies have to exist in this world we live in, and I'd rather have people like you working in there and investing in their future than people who aren't thoughtful about these issues.
posted by something something at 7:42 AM on November 2, 2021 [4 favorites]
posted by something something at 7:42 AM on November 2, 2021 [4 favorites]
The world is a compromising place, and bitches gotta eat, but I would draw the line at investing in a PE fund, which is what it sounds like you're contemplating. PE's operations in the present economy are almost entirely predatory.
posted by praemunire at 7:51 AM on November 2, 2021 [2 favorites]
posted by praemunire at 7:51 AM on November 2, 2021 [2 favorites]
My impression is that your basic needs and health care are met, and you have a few nice things.
If you invested in the co., you could donate the excess income (and it would be excess) to AOC, Doctors Without Borders, NARAL, Elizabeth Warren’s next campaign; you get the idea.
If you don’t invest, you can continue making your comfortable living in the knowledge that you’re not further fattening the pigs, and you can still donate to the above. I lean toward Option 2.
posted by BostonTerrier at 8:11 AM on November 2, 2021
If you invested in the co., you could donate the excess income (and it would be excess) to AOC, Doctors Without Borders, NARAL, Elizabeth Warren’s next campaign; you get the idea.
If you don’t invest, you can continue making your comfortable living in the knowledge that you’re not further fattening the pigs, and you can still donate to the above. I lean toward Option 2.
posted by BostonTerrier at 8:11 AM on November 2, 2021
On a practical level, investing significantly in your employer is a bad idea because it compounds the risk of the company doing poorly - you can lose both your job and your investment at the same time.
posted by muddgirl at 8:30 AM on November 2, 2021 [10 favorites]
posted by muddgirl at 8:30 AM on November 2, 2021 [10 favorites]
If you're already working for them, might as well get the bag--no reason to go to hell poor. (The real ethical thing would be to change employers.)
posted by kingdead at 8:34 AM on November 2, 2021
posted by kingdead at 8:34 AM on November 2, 2021
Rather than frame this as a question about hypocrisy, it'd be worthwhile to consider a different potential framing. There are two that come to mind for me. First, your question could be, "Are the consequences of an investment like this morally unacceptable?" Or, second, your question could be, "Would investing like this do moral harm to me?"
Looking at the first question, if you want my opinion, I'd answer: naw, not really. Maybe I'm cynical, or maybe I'm foolish, or maybe I allow myself to accept self-serving narratives, but here's what I think: we can't individual-choice our ways out of problems that require collective action.
You refraining from investing does nothing to change the standing political, social, and economic structures that are actually the problem. No individual action, from any of us non-billionaires and non-corporations can do so.
But if you make money? And then you take (some of?) that money, and you donate it to organizations that are fighting for change? And, maybe, if you have the time, you also volunteer, and make calls to politicians, and do all that grueling, concerted political work with others? Maybe that'll be the sort of collective action that we really need to see in the world.
Looking at the second question, it might be worthwhile to think about integrity. Integrity is often conceptualized as a form of wholeness, or consistency between our actions, values, and beliefs. There is a kind of harm that is done to us, when we find ourselves regularly participating in actions that go against our values, and this harm is non-negligible. It is damaging to the self. So, perhaps, consider: "Would I be doing harm to my self, if I were to invest in this way?"
Here, again, maybe I'm cynical, or foolish, or self-serving: I think we're all stuck in a system that, in countless minuscule and not-so-minuscule ways, does moral damage to all of us. Our society chips away at us, damages our selves. I would caution against trying to establish a sense of moral integrity that is built from never participating in any way in systems that do harms to others, so long as you continue living in this late-stage, colonialist capitalist economy of ours. But, even if it's not possible to thoroughly opt out of the immoral systems in which we're embedded, it might still be worthwhile for you to strive towards personal wholeness as much as you're able. Do you think it would be a moral injury, an infliction of harm to yourself, to invest in this way?
