ESG and the American Clash of Classes

ESG and the American Clash of Classes

In the first chapter of The Dictatorship of Woke Capital, I quote Kevin Williamson, then at National Review, on the cultural identity that had, by the early part of this century, come to dominate the zeitgeist on Wall Street.  I wrote:

In a long post-election piece for National Review, Kevin Williamson noted that the Republicans had “lost Gordon Gekko,” their erstwhile indefatigable caricature.  Williamson also explained, in large part, how the loss had thoroughly changed the face of Wall Street. He quoted one bond trader who told him, “Of course these guys aren’t conservative. Why the [expletive deleted] would they be? We’re talking about guys who live in Manhattan, guys with manicures and eight-figure bank balances. And their wives—their wives aren’t showing up at parents’ day at Brearley with a Sarah Palin button. It’d be like showing up in flip-flops from Walmart. Like showing up in a [rather lengthier expletive deleted] tracksuit.”

The differences between Wall Street in 1988 and Wall Street in 2008 were shocking. The transformation was nothing less than total. In the 1980s, Republicans in pop culture looked like Randolph and Mortimer Duke, the wealthy commodity brokers in the movie Trading Places who toyed with people’s lives just for fun. By the 2010s, however, Republicans were much more likely to be compared to Bo and Luke Duke, the reckless, redneck country boys who drove gas-guzzling cars and clung bitterly to their God and their guns.

The point of that passage – and of the chapter more generally – was to make the case that Wall Street is NOT conservative, irrespective of the longstanding stereotypes (which, in any case, were always false).  In turn, the bigger point was that Wall Street has become a “progressive” bastion, making it unsurprising that its denizens would be susceptible to the progressive ideology that undergirds ESG, shareholder activism, and “woke capital.”

In light of yesterday’s piece, however – and in light of the broader trend of opponents of ESG aligning with the populist Right – we think the above passage takes on new relevance.  The phenomenon it addresses does not just explain why Wall Street and Republicans are, today, often at odds, it also explains how the Wall Street vs Main Street divide and the arguments over ESG are actually part and parcel of the larger bifurcation of American society.

Last week, Ron Lieber, the “Your Money” columnist for The New York Times, penned a piece about the ongoing fight over ESG in Kentucky in which he claimed the following:

To prudent portfolio stewards of everything from retirement investments to housing — that’s you, I hope, and me — an E.S.G. filter is simply good risk management, just as looking at international economic or demographic trends can be. Keeping an eye on how climate change may affect a stock holding (or the place for a retirement home), or whether a board is made up mainly of white men from fancy colleges, is part of what anyone should consider when picking stocks.

We’ve rebutted this thinking so many times that it seems pointless to do so again here.  Nevertheless, Lieber’s declaration proves the point: this is how (most of the) guys who live on the Upper East Side and who hang around with Wall Street insiders think.  Their kids go to Brearly.  Their wives hate Sarah Palin.  And they know (regardless of what the rubes in Kentucky may believe) that ESG is just simply good risk management.

Thirteen years ago, our old friend, the late, great Angelo Codevilla wrote what we called, at the time, “the cri de couer of the American ‘country class.’” He put it this way:

Never has there been so little diversity within America’s upper crust. Always, in America as elsewhere, some people have been wealthier and more powerful than others. But until our own time America’s upper crust was a mixture of people who had gained prominence in a variety of ways, who drew their money and status from different sources and were not predictably of one mind on any given matter. The Boston Brahmins, the New York financiers, the land barons of California, Texas, and Florida, the industrialists of Pittsburgh, the Southern aristocracy, and the hardscrabble politicians who made it big in Chicago or Memphis had little contact with one another….

The two classes have less in common culturally, dislike each other more, and embody ways of life more different from one another than did the 19th century’s Northerners and Southerners — nearly all of whom, as Lincoln reminded them, “prayed to the same God.” By contrast, while most Americans pray to the God “who created and doth sustain us,” our ruling class prays to itself as “saviors of the planet” and improvers of humanity. Our classes’ clash is over “whose country” America is, over what way of life will prevail, over who is to defer to whom about what. The gravity of such divisions points us, as it did Lincoln, to Mark’s Gospel: “if a house be divided against itself, that house cannot stand.”…

Today’s ruling class, from Boston to San Diego, was formed by an educational system that exposed them to the same ideas and gave them remarkably uniform guidance, as well as tastes and habits. These amount to a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints. Using the right words and avoiding the wrong ones when referring to such matters — speaking the “in” language — serves as a badge of identity. Regardless of what business or profession they are in, their road up included government channels and government money because, as government has grown, its boundary with the rest of American life has become indistinct. Many began their careers in government and leveraged their way into the private sector. Some, e.g., Secretary of the Treasury Timothy Geithner, never held a non-government job. Hence whether formally in government, out of it, or halfway, America’s ruling class speaks the language and has the tastes, habits, and tools of bureaucrats. It rules uneasily over the majority of Americans not oriented to government.

Two years after Codevilla’s underappreciated and unsparing dissection of the American condition and the American “elites,” Charles Murray (whom we mentioned in yesterday’s piece) made a similar observation.  In January 2012, Murray wrote a long piece for The New Criterion comparing the fates of working-class and middle-class whites in the suburbs of Philadelphia.  (The article later became a book, Coming Apart: the State of White America, 1960-2010.)  In the original article, Murray wrote:

America has never been a classless society. From the beginning, rich and poor have usually lived in different parts of town, gone to different churches, and had somewhat different manners and mores. It is not the existence of classes that is new, but the emergence of classes that diverge on core behaviors and values—classes that barely recognize their underlying American kinship….

