Sabbath Economics: Household Practices
Matthew Colwell
I was lent this by a friend (our pastor) after I lent him Ched Myers' “The Biblical Vision of Sabbath Economics.” While I liked the Myers book a lot, this one fell a little flat with me. As the names suggest, the Myers book is more scripturally focused, and the Colwell book is more practical-action focused. I guess I prefer reading a book that teaches me a way of thinking about things to a book that proposes a list of actions. (See: cookbooks.)
One of the main topics that I struggle with, as both a Christian and a student of finance, is the idea of socially responsible investing. The idea, as you probably already know, is to avoid owning the stock or debt of companies that do things you don’t approve of (arms manufacturers, etc.), or less commonly, focus on owning the liabilities of companies that you think do socially beneficial things. Colwell puts this forward as an obvious thing for a Christian to do, but I am not convinced. There are a couple of reasons for this. First, one person’s idea of “socially responsible” may not be another’s. Take, for example, the Vanguard FTSE Social Index Fund (VFTSX). Three of its top ten holdings are Citigroup, JPMorgan, and Bank of America. These are not getting screened out by the index’s criteria, but they are hardly anyone’s idea of socially responsible these days. The point is that if you really want to invest your values, you have to either take a lot of time to do it yourself, or pay someone else to do it for you.
Now, I know that many SRI supporters would say that it’s worth the cost, but that brings me to my second point. If SRI were as cheap as “normal” investing, I would be fine with it. But it’s important to think of where else that money could go. Let’s do a simple numerical example. Assume that I, either as an individual investor or as a church, have $100,000 that I want to invest in stocks. I can either decide to invest in an SRI fund or in a “normal” index fund. To make the comparison as fair as possible, I will assume the cheapest SRI fund I know of, and I will also assume that expected returns on the SRI fund equal those on the overall index. If I invest in the SRI fund (VFTSX), my expense ratio is 0.29%, or $290 a year. Or I can invest in the regular broad stock market fund (VTSAX), with an expense ratio of 0.06%, or $60 a year. That means that by investing in the “regular” fund, I would have an additional $230 per year. That money can pay for, let’s say, 100 soup-kitchen meals for hungry people. Meanwhile, my investing in the SRI fund has no impact on the “bad” companies, given the very small dollar amounts involved, and that $230 goes to the fund manager instead of the hungry people. You could easily set up financial governance to require that any savings from investing in “normal” funds relative to SRI funds be spent on charitable causes.
Ultimately, I think that SRI is often more about establishing a sense of personal or institutional purity than about actually doing good. I think SRI is mostly only effective when you are either a huge institutional investor, or a part of a large collective action with specific demands, such as the apartheid divestment campaign (or both). Otherwise I don’t think it adds up. “Take your social tilt on the expenditures side,” is how I once heard it put.
The challenge of the book that I do want to take more seriously is the idea of keeping a Sabbath day. To me that seems like a very valuable way of asserting some control over your life and keeping values in the right prioritization. I have tried to take small steps in this direction in the past and it is very difficult; it makes me especially impressed with the people I know who really do it. It’s too bad it’s not a common cultural practice among Christians.