×
↓ Freedom Centers

Tag Archives: Capitalism


Wall Street Must Stop Enabling Communist China

America’s financial elite is helping to finance America’s prime strategic adversary.

By Senator Marco RubioThe American Prospect

Rubio-China 052621.jpg
After the Trump administration called for the delisting of Chinese companies tied to Beijing’s military last fall, Wall Street went to bat to ensure that three Chinese telecommunications firms, including China Telecom, were spared.

As a new, more skeptical consensus about America’s economic relationship with Beijing emerges in Washington, Wall Street is growing more tightly integrated with China than ever before. The disconnect highlights one of our nation’s biggest vulnerabilities in our confrontation with China over who will determine the course of the 21st century.

American capital markets are the most open, liquid, and valuable in the world. They are also increasingly a source of funds for China’s most strategically important companies. Chinese companies that produce surveillance technology and weapons of war that could one day kill Americans finance their investments with Wall Street capital.

Historically, both Republicans and Democrats have been weak when it comes to identifying and correcting these kinds of problems. Politicians in my own party have too often been reluctant to intervene over concerns about the “free market.” But things are changing. Faced with the catastrophic impacts of deindustrialization, which has choked opportunity for the American working class, and a growing reliance on an authoritarian regime, more of my colleagues in the GOP have awakened to the dangers of economic policymaking that prizes short-term economic efficiency over all else.

American capital markets are increasingly a source of funds for China’s most strategically important companies.

But just as many Republicans have grown more skeptical of big business’s cozy relationship with Beijing, large swaths of America’s financial and corporate sectors are making a play for a new base of political support—this time complete with deep-blue, progressive social stances on hot-button issues in our politics.

It’s the height of hypocrisy. U.S. corporations with lucrative business ties to the Chinese Communist Party will boycott states here over anti-abortion laws, while Beijing systematically sterilizes Uyghur women. They routinely inflame divisive race issues within the U.S. while marginalizing African American actors or erasing Tibetan characters to keep Chinese audiences happy.

And in instances when the U.S. government has acted, our financial sector, fearful of losing out on a lucrative investment opportunity, often intervenes to protect state-tied Chinese firms. For example, after the Trump administration called for the delisting of Chinese companies tied to Beijing’s military from the stock market last fall, it was Wall Street that initially went to bat to ensure that three Chinese telecommunications firms complicit in state censorship, China Telecom, China Mobile, and China Unicom, were spared. (After several reversals and a failed appeal process, the three ended up recently delisted.) And just this month, the Biden administration allowed one of China’s biggest companies, Xiaomi, to relist on U.S. exchanges.

Democrats should be skeptical of the opportunistic progressive social stances in our finance and tech sectors. The presence of a diversity and inclusion czar does nothing if a company is profiting off of slave labor in Xinjiang.

More fundamentally, Wall Street advances the goals of the CCP with its investment in China, which needs American capital to grow its economy. As China has evolved from an export-driven economy to one reliant on state-led investment, it needs foreign investment to help pay for its debts. Investing in China funds the Chinese companies powering Beijing’s economic strategy and industrial policy.

In 2019, the United States became a net investor in China for the first time in history. How did this happen? The answer lies with the fund managers. As China has “opened” its market to American financial companies and sought the listing of its businesses on American stock exchanges, the portfolios of American investors have been increasingly invested in Chinese companies. Many well-meaning Americans may inadvertently be propping up a genocidal regime because Wall Street does it for them.

Furthermore, Chinese firms listed on U.S. securities exchanges are widely shielded by their government from the full oversight of American financial regulators, putting teachers’ pensions and retirees at risk.

Thankfully, there are legislative solutions that both Republicans and Democrats should be able to support. First of all, we should ban any U.S. investments in Communist Chinese military companies. This is part of the reason why I first introduced my Taxpayers and Savers Protection (TSP) Act in 2019—to ensure the retirement savings accounts of federal workers and service members didn’t end up invested in Chinese companies tied to the People’s Liberation Army or engaged in human rights abuses.

In instances when the U.S. government has acted, our finan-cial sector often intervenes to protect state-tied Chinese firms.

Similarly, no Chinese company on the U.S. Department of Commerce Entity List or the U.S. Department of Defense list of Communist Chinese military companies should be allowed to access U.S. capital markets—a move that could simply be accomplished by passing my American Financial Markets Integrity and Security Act.

We can also require increased scrutiny of activist investors in companies tied to national-security work or supply chains—particularly ones related to China—through my Shareholder National Security Awareness Act. Finally, we must ensure that Chinese companies, the only ones in the world that routinely skirt U.S. regulatory oversight, are no longer welcome to publicly list on U.S. stock exchanges.

Americans from across the political spectrum should feel emboldened by the growing bipartisan awakening to the threat that the CCP poses to American workers, families, and communities. As we deploy legislative solutions to tackle this challenge, Democrats must not allow our corporate and financial sectors’ leftward shift on social issues to blind them to the enormity of China as a geo-economic threat.


The Green Dream: What AOC’s Signature Policy Really Aims to Accomplish

Leading climate activists aren’t being serious about climate change — but they’re deadly serious about socialism.

By Mario LoyolaNational Review

Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-MA) lead a news conference to reintroduce the Green New Deal at the U.S. Capitol in Washington, D.C., April 20, 2021. (Jonathan Ernst/Reuters)

At a rally in Washington, D.C., this week, Senator Edward Markey described the scope of his Green New Deal: “Racial injustice, economic inequality, housing, education, jobs, and climate change. It is all intertwined.” Co-sponsor Alexandria Ocasio-Cortez chimed in, saying, “We’re going to transition to a 100 percent carbon-free economy that is more unionized, more just, more dignified and guarantees more health care and housing than we’ve ever had before.”