In major cities and their surrounding areas, those top-ranked zip codes in which the members of the new upper class live are surrounded by other top-ranked zip codes that form elite clusters consisting of tens or hundreds of thousands of people, creating large bubbles within which life can go on without reference to anywhere outside the bubble. Even when the geographic isolation is not extreme, the differences in culture often are. The members of America’s new upper class tend not to watch the same movies and television shows that the rest of America watches, don’t go to kinds of restaurants the rest of America frequents, tend to buy different kinds of automobiles, and have passions for being green, maintaining the proper degree of body fat, and supporting gay marriage that most Americans don’t share. Their child-raising practices are distinctive, and they typically take care to enroll their children in schools dominated by the offspring of the upper middle class—or, better yet, of the new upper class. They take their vacations in different kinds of places than other Americans go and are often indifferent to the professional sports that are so popular among other Americans. Few have served in the military, and few of their children either.

Worst of all, a growing proportion of the people who run the institutions of our country have never known any other culture. They are the children of upper-middle-class parents, have always lived in upper-middle-class neighborhoods and gone to upper-middle-class schools. Many have never worked at a job that caused a body part to hurt at the end of the day, never had a conversation with an evangelical Christian, never seen a factory floor, never had a friend who didn’t have a college degree, never hunted or fished. They are likely to know that Garrison Keillor’s monologue on Prairie Home Companion is the source of the phrase “all of the children are above average,” but they have never walked on a prairie and never known someone well whose IQ actually was below average.

As we argued yesterday, much of what we see in these two essays undergirds Vivek Ramaswamy’s presidential campaign and will, presumably, undergird Ron DeSantis’s campaign as well (and maybe even Tim Scott’s).  Ramaswamy rails against the “administrative state.”  He has made a very public point of noting that he loathes the Davos crowd and refused an honor that Klaus Schwab tried to bestow upon him.  He thinks that the Department of Education is woke and that its policies are hurting kids and destroying families – perhaps wittingly!  He talks explicitly about the clash between the “Great Reset” and the “Great Uprising.”

This is all, inarguably, taken directly from the Ruling Class vs. Country Class rhetoric introduced by Codevilla and reinforced by Murray, among others.  About this, there is no question.

Rather, the question is: “How did a guy who spent the last two years fighting back against woke capital and ESG come to be a Codevill-ian Class warrior?  How did the half-billionaire founder of Strive Asset Management become a Country Class populist?

The answer, we think, is simple, even if it is not especially obvious.  ESG and the fight over it are part of the Ruling Class/Country Class struggle.  Indeed, in many ways, ESG is the embodiment of all that the Ruling Class believes and desires.  It has “a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints.”  It supports “Using the right words and avoiding the wrong ones when referring to such matters — speaking the “in” language — serves as a badge of identity.”  It “prays to itself as ‘saviors of the planet’ and improvers of humanity.” It emanates from “major cities and their surrounding areas, those top-ranked zip codes in which the members of the new upper class live are surrounded by other top-ranked zip codes that form elite clusters.”

Anyone who would ever think, say, or write the words “E.S.G….is simply good risk management” comes from those zip codes, believes in the social canon of environmentalism and diversity, was educated to use the “in” language, and firmly – but modestly, of course – believes himself to be one of the “saviors of the planet.”

When I write – as I did in the book and did last week – that “woke capital is:

the top-down, antidemocratic means by which some of the most powerful and best-known men and women in business are endeavoring to change capitalism, to change the securities markets, and to change the fundamental relationship between the state and its citizens – in an effort to right historical wrongs and to save the world,” I am flatly stating that I believe the purveyors of woke capital are part of the Ruling Class.  And I am almost inarguably correct.

This clash of classes is, at this point, strictly a Right-of-center phenomenon, embraced by Right-of-center commentators, intellectuals, and politicians.  But this is not a fundamental part of the clash’s character.  It is rather, a byproduct of the complete collapse of the populist Left.  Bernie Sanders, Elizabeth Warren, and Alexandria Ocasio-Cortez may play populists on TV, but they are not. They are, rather, corporatists and egoists.  They wouldn’t know how to help the Country Class if we drew them a diagram (or wrote them a book).  They, like the rest of the Left and much of the Right, are enamored with the power of the state – often in conjunction with industry – to impose their personal will on those whom they’ve deemed “enemies.”  They are, in short, part of the problem, not part of the solution.

But it doesn’t have to be this way.  And no, we are not arguing for the revival of Leftist populism.  We are simply noting that the clash of classes isn’t a partisan matter and it need not be the purview of conservatives alone.

Opposition to ESG need not be a partisan matter either.  It really shouldn’t be.  Opposition to ESG should be a broad, community-based, practical idea that transcends party lines.  That it’s not is problematic, we think, in that it hints at how “political” the issue has already become, even in its relative infancy.

Democratic teachers’ union members in deep Blue Chicago should want the greatest return on their retirement investments and they should not want guys like Ron Lieber telling them that’s “imprudent.”

They should want someone – an asset manager, a politician, whomever – looking out for them.

Stephen Soukup
Stephen Soukup
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Steve Soukup is the Vice President and Publisher of The Political Forum, an “independent research provider” that delivers research and consulting services to the institutional investment community, with an emphasis on economic, social, political, and geopolitical events that are likely to have an impact on the financial markets in the United States and abroad.