Follow the State's Lead

PROPONENTS OF DIVESTITURE from South Africa gained an unexpected source of support last week: the Massachusetts legislature Putting principles before profits, the legislature passed a bill requiring the divestiture of all state pension funds from firms doing business in or with South Africa. The legislature's action provides a lesson in social responsibility that the University would do well to emulate.

The bill, which allows three years for the completion of divestiture, mandates the sale of more than $100 million in stocks and bonds from a pool of $1.3 billon invested for the retirement benefits of state employees and public school teachers. The proceeds of the sales are to be reinvested "as much as reasonably possible" in firms with operations in the Commonwealth.

Acting at a time of economic distress and fiscal difficulty, the legislature could hardly have ignored the financial losses which may result from divestiture. Indeed, the state treasurer quietly opposed the bill because he considered the potential losses--which he predicted could exceed $12 million--unjustified. But the legislators rightly placed a greater value on the withdrawal of support from South Africa's system of racial oppression that will be accomplished by the bill. Unfortunately the University, blessed with rare economic security, finds itself unable to take a similarly courageous moral stand.

While the legislature is willing to sustain a small financial loss in order to send a powerful message of condemnation to Pretoria, many of the bill's sponsors are hopeful that divestment will not cost the state a dime. The Massachusetts Coalition for Divestment from South Africa--a coalition of more than 100 religious, civic and labor organizations that promoted the bill--has calculated that the state may even be able to make several million dollars in the process of divestiture. This prediction is probably overly optimistic. But by judiciously spreading the required sales over the three-year period allotted by the bill, the state may well be able to divest without a loss. By adopting a similar policy of gradual divestiture, the University should be able to end its support for apartheid without incurring losses that would cause it significant harm.

President Bok likes to portray divestiture as an impractical gesture, favored only by college students and other romantics. Yet the legislature's move is practical as well as symbolic. It serves notice to Pretoria that apartheid must go. And it encourages more than 30 American firms to reconsider both the moral and financial wisdom of maintaining businesses in South Africa. If the Bay State's action reveals a romantic outlook, it is a romanticism that the University would be wise to adopt.