15 Feb Nocking Down Global Climate Organizations
The following commentary/analysis is one I wrote in my capacity as a senior fellow at “the nation’s oldest consumer protection agency,” Consumers Research, where, among other things, I compile a weekly letter for public pension-fund managers. I am sharing it here today because I thought it might be useful to some of you.
Also, my apologies for the tardiness of today’s piece. As you’ll see, “breaking news” compelled a different essay than was originally planned.
The Remnant(s) of Climate Action 100+
When I went to work as a junior analyst in the Washington research shop of a big brokerage house 28 years ago, most observers still assumed that Wall Street was conservative or, at the very least, libertarian. The business of capitalism, after all, is presumed to require the input of capitalists. As I demonstrate in the first chapter of my book, The Dictatorship of Woke Capital, this idea that Wall Street leaned to the right was never really true and, in any case, was inarguably untrue just over a decade later:
During the 1990s, Wall Street became democratized—and Democratized—which is to say that it became not only a savings option and object of economic obsession for the masses, but also a bastion of “progressive” political thinking….
By the time the 2008 election cycle rolled around, Wall Streeters had fully and firmly embraced the Democratic Party and actually dragged it leftward. Hillary Clinton, then the sitting senator from New York, was pushed aside by her adopted home state’s most affluent and influential residents in favor of Barack Obama, the young, charismatic, ideological tabula rasa from Illinois. Wall Street loved Obama and especially loved his social liberalism and his economic malleability.
During the 2006–2008 election cycle, Wall Street ponied up big for the Democrats and especially for Obama. Goldman Sachs (its PAC, its employees, and their immediate families) was the second-largest donor to Obama overall. J.P. Morgan was fifth, Citigroup seventh, and Morgan Stanley rounded out the Top 20. The Democratic takeover of Wall Street was complete.
Among the more unfortunate aspects of the financial services industry’s embrace of left-leaning politics was its accompanying abandonment of right-leaning thinkers, men and women who studied incentives, markets, and business more generally, making observations that were inarguably valuable but that were deemed outdated or “politically incorrect.” Milton Friedman and his famous thoughts about the responsibilities of corporate executives, for example, spring readily to mind, although Friedman was hardly alone.
As I’m fairly certain you’ve all heard by now, Climate Action 100+, one of the largest and farthest-reaching business organizations dedicated to fighting global climate change, is today, headed toward profound humiliation, if not total collapse. Large American asset managers are extricating themselves from the operation, finding its goals and tactics to be inimical to their business operations and the interests of their clients:
Two of the world’s biggest asset managers are quitting an investor group set up to prod companies over global warming and a third is scaling back its participation, in a major setback to the ambitions of Climate Action 100+.
JPMorgan Asset Management and State Street Global Advisors both confirmed they were leaving Climate Action 100+. BlackRock, the world’s largest money manager, is pulling out as a corporate member and transferring its participation to its smaller international arm….
BlackRock said in a note that it was dropping its corporate membership because it believes the phase 2 strategy, which takes effect in June, conflicted with US laws requiring money managers to act solely in clients’ long-term economic interest.
This is interesting, and for those of us who believe that ESG and its global enforcement organizations represent a threat to free and fair capital markets, it is most welcome. It is comforting to know that American firms, even those most earnestly dedicated to ESG, can be persuaded to behave sensibly by a mixture of federalist/state government pushback, client dissatisfaction, and the emerging conspicuousness of objective reality.
At the same time, if the people who ran the big Wall Street firms were better educated” this might not have been an issue in the first place. And to be clear, when I say “better educated” I mean if they had been exposed or had voluntarily chosen to expose themselves to economic, business, and social commentary outside of the standard Left-leaning canon. Again, Friedman has much to offer on the risks involved in top-down, one-size-fits-all solutions to problems. So, for that matter do Hayek and Mises.
Perhaps most relevant in this case, however, is the early 20th-century libertarian writer Albert Jay Nock, who, outside of a small handful of conservative circles, is generally forgotten or, at best, considered a nut (and who, unfortunately, did much to earn that reputation). Nevertheless, Nock offers profound advice on the importance of “thinking small” and proactively choosing not to conquer the world, given the complications that inevitably ensue.