Translation: Every progressive social program under the sun can now hitch a ride on the climate bandwagon. The Green New Dealers are serious about socialism. But are they serious about climate change?

There are reasons to doubt it.

The Green New Dealers talk as if achieving a zero-carbon economy by 2050 won’t cost anything. Indeed, they believe that transitioning to a zero-carbon economy will open up vast new sources of money for a dizzying array of social programs. It’s no surprise. After all, these same people believe that raising the minimum wage will increase average wages without diminishing employment among low-skilled workers, and that taxing corporate income will generate revenue without diminishing the tax base.

In fact, that Green pie-in-the-sky only gets bigger. A 2018 report of the United Nations’ Intergovernmental Plan on Climate Change (IPCC) called for unprecedented changes to the human economy in order to stave off “catastrophic” effects of climate change. The IPCC report calls for much greater energy efficiency and dramatic reductions in household and industrial energy use, along with the familiar renewable- and clean-energy mandates, but it didn’t stop there. It also called for sweeping changes in agricultural patterns, restoration of ecosystems, and transitioning to new diets. Seaweed for breakfast, anyone?

Meanwhile, on planet Earth, the only realistic way to achieve a zero-carbon electricity with a grid that is reliable and affordable is through the massive deployment of nuclear energy. Solar and wind are too variable to serve as “base load” generation, which is why renewable-energy mandates have made America’s electricity grid dangerously unstable, as we saw most recently in Texas. The United Nations’ own IPCC has said that meeting the goals of The Paris Agreement will require a doubling and perhaps tripling of nuclear power around the world.

Instead, nuclear energy is in a free fall. According to the International Energy Agency, nuclear power has fallen from 18 percent of worldwide electrical capacity in the 1990s to 10 percent, and it is expected to hit 5 percent by the end of next decade without concerted government intervention. Yet the U.S. is closing nuclear plants and has no plans to build any new commercial nuclear plants anytime soon. California recently closed its last operating nuclear plant.

If you’re really serious about fighting climate change, reviving nuclear power would be the highest priority. But President Biden’s infrastructure plan calls only for a few experimental research reactors that wouldn’t provide anyone with power. The Green New Deal resolution doesn’t even mention the word “nuclear.” It really is too much to expect former hippies such as Edward Markey and Bernie Sanders to change their minds on nuclear energy, which they grew up hating almost as much as they hated the Vietnam War. But the worldwide fading of nuclear power, just when the U.N.’s professional climate alarmists are saying that we need it more than ever, is a clear sign of how unserious the effort to stave off climate change really is.

Assuming no dramatic increase in nuclear power, one study estimates that the U.S. alone would have to add 750 GW of wind capacity and 550 GW of solar capacity by 2050. Focusing just on the solar part, consider that each new solar project might have a total footprint of 10,000 acres. Multiply that by 1,000 projects, and you’ve already covered an area twice the size of New Jersey with solar panels. Because of intermittency and other issues, you can multiply that area by maybe two. Now add thousands of utility-scale batteries (just to extend the power output of solar plants through evening hours and cover increasingly frequent shortfalls), and hundreds of thousands of miles of transmission lines. Oh, and outside the desert southwest, the vast majority of the land needed for all of that is currently either forest or farmland, and in both cases doing a lot of “carbon capture” just through photosynthesizing plants.

The Green New Dealers don’t spend a lot of time talking about the staggering quantities of land (and offshore ocean areas) that would be needed for the hundreds of thousands of new wind turbines and thousands of new solar plants that will have to be built by 2050 in order to achieve zero emissions. That’s probably because many of those projects are deeply unpopular with the locals — even among the Green New Deal’s own supporters!

This is no surprise: The Green New Deal coalition includes more than its fair share of NIMBYs (“Not In My Back Yard”) and virtually all of the country’s BANANAs (“Build Absolutely Nothing Anywhere Near Anything”).

One Massachusetts family discovered this first-hand when they decided to build a ten-megawatt solar plant on their family farm. (Ten MW, incidentally, is a tiny fraction of a utility-scale solar plant). They saw it as a chance to confront climate change, but their neighbors had other concerns, such as solar panels ruining their view, declining home values, and impacts to Native-American heritage sites.

The story, in Politico’s “Climatewire,” notes that Massachusetts, like the rest of New England, is strongly committed to fighting climate change:

All six [New England] states have committed to deep emissions reductions by midcentury. And two-thirds of the region’s residents support government requirements that 20% of electricity come from renewable sources, according to a recent poll by Yale University.

But fulfilling those aspirations is more complicated. In Maine, environmental groups have led opposition to a transmission line that would bring hydropower into the region from Canada. Fishermen are objecting to plans for building offshore wind farms off the coast of southern New England. And solar development has prompted worries about loss of farmland in Connecticut and Rhode Island.

Here in Massachusetts, high-profile fights are flaring over clear-cutting forest to make space for solar panels. “We say yes to climate goals, but no to all the solutions that get us there,” said Sarah Jackson, who oversees Northeastern climate policy for the Nature Conservancy.

Indeed. And it gets worse. Each of those projects will need its own federal permits and environmental reviews. And as I wrote in the Wall Street Journal recently, the process for getting federal permits is so convoluted, costly, time-consuming, and unpredictable that it’s a wonder any infrastructure project at all gets built in America. Project sponsors routinely spend $100 million or more during a process that can drag on for years without any way of knowing when or whether a decision will ever be made. The most “shovel-ready” renewable energy project is years away from being shovel ready.