I don't have an answer for you. But I hope that this might give you some useful ways of thinking about the dilemma you face. Good luck; you, like all of us, are doing as best as you can, in a system that functions to tear us apart.
posted by meese at 8:35 AM on November 2, 2021 [9 favorites]
Looking at the first question, if you want my opinion, I'd answer: naw, not really. Maybe I'm cynical, or maybe I'm foolish, or maybe I allow myself to accept self-serving narratives, but here's what I think: we can't individual-choice our ways out of problems that require collective action.
You refraining from investing does nothing to change the standing political, social, and economic structures that are actually the problem. No individual action, from any of us non-billionaires and non-corporations can do so.
But if you make money? And then you take (some of?) that money, and you donate it to organizations that are fighting for change? And, maybe, if you have the time, you also volunteer, and make calls to politicians, and do all that grueling, concerted political work with others? Maybe that'll be the sort of collective action that we really need to see in the world.
Looking at the second question, it might be worthwhile to think about integrity. Integrity is often conceptualized as a form of wholeness, or consistency between our actions, values, and beliefs. There is a kind of harm that is done to us, when we find ourselves regularly participating in actions that go against our values, and this harm is non-negligible. It is damaging to the self. So, perhaps, consider: "Would I be doing harm to my self, if I were to invest in this way?"
Here, again, maybe I'm cynical, or foolish, or self-serving: I think we're all stuck in a system that, in countless minuscule and not-so-minuscule ways, does moral damage to all of us. Our society chips away at us, damages our selves. I would caution against trying to establish a sense of moral integrity that is built from never participating in any way in systems that do harms to others, so long as you continue living in this late-stage, colonialist capitalist economy of ours. But, even if it's not possible to thoroughly opt out of the immoral systems in which we're embedded, it might still be worthwhile for you to strive towards personal wholeness as much as you're able. Do you think it would be a moral injury, an infliction of harm to yourself, to invest in this way?
I don't have an answer for you. But I hope that this might give you some useful ways of thinking about the dilemma you face. Good luck; you, like all of us, are doing as best as you can, in a system that functions to tear us apart.
posted by meese at 8:35 AM on November 2, 2021 [9 favorites]
How much financial security do you have? Even if it’s decent, you could still have a ruinous event that wipes it out. If this investment will really make that much more money for you, I would take it and hold onto it for a long time (whether in the original investment or cash it out and put it somewhere else to grow, depending on what kind of investment this is). Then, if you end up
needing it, you can take care of yourself with it. If you don’t, you will either know someone that desperately needs help at some point, and you can help them, or donate it to a good cause.
posted by sillysally at 8:36 AM on November 2, 2021 [1 favorite]
needing it, you can take care of yourself with it. If you don’t, you will either know someone that desperately needs help at some point, and you can help them, or donate it to a good cause.
posted by sillysally at 8:36 AM on November 2, 2021 [1 favorite]
You already work there. You’re already a hypocrite. It’s fine, with the exception of a few holy fools, hypocrisy is part of adulthood.
I have a job that aligns with my values and no opportunities to make extra — would not recommend. Get that cash.
posted by betweenthebars at 9:18 AM on November 2, 2021 [1 favorite]
I have a job that aligns with my values and no opportunities to make extra — would not recommend. Get that cash.
posted by betweenthebars at 9:18 AM on November 2, 2021 [1 favorite]
One can argue that making as much money as possible as an individual and spending it in ways that have a chance at generating systematic change is a good strategy. Lowering the value of shares of a bad company by a tiny amount is worthwhile, but may be a lot less useful than earmarking the money you'd make and spending it to support local political campaigns or activist groups.
posted by eotvos at 9:22 AM on November 2, 2021 [2 favorites]
posted by eotvos at 9:22 AM on November 2, 2021 [2 favorites]
You cannot live on theory. You need capital/money to buy food, housing medical, etc. Cash is king.
posted by AugustWest at 9:51 AM on November 2, 2021 [1 favorite]
posted by AugustWest at 9:51 AM on November 2, 2021 [1 favorite]
I know this isn’t the question you asked but I really think investing in company you work for is a bad financial decision.
The future doesn’t always look like the past; your company may not keep making money.