Nock is probably best remembered for his essay, “Isaiah’s Job,” which was originally published in the June 1936 issue of (what was then called) The Atlantic Monthly (and which inspired successive generations of conservatives to think small).
Nock’s starting point in this essay is a conversation with a friend who tells him that he has come up with a “politico-economic doctrine” that he thinks deserves widespread attention. “I have a mission to the masses,” he tells Nock. “I feel that I am called to get the ear of the people. I shall devote the rest of my life to spreading my doctrine far and wide among the populace.” And then he asks Nock, “What do you think?”
Nock’s reaction is to relate the story of God’s order to Isaiah to go out and warn the Israelites that trouble lay ahead; that they needed to mend their ways or face a terrible crisis. The interesting fact about this mission, Nock notes, was that God told Isaiah that the vast majority of citizens, the masses so to speak, would pay no heed to his warnings. This led Isaiah to ask the logical question, why bother? To which God answered, in Nock’s words, paraphrasing the Good Book:
Ah, you do not get the point. There is a Remnant there that you know nothing about. They are obscure, unorganized, inarticulate, each one rubbing along as best he can. They need to be encouraged and braced up, because when everything has gone completely to the dogs, they are the ones who will come back and build up a new society, and meanwhile your preaching will reassure them and keep them hanging on. Your job is to take care of the Remnant, so be off now and set about it.
The moral of this story, Nock told his friend, is that he should concentrate his efforts on selling his idea to the Remnant, that he would be wasting his time on the masses. He noted that by “the masses” he did not mean simply the poor, or the laboring classes, or the proletarians.
The mass-man is one who has neither the force of intellect to apprehend the principles issuing in what we know as the humane life, nor the force of character to adhere to those principles steadily and strictly as laws of conduct; and because such people make up the great, the overwhelming majority of mankind, they are called collectively the masses. The line of differentiation between the masses and the Remnant is set invariably by quality, not by circumstance. The Remnant are those who by force of intellect are able to apprehend these principles, and by force of character are able, at least measurably, to cleave to them; the masses are those who are unable to do either.
Having related this story, Nock proceeds to discuss its applicability to the society of his time. His message is probably even more pertinent today:
Everyone with a message nowadays is eager to take it to the masses. His first, last and only thought is of mass-acceptance and mass-approval. His great care is to put his doctrine in such shape as will capture the masses’ attention and interest. . . . The main trouble with all this is its reaction upon the mission itself. It necessitates an opportunist sophistication of one’s doctrine which profoundly alters its character and reduces it to a mere placebo. If, say, you are a preacher, you wish to attract as large a congregation as you can, which means an appeal to the masses, and this in turn means adapting the terms of your message to the order of intellect and character that the masses exhibit. If you are an educator, say with a college on your hands, you wish to get as many students as possible, and you whittle down your requirements accordingly. If a writer, you aim at getting many readers; if a publisher, many purchasers; if a philosopher, many disciples; if a reformer, many converts; if a musician, many auditors; and so on. But as we see on all sides, in the realization of these several desires the prophetic message is so heavily adulterated with trivialities in every instance that its effect on the masses is merely to harden them in their sins; and meanwhile the Remnant, aware of this adulteration and of the desires that prompt it, turn their backs on the prophet and will have nothing to do with him or his message.
In their efforts to build bigger and bigger fiefdoms, to engage as many clients/customers as possible, and to manage greater masses of wealth than the GDP of nearly all the nations on earth, the big asset managers have diluted their message, have embraced crackpot ideas and theories, and have joined organizations with anti-democratic and even anti-capitalist aims. In short, they have allowed the “realization of these several desires” to make their “prophetic message” “heavily adulterated with trivialities.” They all wanted to be bigger than the other guy, bigger than anybody in history. And, as a result, they put themselves in a position in which they were no longer willing or able, given their global commitments, to “act solely in clients’ long-term economic interest.” In their race to the top, they forgot what they were supposed to be doing in the first place.
While there is an important lesson to be learned here, one suspects that it will not be learned, that the reminders issued to JP Morgan, State Street, and BlackRock will have an impact of limited endurance and will, thus, have to be reissued from time to time.
Bigger isn’t necessarily better. Indeed, bigger brings its own problems.