Worse still, despite the largest bureaucracy in the known universe, the capacity of the federal government to process permit applications is frightfully tiny. In a typical year, federal agencies issue permits to, at most, a few dozen solar and wind projects across the entire country. Individual federal agencies get totally overwhelmed by just a handful of permit applications. But guess what. The word “permit” also doesn’t appear once in the Green New Deal resolution.

Without overcoming these challenges, the Green New Dealers’ vision of a zero-carbon future is simply a fantasy. Yet they can hardly bring themselves to acknowledge that these challenges even exist. It’s hard to say whether they simply don’t understand the reality facing their zero-carbon ambitions, or just aren’t interested. Either way, their priorities simply seem to lie elsewhere.

I once asked a radical environmentalist: “If we found out that the planet was warming for purely natural reasons, would you be in favor of climate engineering to stop it, because the current temperature and sea level are the right ones for humans?” He was appalled. “No, of course not, man,” he said.

What really keeps that young man up at night, and many others like him, is not climate change, but capitalism. As Alexandria Ocasio-Cortez said at the Green New Deal rally this week, “The climate crisis is a crisis born of injustice. It is a crisis born of the pursuit of profit at any and all human and ecological cost.”

The Green New Dealers may be in shabby shape when it comes to climate policy, but if saving the planet requires socialism, their hearts are in the trim.


Look to the Reagan administration for the answer to the China challenge

By H.R. MCMASTER AND JONATHAN D.T. WARDThe Los Angeles Times

President Reagan in the Oval Office.
President Reagan in the Oval Office. 
(Scott Stewart / Associated Press)

Among the best remembered summits of the 20th century are those of Ronald Reagan and Mikhail Gorbachev. Reagan’s commitment to dialogue with America’s primary adversary and what then-Secretary of State George P. Shultz called his “personal chemistry” with his Soviet counterpart were hallmarks of his presidency. But even more important was the fact that Reagan had a clear strategy for victory in the global contest with the Soviet Union.

Reagan’s approach — applying intensive economic and military pressure to a superpower adversary — became foundational to American strategic thinking. It hastened the end of Soviet power and promoted a peaceful conclusion to the multi-decade Cold War. 

Now it is useful to ask if a similar approach would be equally successful in America’s contest with an even more formidable rival, the People’s Republic of China, a challenger with whom the free world’s economies are intertwined and increasingly interdependent.

In 1983, Reagan approved National Security Decision Directive 75, which set the course for an assertive, competitive approach to the Soviets, in contrast to the “live and let live” aspirations of détente. Reagan drew on George F. Kennan’s innovative policy of containment, which acknowledged both the disastrous consequences of a hot war with the Soviet Union and the impracticality of cooperation with a Kremlin driven by communist ideology.

Working from Kennan’s original intuitions, the operational approach that Directive 75 emphasized was “external resistance to Soviet imperialism” and “internal pressure on the USSR to weaken the sources of Soviet imperialism.” Rather than trying to reduce friction with the Soviets as prior administrations had done, Directive 75’s aim was “competing effectively on a sustained basis with the Soviet Union in all international arenas.” Within nine years, the Soviet Union collapsed, worn out by economic pressure, an arms race it could not win and internal political contradictions.

The goal of a competitive strategy versus Chinese Communist Party aggression should be different. The United States and like-minded liberal democracies must defend against the expansion of the party’s influence, thwart its ambitions to dominate the 21st century global economy, and convince Chinese leaders that they can fulfill enough of their aspirations without doing so at the expense of their own people’s rights or the sovereignty of other nations.

These efforts must apply Reagan’s fundamental insight — to win against a rival of China’s magnitude requires sustained pressure against the true sources of the adversary’s power.

China is an economic juggernaut. Through its engagement with the United States and other major markets, it has made itself central to global supply chains, moved to dominate strategic industries and emerging technologies, and built up a military designed to win a war with the U.S. and its allies. Numerous multinational corporations and global financial institutions pump capital, technology and know-how into China. This transfer of capability and competitive advantage can be used against the free world to devastating effect. As the CCP puts it, China is poised to “regain its might and re-ascend to the top of the world.”

To foil China’s plans for preeminence, the United States and its partners should restrict investment into Chinese companies and industries that support the CCP’s strategic goals and human rights abuses. The U.S. should work to block China’s access to Western technology in areas that contribute to military advantage and to construct a new global trade and supply chain system that reduces dependency on China. With India, Australia and Japan, the U.S. must also maintain preponderant military power in the Indo-Pacific to convince Chinese leaders that they cannot accomplish their objectives through threats or the use of force.

In all of this, America and its allies should be confident. At the start of the Reagan administration, the Soviet Union, like China today, appeared to be at the height of its ambitions, exerting influence in every corner of the globe. One decade of focused American strategy helped bring about a peaceful conclusion to what many believed could have been an endless Cold War.

Just as Reagan generated the national and international will necessary to overcome the Soviet challenge, the Biden administration can galvanize efforts to compete effectively with an emboldened China. That effort will bolster the administration’s goal of building back the United States’ strength and prosperity.

The Trump administration’s recognition of that the Chinese Communist Party is a strategic competitor was a crucial shift in U.S. foreign policy. There is now a bipartisan consensus in Washington about the need to sustain a multinational effort to restrict the party’s mobilization against the free world. Applying pressure abroad and fostering growth at home will allow the United States and its partners to prevail in this century’s most important competition, preserve peace, and help build a better future for generations to come.


