Senior Fellow of Real Clear Foundation Rupert Darwall Sees the Polity of Businesses Becoming Armed Tools of Political Agendas

Senior Fellow of Real Clear Foundation Rupert Darwall Sees the Polity of Businesses Becoming Armed Tools of Political Agendas

 

Live from Music Row Friday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. –  host Leahy welcomed Senior Fellow at the Real Clear Foundation, Rupert Darwall to the newsmakers line to discuss his recent article and defines the design of ESG.

Leahy: We are delighted to welcome to our newsmaker line from across the pond, Rupert Darwell, a senior fellow at the Real Clear Foundation. He just released a study on capitalism, socialism, and a thing called ESG. And if you haven’t heard about it, you got to listen up. It’s very important what he’s written. Rupert, thanks so much for joining us this morning.

Darwall: It’s my pleasure, Michael.

Leahy: ESG, it sounds like a food additive, but it’s much more dangerous. Tell us, what does ESG mean? And why should we care about it?

Darwall: ESG is environmental, social, and government. It’s a form of investing. It’s meant to be for the clean, moral, pure types that want to make the world a better place. And it’s a bit of a con, really, because what it says on the outside is ESG investing, you’re doing well by doing good.

So you’re going to make more money by doing the things that are going to make the world a better place. But actually, it’s all about that at all. It’s politics by other means. It’s the politicization of business and investing. And you’ll say goodbye to those higher returns because that’s just sales chatter.

But fundamentally, it’s about turning capitalism into something very, very different. And it’s also about political power. It’s about giving financial oligarchs on Wall Street and in the big state pension funds like CalPERS in Sacramento and the Neivers New York pension funds, enormous amounts of political power of business.

Leahy: Yeah, that’s exactly it. We’ve noticed, of course, I guess the publicly traded corporations, I don’t know, 90 percent of them seem woke beyond repair. They’re always preening about some moral issue, and it’s just highly destructive it seems to me. When did this really start being a thing?

Darwall: Well, there was a phase of it, I think, in the 1970s because Milton Friedman wrote a fantastic article saying the role of business is judged by how much money it makes for shareholders. It’s about profit. Because if you’re a good business creating and innovating things in the market that customers want, you’ll do well and that kind of thing.

It kind of then went through the 80s and 90s and then receeded. But it’s really come back with a vengeance now. And you may remember, a couple of years ago, the Business Roundtable issued that 181 CEOs signed the Business Round Table statement on stakeholderism.

The businesses are meant to serve a wide variety of interests and demoting the stockholder. So it’s really come in very powerfully. And, of course, the so-called climate crisis, this existential threat to life on earth kind of thing, businesses have got to emit zero. So it’s really kind of taken business and particularly financed by storm might say.

Leahy: I don’t know what your background is other than your finance guy in London and you write about it. I’m a graduate of Stanford Business School. I have an MBA from Stanford way back when. And what I’ve noticed is the ideas that are taught in business schools today seem much more socialist at the highest level than they were when I was in school.

Tell me what you think about this. You have a generation of left-wing socialists now that are influencing these hedge funds like Black Rock and are serving on corporate boards and are in the marketing departments and the finance departments of Fortune 500 companies and they’re forcing that ideology that they’ve grown up with upon these publicly traded companies. Do I have that right or is there another element to it?

Darwall: I think that’s a very important aspect of it. I would also point to there’s also kind of a revolving door between the corporate affairs department of large corporations. At the end of the Obama administration, you saw a load of Obama administration officials exiting the federal bureaucracy and jumping into the C-suites of corporations.

For example, you mentioned Black Rock. One of the Black Rock guys is now a very senior economic advisor in the Biden administration. So it’s kind of this revolving door. It’s this intertwining of business and politics. And in my view, the business of business, the business of business is business. It’s not politics. It’s not politics by other means.

But what we’re seeing is polity of businesses becoming armed tools of political agendas, which I think is very dangerous for democracy, because these questions should be decided through the ballot box and through the Constitution.

The United States has a brilliant, perfect Constitution, if you like, of representative democracy. And the second danger to capitalism because as businesses become woke, they become less innovative and doing less of driving the things that make living standards rise and which makes capitalism the greatest economic system there’s ever been.

Leahy: The title of your study is Capitalism, Socialism, and ESG. But I look at this interconnection between the very large, publicly-traded corporations and government and politics. And to me, the ism that comes to mind is more a form of fascism. What’s your thought about that?

Darwall: Corporatism, because both socialism in its extreme form and fascism, but they both see that the political ideology must trump everything and every aspect of society. And particularly economic ones should be the tools of the state.

Yes, there is. You are absolutely right. It’s a form of corporatism. It’s very nasty. It’s unrepresentative, as I say, it’s about usurping, the Democratic prerogatives of the people through the ballot box.

