11 May Thank Heavens for Bob Iger
Thank heavens for Bob Iger.
You don’t know this, obviously, but I spend a great deal of time fretting about the damage I may have done, unwittingly, to the effort to fight the politicization of business and capital markets. If I do say so myself, The Dictatorship of Woke Capital is a helluva good title for a book, especially a book on a subject with which most people are (or were) unfamiliar. It’s accurate. But it’s menacing. It warns that a seemingly mundane issue is, in truth, massively destructive. It draws attention to a complicated matter without seeming overly intellectual or inaccessible.
At the same time, I worry that it gave a lot of people the wrong impression about the problems facing American business and markets. The problem is NOT that business is “going woke.” Or at least that’s not the primary problem. Rather, the primary problem is that the utilization of the stakeholder model of capitalism and the rise of ESG investing have combined to fashion a zeitgeist among those who control massive amounts of capital – and their allies in various institutions at home and abroad – that empowers them to manipulate market mechanisms to achieve ends other than those that benefit shareholders and that are often directly contrary to shareholder interests.
That’s quite a word salad, I know. Put simply, “woke” and “woke capital” are not the same thing. Woke capital is “the top-down antidemocratic means by which some of the most powerful and best-known men and women in American business are endeavoring to change capitalism, the securities markets, and the fundamental relationship between the state and its citizens.” Woke capital isn’t just the embrace of DEI or CRT or zero-carbon. Woke capital is the use of business and capital markets to bypass electorates and short-change shareholders in an effort to achieve those ends.
Unfortunately, not everyone understands this distinction, and even among those who do, not everyone cares. Our struggle against “woke capital,” for example, is not the same as the fight against Bud Light and its partnership with trans-influencer Dylan Mulvaney. Obviously, there’s some crossover, in that the marketing scheme putting “inclusion” at the forefront of Bud Light’s image was politically motivated and contrary to shareholder interests. Our concern is more one of assessing where the pressure to do so came from and addressing it by pushing back, in the interests of InBev/Anheuser Busch shareholders. Those who are boycotting the beer and everything associated with its brand are involved in a different struggle and are, therefore, focused on different metrics and ends. The two struggles are related on the matter of culture, but one is strictly political while the other is largely market focused.
The situation involving Disney in Florida is one example of how these two struggles can get mingled and mangled and why it’s important to try our best to disentangle them.
As you likely know, the whole mess in Florida began when Governor Ron DeSantis and the state’s legislature threw their support behind a bill called The Parental Rights in Education Act, which the Left successfully mislabeled the “Don’t Say Gay” bill. Disney employees groused. Then-CEO Bob Chapek said, “we’re staying out of it.” Disney employees groused louder. Chapek changed his mind, grabbed Sancho Panza, mounted Rocinante, and charged off into battle, only to get knocked off Rocinante quickly and comically. The bill passed. DeSantis signed it. Chapek got canned. And Bob Iger was recalled (from his office around the corner) to save the company.
On the surface and to the casual observer, it would appear that this is purely a political fight. Disney went woke. DeSantis called them on it. And now he and Iger are locked in a fight over political preferences and worldviews. Who will win? The woke and massively powerful company and its woke and massively powerful CEO? Or the social conservatives who want corporations to stay out of politics and not use their influence to try to change the course of political debates?
Obviously, this is a big part of it. But it’s only the superficial part of it.
And this is why we’re so grateful to Iger. He can’t help himself. And his arrogance and insolence serve as a reminder that there are bigger, more valuable matters at stake here:
“Does the state want us to invest more, employ more and pay more taxes or not?” Disney CEO Bob Iger rhetorically asked today of the on-going attacks on the Mouse House by Florida Governor Ron DeSantis.
“There’s .. a false narrative that we’ve been fighting to protect tax breaks as part of this,’ the politically savvy executive added of the on-going war of words in the media and the courts with the would-be 2024 White House candidate. “But in fact, we’re the largest taxpayer in Central Florida paying over $1.1 billion in state and local taxes last year alone.”
“This is about one thing and one thing only, and that’s retaliating against us for taking a position about pending legislation,” Iger also noted of Disney’s initially fumbling response to Florida’s discriminating ‘Don’t Say Gay’ law. “And we believe that in us taking that position, we’re merely exercising our right to free speech,” the CEO went on to say echoing language he has used before in the battle with DeSantis….
This is good stuff, largely because it reminds us why corporations getting political matters in the long run. Yes, Bob, Disney has “free speech.” That’s what the Citizens United ruling that you and your fellow leftists hate so much said. The catch is that you, as the agent of the shareholders, are required to exercise that right on THEIR behalf, not your own. And it is INARGUABLE that, in this case, the exercise of Disney’s “free speech” – both by you and your successor/predecessor – has been exceptionally damaging to shareholders’ interests. While shooting your mouth off may have been cathartic, it precipitated the ongoing war with Florida’s government and has served as a major distraction for management. Even aside from all the resources the company will have to expend dealing with its problems in Florida, its CEO (that’s you, Bob) is now too busy dealing with “free speech” and its consequences to notice that the streaming service he bet the company on is…well…not doing great.
To be clear, this is not to say that Governor DeSantis has handled this situation perfectly or, even as I would have liked. But DeSantis’s role, in contrast to Iger’s, IS explicitly political, and he answers to a much different constituency than Iger does. That constituency rendered its initial verdict on DeSantis’s behavior last November, re-electing him by 19 points over his opponent.
And speaking of last November, I wrote about Disney and its problems with Florida last November 22, when the company announced that Chapek was out and Iger was back in. I argued that the likelihood of Iger’s success in his second term as CEO depended heavily on the reason Chapek was fired. If the move was strictly about management style, Iger would do very well. Disney employees have always loved him. If, however, it was about something else, if it was about Chapek’s disastrous foray into politics, then all bets were off, I warned. “Shed no tears for Bob Chapek. His termination was long overdue. As for his replacement…well…time will tell, but we’re not exactly holding our breath.”
As it turns out, Disney shareholders have not exactly been well-served by the move. On the other hand, those of us who want to make the point that “woke capital” is different from “woke” and that the ultimate victims of corporate politicization are the shareholders are quite pleased with and grateful for the move.
Thank heavens for Bob Iger.