No Fair Trial For Big Tech

By David R. HendersonHoover Institution

How do you make a case against capitalism while appearing to defend consumers’ rights and values? You make a movie called The Social Dilemma.

The movie is cleverly done. It purports to oppose manipulation by Big Tech of social media users, calling out advertisers who manipulate people for profit. At the same time, the movie engages in its own manipulation. How does it do so? To quote Elizabeth Barrett Browning, “let me count the ways.”

State the credentials only of the people on your side

Throughout the ninety-four-minute movie, various commentators argue that social media have done great harm. In every case but one, the commentators criticize social media, warning us of its many harms. The movie states quite prominently, without exception, the credentials for all the negative commentators, and the credentials are impressive. The main commentator throughout is Tristan Harris, identified as a former design ethicist at Google and also as president of the Center for Humane Technology. Another commentator is Sandy Parakilas, identified as a former platform operations manager at Facebook and a former product manager at Uber. Yet another is Justin Rosenstein, whom the movie identifies as a major player at Google and then Facebook. A fourth is Shoshana Zuboff, an emeritus professor at Harvard Business School and author of The Age of Surveillance Capitalism. That’s not a complete list.

In the whole movie, only one person expresses skepticism about the idea that manipulation by social media is sui generis. He expresses this view at a panel in which he challenges the aforementioned Tristan Harris. This skeptic points out that newspapers and print media also played on people’s addictions and ability to be influenced. He notes that when television came along, it did so as well, but in different ways. This, according to the skeptic, is just the next thing.

Here’s what’s most interesting about this skeptic. Only because I’m an economist do I know who he is. “That’s Kevin Murphy,” I said to my wife, who was watching the movie with me. Who’s Kevin Murphy? You wouldn’t know from watching the movie. You had to pay close attention even to know it was Kevin Murphy. I had to pause and rewind and only then did I notice that he had a name card in front of him. Probably not one viewer in fifty notices that, and probably not one viewer in a thousand knows who he is. So let me tell you. Kevin M. Murphy is a star economist at the University of Chicago. He won the John Bates Clark Medal in 1997, given in those days only once every two years to the most outstanding American economist under age forty. He’s the only business school professor ever to win a MacArthur genius award. But the movie tells you none of that.

That’s how the movie deals with controversy: allow only one person to challenge the narrative and don’t even tell the viewer who he is. The basic narrative is that Facebook, Google, and other social media manipulate us. But when it comes to manipulation, those media have nothing on the makers of The Social Dilemma.

Hint at the problem without ever showing the problem

The bad actors in the movie’s narrative are advertisers and the wealthy social media firms. At one point in the movie, Parakilas states, “It’s not like they’re [the social media companies] trying to benefit us. Right? We’re just zombies and they want us to look at more ads so they can make more money.” What’s the problem with that? You might think in a standard-length movie, the critics would try to say why. Here’s the amazing thing: they don’t.

So let’s fill in the missing reasoning. Think about why companies would pay social media firms to advertise. It’s to get people to buy their products. If advertising on social media were seen as completely ineffective, companies would pay precisely zero for advertising. The fact that they keep paying and that social media companies get rich by selling advertising, month in, month out, means that advertising is effective.

Wouldn’t you want the critics in the movie to then point to how advertising manipulates our tastes for products, causing us to buy things we don’t “really” want? Amazingly, they don’t.

The closest the movie comes to making a case is near the end of the movie, when Rosenstein states:

Corporations are using powerful artificial intelligence to outsmart us and figure out how to pull our attention to what they want us to look at, rather than the things that are most consistent with our goals and our values and our lives.

But why would they do that? Isn’t it easier to sell us things that are consistent with our goals, our values, and our lives?

The critics point out numerous times that the companies are continuously refining their algorithms to learn more and more about you. They imply that that’s bad without ever saying why. There’s an old saying whose origin is unknown that goes as follows: “Half the money I spend on advertising is wasted, and the trouble is I don’t know which half.”

I think we can all agree that waste is bad. So isn’t it good rather than bad that advertisers and social media are continually honing their tools to put in front of your eyes items that you really have a high probability of buying? They aren’t there yet. Sometimes when I Google an item I’m thinking of buying, within what seems to be minutes an ad for that item shows up on my Facebook page. It’s almost always mildly annoying, either because the advertised item is a brand I don’t want or because I was just exploring and have decided that I don’t want that item at all. Which means that not half, but perhaps 90 percent, of that advertising was wasted on me.

Some people find it creepy that advertisers know so much about us. I don’t, although I understand the feeling. But think back to how advertisers tried to reach us before social media existed. Imagine that you live in a Jewish household. Which kind of advertising by mail would you dislike more: mailers premised on the assumption that you’re Jewish or mailers premised on the assumption that your household is Muslim, Catholic, or Buddhist?

Make up history

In one segment of the movie, Harris contrasts social media with previous innovations, claiming that no one objected to bicycles on the grounds that those who used them would spend less time with their families. Neither he nor the movie presents any evidence for his claim. But here’s what I found with just a little search (on Google, by the way) about early attitudes toward the bicycle. In a 2001 book titled The Ride to Modernity: The Bicycle in Canada, 1869–1900, author Glen Norcliffe quotes an essay by Heather Watts on early cycling in Nova Scotia. Watts writes:

At a time when higher education, women’s suffrage, and the movement for dress reform were all topics of heated discussion, the bicycle became one more liberating influence on the restricted lifestyle of Victorian women. . . . This element of freedom and independence greatly appealed to women. They were no longer left at home, but could go on outings with their women friends or accompany their young man on an equal basis. Once tasted, the new freedom was hard to abandon.