Leahy: The other element of this to me, for free markets and capitalism to work, the capital markets have to work for all sizes of companies. Large companies and small companies. And of course, startup companies, small companies, entrepreneurial companies, that’s where most innovation does occur.

It seems to me that the rise of ESG, environmental, social, and governance standards among larger corporations has kind of made the capital markets much more difficult for small businesses and those that are providing innovations. Do you see that as well, or am I just looking at it from a small business lens?

Darwall: No. I think what happens is that large businesses call for large woke businesses if you like. When they embrace this agenda they say, well, our business model could be under threat from startups, therefore, because we’re doing what the politicians want and because what Democrats in Washington want, we need protection from startups.

Inevitably you get distortions in markets. You have you know what economists call rent-seeking behavior and businesses trying to protect themselves from businesses that are unencumbered by ESG and are free to perform as they want. I think you’re absolutely right. It’s a big threat to the layer of new businesses which really have driven growth and innovation.

Leahy: The other thing is to look at alternatives to ESG. Is this just a huge group think among hedge funds and Fortune 500 companies? Is there anybody in that world that you see right now that is not embracing ESG? And what consequences are they facing?

Darwall: I would say corporate CEOs are very exposed to proxy battles. If they put their head above the parapet, they’re likely to have a shareholder and stockholder revolt at the next annual general meeting. So they’re quite nervous individuals.

They have to go with the flow. The greatest economist of capitalism was Schumpeter. He wrote that an incredible book, Capitalism, Socialism, and Democracy. And in that, he described the publicly traded corporation as capitalism’s vulnerable fortresses for exactly this reason in that you have a split between ownership and control.

But I think the ESG thing because it’s such a distortion of the capital markets, there will be people who come in and contrarian investors who can make lots of money out of the fools who follow the ESG sales pattern. Because when you have people investing for non-financial reasons, they make mistakes.

They’re the easy ones you can pick off. I think there’s an aspect of it that this is set up so that more savvy investors at some point will make a great deal of money from the investors chasing the fools gold of ESG investing on the basis that they’re going to do well by doing good, which is, as I say, is complete junk.

(Commercial break)

Leahy: Rupert, you mentioned before that ESG actually doesn’t perform well financially, and it’s a bit of salesmanship, if you will, for the left. And you mentioned that perhaps some more savvy investors will come up with contrarian views.

I just sent you an email that includes some information about just such a group based here in Nashville, as it turns out, called 2nd Vote Advisors. And basically, they manage funds and they have private funds that are exchange-traded funds.

One is focused on pro-life. The other is focused on Second Amendment-type issues. They say that without 2nd Vote Advisors as a counterweight to existing asset managers, a progressive ESG agenda will continue when investors can rest assured that we will never vote proxies in support of ESG shareholder initiatives. I don’t know if you’ve heard of 2nd Vote Advisors, but it’s almost as if you predicted they would come into existence.

Darwall: It does sound like that. The smart investors will. When I say smart investors, investors that have got their feet on the ground, and they’re the best ones will see this as an opportunity. Because what will happen is that they will dump lowly rated ESG stocks, which means that they’re cheaper for others to buy.

There’s that thing that Ben Graham, the Warren Buffett guru, said, in the short term, a stock market is a voting machine, and in the long term, it’s a weighing machine. And at the end of the day, what will happen is it will be the cash flows that companies generate. The ESG investing movement is creating a massive investment opportunity for smart investors.

Leahy: But besides 2nd Vote Advisors, is there anybody promoting these contrarian options to ESG investments?

Darwall: That’s one of the things that’s needed to happen because what you’ve got is the big three index providers, ETF index providers led by Black Rock. You’ve got State Street and Vanguard. Those big three, which Black Rock is the largest asset manager in the world have gone woke.

Larry Fink is leading the charge on ESG, climate, and on stakeholderism. He has threatened encumbered management to vote against them if they don’t bow to the God of ESG. That means that if you don’t subscribe to that view of politics and that is what it is, it is essentially politics and ideology, you need to find the ETF provider who will vote your proxies the way that you want and not the way Larry Fink wants.

I think in time you will see alternative providers. The market should respond in the way that people who want politically free investing can have that demand satisfied. But as yet, I haven’t seen those ETF providers come over the horizon. America is still the most dynamic economy in the world, the freest economy in the world, and that over time that will happen. There will be a market reaction against this.

Leahy: How is it that a guy like Larry Fink, who is, in essence, a financially sophisticated left-wing ideologue, how is it that we have so many guys like that now?

Darwall: He was a bond trader who correctly spotted the diverse portfolio and index investing. These are both low costs and over time give very good performance. And he’s ridden that. And now he’s made as much money as he can ever hope to.

