In a 1988 ABC special, columnist William F. Buckley debated Jesse Jackson on drugs (particularly cigarette smoking), and during the debate Buckley said this:
“If we get nothing else out of the hour tonight, I would hope that we emancipate ourselves from the superstition that that which is legal is necessarily honorable. . . It’s perfectly legal to contract syphilis but that does not mean that society is in favor of syphilis.” And then he goes on with the pointed jab: “As a matter of fact, it’s perfectly legal to vote for Jesse Jackson. That doesn’t make it reputable, does it?”
I receive a decent amount of comments from readers (some of it posted here, some of it posted on my Seeking Alpha writings, and some of it sent to me privately) responding to old articles that I have written analyzing the tobacco stocks (Altria, Lorillard, Reynolds American, and Philip Morris International) that react as if I’m “Tobacco Tim” encouraging cigarette consumption amongst our youngsters.
That is not how I feel about the topic at all, and here is where the misunderstanding occurs: just because I am in favor of something being legal, does not mean that I am advocating the use of the product. I think you should have the legal right to go to McDonalds and eat 1,000 Big Macs every day, but I don’t think that is something that we should necessarily consider desirable behavior. I think you should have the legal right to sit on the couch and stuff yourself with giant blocks of Kraft cheese all day (like George Costanza during his “Summer of George” run on Seinfeld. I think you should have the legal right to drink a case of Bud Light Platinum every night at your house, even though that won’t lead to optimal behavior in your own life. In short, I want all of you to have as much legal autonomy to conduct your life as you see fit as possible.
Consistent with that, I think that product manufacturers should have the right to give its customers what they want. The owners of Coca-Cola, Kraft, McDonalds, and Philip Morris International are delivering value to their customers, otherwise no one would take money from their paychecks (or dividend income, rental payments, or whatever) and buy those products if it did not deliver some value to them. I support your right to choose what you think delivers value to you, regardless of what the other 300 million people around you think (with only a few exceptions).
At an old Berkshire Hathaway shareholder meeting, Warren Buffett once said something to the effect of, “We now employ more than 100,000 people. Someone, somewhere that works for us is doing something that we don’t like.” If you take a good, hard look at companies, you will find that every company is doing something that you probably don’t like. U.S. multinationals have a very troubling record of employing folks living in third-world countries in very troubling living conditions, and American multinationals also have a long record of bribing officials in third-world countries to bypass regulations. McDonalds, Pepsi, Nestle, Kraft, Coca-Cola, and Dr. Pepper are probably selling something somewhere to someone right now that will lead to diabetes. If you want to interject morality into investing, you’ll find yourself sitting in a room with a wad of cash, unable to invest anywhere.
A much more practical solution is this: you find companies that have long records of giving their customers what they want and generate a healthy profit doing so, and then, when those profits reach your pocket in the form of dividends or capital gains (at the time you sell), use that money to do some good for others. Someone with 100,000 shares in Pepsi could use a couple years of dividend checks to open a free gym in his local community. Someone with 50,000 shares of Altria could use the dividend checks to open a soup kitchen. Complaining about the excesses of corporate America is usually a suboptimal use of your resources unless you spot something new and egregious and have the platform to reach a large audience. If you want to do the most good, the best thing you can do is to focus on the things you directly can control and change—the wealth you build, and how you choose to allocate it.