If bicycling was a liberating force for women, and if women were able to ride with their women friends, is there much doubt about whether some critics at the time claimed that bicycling women would spend less time with their families?

Play up the downside of social media with little attention to the upside

I do think the movie scored a direct hit on a huge downside of social media: the purported effects on people between the ages of ten and nineteen. It presented some disturbing data about the effects on young girls, especially those ages ten to fourteen, of media such as Instagram that encourage them to compare their faces and bodies with what seem to be regarded as ideal body types. Here are two shocking statistics about what has happened since 2011, when Facebook and other social media had become widespread: the number of girls aged ten to fourteen per 100,000 who are admitted to hospitals for cutting themselves or harming themselves in other ways has risen 189 percent, and the number of girls aged ten to fourteen per 100,000 who have committed suicide has risen 151 percent. 

One critic, Jonathan Haidt, a psychology professor at New York University’s Stern School of Business, gives a straightforward solution: set an age below which your child is not allowed to use social media and limit your child’s use of such media. To say it’s straightforward is not to say it’s easy. It’s probably hard, but parenting is hard.

To their credit, the critics do mention some upsides to social media. Harris says you can get on your smartphone and have a car show up quickly. Critic Tim Kendall, identified as the former president of Pinterest, notes that social media have helped people find long-lost relatives and organ donors. That’s pretty big.

But there are many more upsides. I can find some half-forgotten poem from high school when I remember only one sentence. That happened just last month with this poem. We can check a fact, we can follow friends, not just family, with whom we had lost touch, and we can compare airfares and make airline reservations in minutes, without either the use of a travel agent or even a phone call. I’ve just scratched the surface.

Discuss the upside as if it’s the downside

Critic Bailey Richardson, an early team member of Instagram, says that when the Internet first started, it was a weird, wacky place with lots of creativity. She recognizes that creative things still happen on the Internet, but now, she says, it feels like a “giant mall.”

That’s bad? Some people whom I’m close to have restricted diets because of various ailments. For them, shopping online has been wonderful. One person in particular needs to keep gluten out of her diet. And she is able to find appealing, tasteful, gluten-free items online much more easily than if she had to shop in her semi-urban, semi-rural part of the country. Imagine if she lived in, say, rural Nevada. Shopping online could be a godsend.

Attack wealth when it’s not that of your allies

At many points in the movie, the critics point out disdainfully how wealthy the social media companies are. That raises two questions. First, is there some chance they got that way by making things we want more available? Answer: yes. Second, how wealthy are these critics? Answer: very. Critic and investor Roger McNamee, for example, is a billionaire. Justin Rosenstein’s net worth is $150 million. The other critics are multimillionaires. Honestly earned wealth is not a mark against the wealthy, whether the wealthy be social media critics or social media firms.

Lay out your real agenda, with no evidence, at the end

Near the end of the movie, probably many viewers are hooked. Then we get to what seems to be the agenda of the critics and the movie makers: to end, or highly regulate, free markets.

Zuboff states, “These markets undermine democracy and undermine freedom and they should be outlawed.” The movie director possibly forgot to insert a sentence or two telling us which markets Zuboff is referring to. Whatever markets she wants to end, that would be a major hit on capitalism.

Rosenstein complains that social media corporations go unregulated “as if somehow magically each corporation acting in its selfish interest is going to produce the best result.” One gets the idea that he’s never read Adam Smith, who indeed did arguein The Wealth of Nations that “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.”

Rosenstein also says mining the earth and pulling oil out of the ground are bad for humans. He claims as evidence of a warped, for-profit system that trees and whales are worth more dead than alive. And then he jumps the shark, or maybe I should say the whale, by saying “we’re the tree; we’re the whale.” How exactly social media companies kill us and how exactly they gain from dead consumers he leaves as an exercise for the viewer.

Coda

Various friends told me that The Social Dilemma would upset me. It did. As noted, I found the facts about young girls very disturbing. The biggest upset, though, is that a bunch of critics and a movie director manipulate viewers into not knowing that there is another side to this debate, understate the benefits of social media, and use the movie as a vehicle for a rant against capitalism. Other than that, the movie was great. 


Progressives Smashed, GOP Surges in Down-Ballot Races

By Peter RoffNewsweek

If news writers had any integrity, the headlines following the 2020 election would have read like the one on this column. Instead, the media gods who helped put Joe Biden over the top expound on why Donald Trump‘s protests are without merit and just another example of Republican sore-loserism.

The former vice president’s apparent margin of victory is not all that large. At the time this was written it was about 6 million votes out of about 150 million cast. That works out to about 4 percent and could, depending on recounts, slip lower.

In the states that appear to be making the difference—Arizona, Georgia, Michigan, Pennsylvania, Wisconsin—Biden’s lead is extremely narrow, much as Trump’s was when he defeated former secretary of state Hillary Rodham Clinton to win the White House in the first place. It’s hard to argue the man most of the media anointed the new American chief executive before all the votes were cast has a mandate to do much of anything.

Nonetheless, if he eventually becomes president, the calls for him to act swiftly and decisively will be frequent, loud, and—from his point of view—problematic. In the Thursday, November 19 edition of The Wall Street Journal author and political cartoonist Ted Rall argues forcefully that, without the support of progressives who held their nose and voted for him anyway, Biden wouldn’t be going back to Washington and instead would be headed back to Delaware.

Progressives who would have preferred Vermont senator Bernie Sanders may have pushed Biden past Trump in the popular vote and in the states that will determine the outcome in the electoral college, but on almost every other measure they were defeated. By a small majority, the nation indicated it may not want four more years of Trump, but it’s clearly repudiated the progressive agenda.