And he’s got the whiff of political power in his nostrils. And sitting in as chairman and CEO of Black Rock, he has the best of both worlds of having immense financial power on Wall Street and also access to every political leader he ever wants. So there is a lot of that.

There’s something that he said. Every year he writes to corporate CEOs just telling them what to think. And last year he wrote to them and said all this disclosure stuff, ESG and climate disclosure, and so forth. He says the goal cannot be transparency for transparency’s sake.

They normally say, well, the market needs more transparency and more data. Then he went on to say disclosure should be a means to achieving more sustainable and inclusive capitalism. Now, that is politics. That is pure politics and nothing to do with boosting investor returns or anything like that.

This is the guy acting as a politician wielding political power. The proxy votes that are embedded in ETF index funds, he’s stripping the proxies out of them, and he’s casting them according to his ideological prejudices.

Leahy: The founders, Alexander Hamilton, James Madison, Thomas Jefferson, didn’t agree on a lot. But one thing they did agree on that if an aristocratic manufacturing class ever arose in America, it would be bad for the constitutional Republic.

We have now this aristocratic leftwing financial class, and they have no constraints. I think what has arisen here with guys like Larry Fink is exactly the kind of aristocratic modern feudalism that Jefferson, Hamilton, and Madison would have absolutely loathed.

Darwall: I absolutely agree with that. These Wall Street oligarchs are essentially usurping, the prerogatives of the Democratic and constitutional political state. That’s exactly what’s going on. This is a parallel government that is not really accountable to anyone and certainly not accountable to voters. When Larry Fink talks about inclusive capitalism, he’s actually talking about exclusive capitalism, insider capitalism.

Leahy: Exactly.

Listen to the full interview here:

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.

 

 

 

 

 

 

Dan Gainor VP of MRC TechWatch Explains the Left’s ‘Freedom of Speech Does Not Equal Freedom of Reach’

Dan Gainor VP of MRC TechWatch Explains the Left’s ‘Freedom of Speech Does Not Equal Freedom of Reach’

 

Live from Music Row Monday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. –  host Leahy welcomed VP of MRC Tech Watch, Culture, and Business Dan Gainor to the newsmakers line.

During the first hour, Gainor made the case for liberty explaining how the MSM and Big Tech are controlling speech, de-platforming, and censoring the content of right-wing media outlets. He recognized the control as an attempt to have America online mimic that of Europe online by systematically removing our Bill of Rights. Gainor outlined how the left games the system as citizens have moved most of their life online.

Leahy: We are joined Now by our good friend of many years Dan Gainor Vice President of Business and Culture for the Media Research Center. He also has a section there called Tech Watch. Welcome, Dan.

Gainor: It’s good to be talking to you. It’s been a while.

Leahy: Dan, we first met back in the Tea Party days.

Gainor: Yes. I was just going to say that. And we go way way back. And in today’s environment that’s like, you know dog years and we’re like both a hundred or something.

Leahy: Well, we first started corresponding in 2009 at the start of the Tea Party Movement. We met in person and talked about Tea Party strategy and related things at a restaurant in Alexandria, Virginia back in 2010. And we’ve been friends ever since. Big question Dan. How has the case of liberty proceeded in America in the intervening 11 years since we first met in person?

Gainor: Oh, it’s like a snowball rolling downhill and it’s heading toward a cliff. I mean, it’s in bad shape. When you have major media outlets calling to de-platform major media outlets. When you have Big Tech basically controlling what you can see say or do online, that is not the path for freedom. That’s not the path for liberty.

Look, we just finished it seems like forever ago already, but we just finished an election where Big Tech, Facebook, and Twitter fixed the election by censoring content. In Facebook‘s case, it openly violated its own policies to the point where its bogus fact-checkers threw them under the bus and said that they weren’t even obeying their bogus fact-check rules.

So then you get to this point now where CNN is blatantly calling to de-platform and for people that don’t know, what that means basically remove from any platform that’s available on. So if you want to remove OANN, Newsmax, Fox, and Fox Business, that means sure they can broadcast but nobody can see them. So if you’ve got Verizon or you have Comcast they’d be kicked off. If they broadcast online on Facebook or YouTube they’d be kicked off. That’s what the media team at CNN is trying to do.

Leahy: Well what kind of opportunity do we have the push back here Dan?

Gainor: To me first, people need to not buckle under to this stuff. And that means there are ways on their sites too, first of all, complain and to file and to reject it. And if you’ve got stuff suspended or whatever there are ways to appeal that. You do that. That’s just a bureaucratic thing you do it. Because know a lot of people don’t even bother but sometimes you win.