The reason index funds are popular is because you are spreading your risk around. Investing in the company you work for is concentrating your risk
You might end up paying a lot of money to do something that you feel ethically icky about.
posted by mmmmmmm at 9:51 AM on November 2, 2021 [3 favorites]
The future doesn’t always look like the past; your company may not keep making money.
The reason index funds are popular is because you are spreading your risk around. Investing in the company you work for is concentrating your risk
You might end up paying a lot of money to do something that you feel ethically icky about.
posted by mmmmmmm at 9:51 AM on November 2, 2021 [3 favorites]
Capital is, famously, fungible. It may be possible to steer investment away from the worst of the worst (see various boycotts, sanctions, socially responsible funds), but in general I don't think your investment in an acquisition fund is going to make any difference. Private equity (aka hedge) funds (which it sounds like you're talking about) are a huge industry. They're not particularly profitable for their investors, after you take into account fees, and they're risky, so I wouldn't invest anything except as a small part of a diversified portfolio. Normally you have to be a "qualified investor" (aka filthy rich) to invest.
posted by wnissen at 10:01 AM on November 2, 2021
posted by wnissen at 10:01 AM on November 2, 2021
Are you investing in the LP or the GP/Management Company? If its the later there is no ethical issue as the investment represents a transfer of wealth from the founding partners to employees as a retention mechanism. If you don't take the returns they will.
If its as an LP hard for us to know without knowing what the strategy is and what your firms reputation is.
posted by JPD at 10:06 AM on November 2, 2021 [1 favorite]
If its as an LP hard for us to know without knowing what the strategy is and what your firms reputation is.
posted by JPD at 10:06 AM on November 2, 2021 [1 favorite]
For me the tricky part here would be the psychology of being invested in something. Takes real effort to hold something you have a literal vested interest in accountable and critical or to work against it when necessary, even if it means worsening your investment returns. I'd be worried about letting things slide or maybe even participating in bad things if it meant me making more money, and I don't see myself as motivated by money at all -- but I'd still worry about my psychology there because it just seems so natural of a pattern to fall into and it seems all the other people in it usually have and I don't think all investors are inherently eviler than anyone else necessarily.
posted by GoblinHoney at 10:37 AM on November 2, 2021 [2 favorites]
posted by GoblinHoney at 10:37 AM on November 2, 2021 [2 favorites]
I take it you haven't heard of distributism. It's a "third way" type of system that tries to soften the hard edges of both capitalism and socialism. The big idea is a redistribution of the means of production so that everybody can be an actual capitalist, rather than concentrating asset ownership among the rich. Anyway, the reason I bring it up is because one of the ways they encourage this is through employee ownership of firms. The idea is that this not only spreads the ownership of the firm around to more people, but also does so to the people who understand the business best (i.e., the people who do the work every day). Theoretically, it's more equal and better managed.
So with that in mind, my question for you is whether you're actually going to have ownership (partnership) rights in the firm? Like, will you be able to gather in a smoke-filled room with the other owners/partners and say "I think we should ensure all employees earn a livable wage" or "I think we should invest in more Black-owned businesses"? (Or maybe even more importantly, "I think we should give more employees ownership options until everyone who works here has a voice in these meetings".) Or are you just loaning them money so that they can keep doing whatever they want, just paying back your investment with better interest? A lot of companies offer employee stock ownership plans, but if you only get two shares while the CEO holds 30 million, you don't actually get a say in how the company is run. If someone is giving you a voice, use it.
posted by kevinbelt at 10:45 AM on November 2, 2021
So with that in mind, my question for you is whether you're actually going to have ownership (partnership) rights in the firm? Like, will you be able to gather in a smoke-filled room with the other owners/partners and say "I think we should ensure all employees earn a livable wage" or "I think we should invest in more Black-owned businesses"? (Or maybe even more importantly, "I think we should give more employees ownership options until everyone who works here has a voice in these meetings".) Or are you just loaning them money so that they can keep doing whatever they want, just paying back your investment with better interest? A lot of companies offer employee stock ownership plans, but if you only get two shares while the CEO holds 30 million, you don't actually get a say in how the company is run. If someone is giving you a voice, use it.
posted by kevinbelt at 10:45 AM on November 2, 2021
Historically, such an investment would yield much more than I could achieve otherwise -- call it twice or three times as much.