Joe Biden
Joe Biden speaks virtually with the National Governors Association’s executive committee during a meeting in Wilmington, Delaware, on November 19, 2020.JIM WATSON/AFP/GETTY

The GOP may have lost seats in the U.S. Senate but it’s most likely maintained control. The outcome hangs on two runoffs in Georgia—both of which the Republicans are favored to win—unless an audit of the votes pushes incumbent GOP senator David Perdue back up over 50 percent of the vote, where he was for most of election night. Right now, he’s at 49.71 percent, and the 0.3 percent he needs to avoid a runoff might be overcome just by the uncounted votes being discovered across the state.

The Republicans were also projected to lose seats in the U.S. House of Representatives. Instead, they won all the top targeted races, lost no incumbents seeking reelection, and gained enough seats not only to get above 200—a crucial barrier in the battle for the majority—but to put Speaker Nancy Pelosi‘s ability to control events on the floor in doubt. Enough moderate Democrats are saying privately (and thanks to some propitious leaks, publicly) that they’re not willing to walk the plank for her and the “The Squad” is in for a rough going.

Looking around the country, the Republicans picked up one governorship in 2020 (Montana) and the New Hampshire state legislature. This gives the GOP the prized “trifecta” in each state which, when added to the dozens they already had, means that while Washington is gridlocked the GOP can use states to pass the reforms they’ll take national the next time they have the White House.

At the same time the Democrats, who enlisted the substantial fundraising support of former president Barack Obama and former U.S. attorney general Eric Holder in an attempt to flip legislative chambers to Democratic control, failed everywhere they tried. They may have spent tens of millions or more in pursuit of this goal with nothing to show for it. Contrary to late predictions, the GOP held on to state legislatures in Texas and Arizona comfortably when the battle for control was expected to be a close-run thing. And they held the legislatures in Wisconsin, Michigan, Pennsylvania, North Carolina, Georgia and enough other key states that predictions are already being made that, based solely on the upcoming reapportionment of U.S. House seats among the states, the Republicans are headed to a decade-long majority. No wonder Mrs. Pelosi is saying this is her last term as speaker.

Even at the lawmaking level, progressivism was crushed. Voters in California, who went for Biden over Trump by about two to one, rejected an effort to repeal the 1996 Proposition 209 that prohibits the state from considering race, sex, color, ethnicity or national origin in public employment, education and contracting. At the same, in progressive Colorado, voters said “Yes” to a cut in the state income tax rate from 4.63 percent to 4.55 percent. In Illinois, voters rejected a measure to establish a graduated income tax and in Montana voters limited the ability of local governments to interfere with issuing of “concealed carry” firearms permits.

If there’s one takeaway from the 2020 election, it’s that, despite the aggressive support it received from donors, elected officials, candidates for office and the mainstream media, progressivism is on the decline. Heck, Joe “I am the Democratic Party” Biden even rejected it while debating Donald Trump. The course is set and if the new president—whoever it is—is smart enough to follow it then the sailing should be smooth. If not, it’s stormy weather ahead.


It’s Vital To 5G To Let The Private Sector Develop It

By Peter RoffTownhall Finance

It’s Vital To 5G To Let The Private Sector Develop It
Source: AP Photo/Mark Schiefelbein

In Washington, bad ideas are like bad pennies: They keep turning up.

In early 2019 a group of well-connected Washington insiders was suggesting with the utmost sincerity that it would be best to have the Pentagon in charge of the push to 5G, the next-level communications network. The primary reason for this, they said, was national security and the threat posed by China.

President Donald J. Trump, a man who is in no way soft on China, wisely rejected their advice. In a Rose Garden press conference with Federal Communications Chairman Ajit Pai, he rejected the government-led approach, calling it “not as good, and not as fast.” Instead, he committed to a 5G buildout that would be “private sector driven, and private sector led,” ending talk of a nationalized network.

Or so we thought. The Wall Street Journal recently reported that the idea of a 5G network run out the Pentagon is once again on the table. A new proposal for a government-managed system under the supervision of a single company is once again under discussion. And, as before, the firm the DoD has in mind has little to no experience managing large information clusters.

The reason the idea’s come back has more to do with the swamp-dwellers who profit off big government contracts than with the science involved, the efficiency needed to bring 5G to life quickly, or the ability of firms in the private sector to make it all happen. It’s crony capitalism at its worst.

The best way to get to 5G is to allow the best minds and best engineers in the best firms to develop competing technologies – with the winner to be chosen in the marketplace. The plan being pushed yet again by the DoD gives one company – in this case, most likely Rivada Networks – control of the spectrum and its allocation as well as access to the protected intellectual property of those who’d be doing the job if the Pentagon had not taken the project over.  At least that’s the opinion of 19 U.S. Senators who wrote the department complaining the way it wanted to move forward “contradicts the successful free-market strategy that has embraced 5G.”

Somehow what President Donald J. Trump likes to call “the race to 5G” is again in danger of being taken over by the officials in charge of it. Instead of fair competition, a vital future national and economic security project is being influenced unfairly by what leading congressional Democrats including House Energy and Commerce Committee Chairman Frank Pallone, D-N.J., say is a plan “specifically crafted to enrich President Trump’s cronies.”

Partisan hyperbole aside, it’s easy to see Pallone’s point. Building a national 5G network requires more than influential political connections. Rivada Networks, the company lobbying hardest to win the bid, is not exactly known for its ability to build out and manage broadband networks. Its proposal to manage FirstNet, a nationwide public safety broadband system, was shot down due to concerns at the Interior Department over concerns about the insecurity of its technology.