So there’s that’s the first thing. Next, Facebook has just announced this oversight board, so if you get content taken down, you could appeal to that. It’s just one more way of putting pressure. Then ultimately this is going to be something that gets decided I think on either Capitol Hill or in the courts or both because these companies are still American companies and they’ve decided that we don’t have the same rights we have offline as online. And they’re trying to make it worse. There is a strong push by these companies to make America online be more in line with Europe online. Well, the last time I checked we still have this Bill of Rights thing.

Leahy: It’s a good way for them to get rid of the Bill of Rights.

Gainor: Well it effectively does when you look at how much we live our lives online now. And more so obviously because of the COVID. I just heard the newscast coming on that kids are still going to school at home. You’ve got people working from home. You’ve got people interacting with the government expressing their opinion. And if you can’t express your opinion online then you don’t have free speech. If you can’t worship online then you don’t have freedom of religion.

Leahy: And by the way, you mentioned this Facebook Ombudsman appeal court, I guess you could say of review. And I looked at the members of it and  I did not see a single conservative news journalist.

Gainor: There is actually one.

Leahy: Who is that? Who is that? Who is that one? Is it Mike McConnell?

Gainor: He releases the social con of some things. But then you’ve got a Libertarian guy who isn’t especially conservative on a lot of things. So they almost cancel out. This is how the left games the system. They say they create a free-speech board. They have 20 members of the board, 15 of them are international.

Leahy: Exactly. That caught my attention too Dan. That caught my attention.

Gainor: So they don’t have any similar view of the U.S. for free speech.

Leahy: Did they call you to be on the board, Dan?

Gainor: No.

Leahy: They didn’t call me either. I’m shocked! I’m shocked!

Gainor: And so I mean they’ve already gamed the system. And here’s the funny thing. To show you how radical the left is the left hates the oversight board because it’s not left-wing enough. Because it’s not censoring content. They hated the rulings that they have already done because they didn’t want to censor content.

The left has this new line and if used for a while I but when you see it crop up on CNN, you know, it’s breaking through. And that’s freedom of speech does not equal freedom of reach. So in other words, you have a right to stand on your soapbox and say something but not in the public square. You can say it on your property. You can say it at your house.

Leahy: Where your nearby neighbors can hear it, but nobody else.

Gainor: Right, and maybe not even that. How dare you say that! A lot of this comes from the radical left on all sorts of issues particularly the transgender issue. If you say men aren’t women on Twitter you can be suspended.

Leahy: They are crazy!

Gainor: It doesn’t matter. They control the platforms.

Leahy: So do you have a particular plan to be on this Dan? I have some thoughts but do what do you think the pushback should entail and what are the chances of success?

Gainor: Well ultimately I think this is the Civil rights battle of this century. And I say civil rights battle because when there is an organized effort to target a group of people, doesn’t matter who the group of people is when there’s an organized effort to target a group of people for the way they think and to silence them, to shut them down, to cost them their jobs, to target their faith, etc, historically that’s seen in this country as a civil rights issue.

And I know that’s hard for conservatives to think of that we’re a minority that’s being targeted. but we are. And so ultimately I think that’s the battle to fight all the way up through the Supreme Court. and that takes a while. So I think that’s part of it. I think this is an international battle. We’ve headed up the Free Speech Alliance which is a coalition of 76 different organizations that are conservative around the world now.

We’ve added I think half a dozen members in Europe, South America, and Australia and we’re continuing to expand because we are fighting globalist international corporations of the most powerful corporations in human history. I always tell people that India was conquered by the British East India Company. And the British East India Company isn’t as powerful as Facebook, Google, Apple, and Amazon.

Leahy: Dan here’s a question for you. We are on a talk radio station right now here in Nashville, Tennessee. How long will talk radio allow freedom of speech or is it likely to continue in your view?

Gainor: Well, I mean, I think the left has wanted to go after talk radio for a long time. It’s just not their number one target. Right now their number one target is Facebook. They want to knock us off there. I mean they’re going after Fox because I think I think they think Fox is weak right now post-election. So they’re trying to bully as much as they can. And you always heard of the bully pulpit. They’re using the bully pulpit.

If they can silence people into being afraid to speak out then they win half the battle that way. They don’t even have to change things. But the Democrats are definitely in charge of Washington and not respective of the First Amendment. They don’t believe in it. They don’t believe in free speech. If you look at HR1 which they passed in the House under Trump that they wanted to get rid of Citizens United.

Citizens United is a free-speech ruling. They don’t believe in it. It was all about creating a documentary about Hillary Clinton when she ran for president. And they oppose that even though they control Hollywood and they produce documentaries all the time bashing the right.

Listen to the full first hour here:

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Photo “Dan Gainor” by MRC.