|Jack Bogle of Vanguard Group|
President Obama's sweeping proposals on gun control grabbed the nation's attention yesterday, and they even showed the kind of political courage that has been all too lacking in his administration--at least in the view of many of us on the left. We applaud the president's actions in the wake of the massacre at Sandy Hook Elementary School in Newtown, Connecticut, but we suspect the public already has largely forgotten about the investment firms that fuel America's gun culture.
That might be because one of those firms, Vanguard Group of Malvern, Pennsylvania, has done a masterful job of deflecting attention from its support for some of our nation's top gun manufacturers. And that might be because Vanguard Group, led by founder John C. "Jack" Bogle, has a lot of practice at covering up its questionable actions as America's largest mutual-fund company.
For example, most citizens probably have no idea that Vanguard Group is one of the primary supporters of private prisons, which are riddled with corruption. On a smaller scale, Vanguard is the No. 1 investor in Campus Crest Communities, the Charlotte-based company that has become a major player in the effort to privatize student housing at publicly funded universities. Never mind that CEO Ted Rollins has a documented history as a child abuser, including a conviction for assault on his 16-year-old stepson and an investigation based on a citizen complaint of suspected child sexual abuse involving the same stepson.
Some investment groups tried to distance themselves from gun manufacturers in the aftermath of the Sandy Hook shooting, but not Vanguard. Company spokesman Doug Hoffman said Vanguard pegs investments toward certain stock index funds, so it often is a passive rather than an active investor.
Published reports show that Vanguard is the No. 1 investor in Smith & Wesson and one of the top investors in Sturm Ruger--and such companies help create weapons that have led to a string of mass killings across the country. But Vanguard's position is to more or less shrug its shoulders and say, "It's all in a day's work for those of us in big-time finance. We can't be held accountable for negative outcomes from our investment decisions."
Perhaps we should excuse Hoffman's nonchalant response to the Newtown massacre because it seems to accurately reflect the view of Vanguard's founder. Jack Bogle appeared on a Philly news-talk program after the Newtown shooting and deflected responsibility as if he were a goalie for the Philadelphia Flyers, the city's NHL hockey team. Here is pretty much the take-home lesson from the Bogle interview:
If we don't invest in gun companies, someone else is going to do it. Besides, we are in no position to tell Smith & Wesson what business it should be in. Are mass shootings bad? Oh yes, but we can't do anything about them.
So much for "socially responsible" investing. Bogle is a bottom-line guy, and you have to give him credit for not pretending to be something else.
Bogle is mostly retired these days, but he remains one of the more talkative types at Vanguard. In upcoming posts, we will take a look at some of Vanguard's other decision makers. We might even give them a chance to explain their financial support for Ted Rollins, despite his history as a child abuser.
Perhaps they will say that Campus Crest Communities, like Smith & Wesson, provides a solid return on investment--and that's all the world of high finance cares about.
Meanwhile, we welcome President Obama's common-sense proposals to control the distribution of deadly weapons. We hope, in time, the president might help shine light on the investment houses that keep the gun industry churning.