One might think this would give the Pentagon pause, yet Rivada’s advocates within the department say they are confident the company can get the job done and have an operating network functioning within three years. Of course these are some of the same people who have already spent more than a decade and hundreds of billions or more on the development of the new multi-service Joint Strike Fight and still haven’t gotten it right.

Chairman Pai, a national hero for his work preventing the Internet from coming under the thumb of the U.S. government as a regulated utility, has dismissed the effort to get to a nationalized 5G run by the Pentagon as being a costly and counterproductive distraction from what America ought to be doing. The federal government moves slowly by design. Processes that work quickly in an authoritarian country like China don’t work in America. Here, roadblocks and rulemaking are the order of the day. Washington can’t compete with the U.S. private sector. In Beijing, the private and public sectors are indistinguishable.

Thanks to President Trump, Chairman Pai, and others who understand the stakes, America is a lot farther down the road to a working 5G network than people might believe. Thanks to a competitive market where the nation’s three largest carriers have all prioritized building the nation’s biggest, fastest 5G network, we’ll get there faster and in better shape than if we let the government do it.


Leaving Socialism Behind: A Lesson From Germany

Editor’s note: This is an excerpt from a fuller essay by Professor Berman, “Leaving Socialism Behind: A Lesson From German History,” that is published by the Hoover Institution as part of a new initiative, Socialism and Free-Market Capitalism: The Human Prosperity Project.

By Russell A. BermanThe Hoover Institution

The images of East Germans eagerly pouring into West Berlin on the night of November 9, 1989, have become symbols of the beginning of the end of the Cold War and, more specifically, evidence of the failure of communist rule in the German Democratic Republic (GDR, or East Germany) and its socialist economic system. Yet that historic moment was only the final dramatic high point in the long history of dissatisfaction with living conditions in the eastern territory of Germany, first occupied by the Red Army during the defeat of Nazi Germany in 1945 and, four years later, established as the GDR when, in Winston Churchill’s words, the Iron Curtain fell across the continent.

Between the formal political division of Germany in 1949 and the final hardening of the border with the construction of the Berlin Wall in 1961, a constant population flow from east to west took place, a movement away from Soviet-style socialism and toward Western capitalism. East Germans stopped voting with their feet only when the construction of the Wall in Berlin made it impossible to leave; outside the capital, prohibitive barriers already had stretched across the whole country. Nonetheless, many continued to try to escape, and hundreds lost their lives, shot by border guards in brave attempts to “flee the republic,” as the crime was cynically designated.

To state the obvious: there are no similar accounts of throngs of westerners clamoring to enter East Germany. Between 1950 and 1989, the GDR’s population decreased from 18.4 million to 16.4 million, while that of West Germany (the Federal Republic of Germany, or FRG) grew from 50 million to 62 million.This tally is an indisputable judgment on the failure of socialism. The GDR system was unable to persuade its population to remain willingly. Only the Wall and the rifles of the border guards prevented East Germans from departing.

Several distinct, if interrelated, factors contributed to the economic limitations of the GDR. As noted, it emerged from the Soviet Occupation Zone, and the Soviet Union’s treatment of its defeated wartime adversary was harsh. Extensive manufacturing capacity was systematically dismantled and moved to the Soviet Union, further undermining an industrial base already reduced through wartime destruction, although this phenomenon declined by the early 1950s. In contrast, West Germany was benefiting from the very different American occupation and the positive effects of the Marshall Plan. While the West German economy profited from access to the world economy, East German trade remained largely constrained to the Soviet bloc. In addition, from 1949 to 1961, the population flight to the west disproportionately involved middle-class and relatively wealthy East Germans, who took their skills and amplified capital flight. Each of these elements arguably put East German economic performance at a disadvantage.

Yet the primary difference between East German underperformance and the West German “economic miracle” involved the antithetical organization of the countries’ economic systems and the philosophical assumptions underpinning them. Jaap Sleifer writes:

The difference between the two systems may be characterized by the structure of ownership and the degree of centralization in decision-making. West Germany, as a capitalist country, mainly relies on private and individual ownership and control of the business enterprise, whereas in East Germany, as a socialist country, state enterprises were predominant. Regarding the degree of centralization, capitalism provides wide areas of discretion for freedom of individual choice, which leads to decentralization of economic decisions, whereas socialism shows a more centralized approach towards economic decisions.2

The comparative performance of the East and West German economies therefore provides a nearly textbook case of the difference between socialist and capitalist economic paradigms. To be sure, other factors played a role, such as the countries’ differing treatments by occupation forces and the ongoing migration from east to west. Yet each of these two potentially mitigating circumstances was also simultaneously symptomatic of the opposed economic systems: the East German economy was disadvantaged precisely because the Soviet Union imposed its model of socialist planning, while the brain drain (and capital drain) to the west was a function of and response to the effects of the socialist model. In contrast to the imposition of the Soviet model—a derivative of the Marxist ideological legacy—in the GDR, West Germany benefited from the free market vision of thinkers such as Walter Eucken and Ludwig Erhard, who steered it toward its successful model of a social market economy: i.e., a capitalist economy tempered by a social safety net and restrictions on monopolies.