This is what drew Bernie Madoff's clients in, too. Unless I were very well equipped to thoroughly evaluate such claims, I would steer far, far clear of this, both for general reasons and for risk-concentration (like, job and stock in Enron) reasons.
Agree with praemunire about PE firms.
Historically, your real best bet is to invest in a low-cost whole-market fund, and leave it there until you need it.
posted by Dashy at 12:04 PM on November 2, 2021 [5 favorites]
This is what drew Bernie Madoff's clients in, too. Unless I were very well equipped to thoroughly evaluate such claims, I would steer far, far clear of this, both for general reasons and for risk-concentration (like, job and stock in Enron) reasons.
Agree with praemunire about PE firms.
Historically, your real best bet is to invest in a low-cost whole-market fund, and leave it there until you need it.
posted by Dashy at 12:04 PM on November 2, 2021 [5 favorites]
Best answer: I could be wrong, but I think from the way OP is describing it OP is being offered an opportunity to invest in a PE fund or side vehicle set up for fund employees that in turn invests in a fund. These funds are administered by the company proper, which functions as the investment advisor, but the company doesn't own the fund and the fund wouldn't evaporate if the PE firm itself should happen to go under (though I can't imagine there wouldn't be some legal disentangling to do in the event of bankruptcy). The cash is invested in the purchase of other companies to be managed by fund-selected executives. So this is not quite the same as having your savings in the company that also employs you (although in practice, there's likely to be some correlation between a PE fund going smash and its portfolio companies performing horribly).
The traditional tradeoff with a PE fund is risk + illiquidity for higher returns. Now many people think the returns are often juiced in PE reporting. OP, if I'm right about the situation, I would not necessarily say that the hope of a higher investment return is a ridiculous one but you should be really sure you understand the tradeoffs. Investments in these funds usually require that you have long investment horizons and can eat the occasional drastic loss.
posted by praemunire at 1:01 PM on November 2, 2021 [1 favorite]
The traditional tradeoff with a PE fund is risk + illiquidity for higher returns. Now many people think the returns are often juiced in PE reporting. OP, if I'm right about the situation, I would not necessarily say that the hope of a higher investment return is a ridiculous one but you should be really sure you understand the tradeoffs. Investments in these funds usually require that you have long investment horizons and can eat the occasional drastic loss.
posted by praemunire at 1:01 PM on November 2, 2021 [1 favorite]
You cannot live on theory. You need capital/money to buy food, housing medical, etc. Cash is king.
...yes and no? I'm pretty sure I could be earning at least 2.5x as much, if not considerably more, helping defend the worst excesses of U.S. capitalism. I had to take that risk when I had a gigantic loan payment to service every month that I had no other way to manage (though I was very lucky and ended up doing essentially morally neutral inter-corporate disputes at my first firm and on the right side of history in a big way at my second), but now, no, thanks. Of course, there are other reasons I like my current job better than Biglaw, but not feeling like you're actively contributing to making the world worse is worth some cash. I'm not impoverished, and it sounds like OP isn't, either.
posted by praemunire at 3:27 PM on November 2, 2021 [1 favorite]
...yes and no? I'm pretty sure I could be earning at least 2.5x as much, if not considerably more, helping defend the worst excesses of U.S. capitalism. I had to take that risk when I had a gigantic loan payment to service every month that I had no other way to manage (though I was very lucky and ended up doing essentially morally neutral inter-corporate disputes at my first firm and on the right side of history in a big way at my second), but now, no, thanks. Of course, there are other reasons I like my current job better than Biglaw, but not feeling like you're actively contributing to making the world worse is worth some cash. I'm not impoverished, and it sounds like OP isn't, either.
posted by praemunire at 3:27 PM on November 2, 2021 [1 favorite]
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posted by wellred at 7:29 AM on November 2, 2021