As a result, the contrast between East and West German economic performance became a set piece in representations of the Cold War. In 1960, Bellikoth Raghunath Shenoy, a prominent classical economist from India, provided a journalistic account of his visit to Berlin, not yet divided by the Wall, which included these trenchant observations:

The main thoroughfares of West Berlin are nearly jammed with prosperous-looking automobile traffic, the German make of cars, big and small, being much in evidence. Buses and trams dominate the thoroughfares in East Berlin; other automobiles, generally old and small cars, are in much smaller numbers than in West Berlin. One notices cars parked in front of workers’ quarters in West Berlin. The phenomenon of workers owning cars, which West Berlin shares with the USA and many parts of Europe, is unknown in East Berlin. In contrast with what one sees in West Berlin, the buildings here are generally grey from neglect, the furnishings lack in brightness and quality, and the roads and pavements are shabby, somewhat as in our [Indian] cities.3

He goes beyond economic observations to remark on the culture he sees:

Visiting East Berlin gives the impression of visiting a prison camp. The people do not seem to feel free. In striking contrast with the cordiality of West Berliners, they show an unwillingness to talk to strangers, generally taking shelter behind the plea that they do not understand English. At frequent intervals one comes across on the pavements uniformed police and military strutting along. Apart from the white armed traffic police and the police in the routine patrol cars, uniformed men are rarely seen on West Berlin roads.4

Evidently more is at stake than contrasting consumer cultures or access to privately owned cars. East Berlin is, in Shenoy’s view, symptomatic of a repressive society in which the inhabitants fear authority and shy away from contact with outsiders lest they draw attention to themselves:

The main explanation lies in the divergent political systems. The people being the same, there is no difference in talent, technological skill, and aspirations of the residents of the two parts of the city. In West Berlin efforts are spontaneous and self-directed by free men, under the urge to go ahead. In East Berlin effort is centrally directed by Communist planners. . . . The contrast in prosperity is convincing proof of the superiority of the forces of freedom over centralized planning.

The Perils of Selective Memory

Today it is especially important to remember both objective economic differences between the two Germanies and these subjective experiences: i.e., the dynamic excitement Shenoy felt in the west as opposed to the timidity of the east. Preserving these insights is vital because of current attempts to idealize socialism retrospectively by pointing to allegedly positive aspects of the East German performance.

While socialist-era statistics are notoriously unreliable, it is likely that East German standards of living were in fact consistently the highest in the Eastern bloc: i.e., better than in the other satellite states and certainly superior to the Soviet Union. Yet that hardly proves the success of GDR socialism; Germany long had been wealthier than its eastern neighbors. GDR standards of living also reflected the political pressure on East German leadership to attempt to keep up with the standard of living in the west, of which the East German population was well aware. This constant comparison with the Federal Republic is one unique feature of East German socialism; Poland never had to compete with a West Poland, or Hungary with a West Hungary. Yet artificially propping up the standard of living in East Germany contributed to the indebtedness of the state and its ultimate fragility, and, in any case, the GDR’s living standards never came close to matching what West Germans grew to expect. East Germany’s per-capita GDP has been measured at only 56 percent of GDP in the west.5

Nonetheless, one can hear apologists for the GDR and its socialist system argue that the East German state provided social goods such as extensive child care, correlating to a relatively higher degree of participation by women in the workforce. In post-unification debates, such features are sometimes taken as evidence of the accomplishments of the GDR. Yet in fact they represent instances of making a virtue out of necessity: in light of migration to the west and the dwindling population, raising labor force participation through the inclusion of women became unavoidable.

Such retrospective considerations arise from rosy false memories in the context of post-unification reality. The past may look attractive to those who do not have to relive it. Yet there is in fact no evidence of any significant interest on the part of former GDR citizens in returning to the socialist regime. One can observe some dissatisfaction in the former East Germany with the character of the unification process for various reasons, including a perceived condescension on the part of West Germany. East Germans at times experience the western critique of the GDR as offensively triumphalist, and, worse, they believe that the western critique of the socialist system simultaneously belittles their own lives within the system. This dynamic can generate defensiveness on an individual level, but it rarely turns into a reactive identification with the former regime.

The abrupt transformation of life through the unification of 1990, the economic disruption as East German enterprises collapsed, and the GDR’s sudden integration into a West German and, more broadly, cosmopolitan world has produced the phenomenon of Ostalgie, a nostalgia for the east. Sometimes it is expressed merely as a yearning for the (few) consumer products of one’s childhood, and sometimes it is a more complex psychological orientation toward a remembered youth in an allegedly simpler past. In Ostalgie discourse, the repressive aspects—the role of the Stasi, the secret police, the extensive surveillance network, the lack of a free press—are minimized or absent. The psychological appeal of Ostalgie—of succumbing to the glow of a wrongly remembered past—can be used by left-of-center politicians to conjure the illusion of a better past in order to advocate for statist policies in the present.

The failure of East German socialism to establish its legitimacy by maintaining the loyalty of its population—who, given the chance, evidently would have largely decamped to the west—was a matter of economics, but not only of economics. At stake was instead the broad infringement on human freedom that made life in the GDR undesirable. It is not only in terms of material prosperity that socialism fails.

“We Are the People”

Two pieces of literary and historical evidence testify to the indigenous flaws in the mindset of the East European satellite countries and especially the GDR, where patterns of subordination, obsequiousness, and obedience worked against the disruptive capacities of individuality, creativity, and spontaneity that drive change and growth. The “really existing socialism,” as it was labeled, held a systemic bias against the recognition of any signals that might allow for autocorrection. Infallibility and determinism, hallmarks of socialist thought, systematically eliminate opportunities to undertake modifications on the basis of experience.

The first piece of evidence is the poem “Song of the Party” (Lied der Partei), which became the anthem of the ruling Communist Party of the East Germany. It was written by German-Czech Communist poet Louis Fürnberg in 1949, and remembered particularly for its repeated line that conveys the core message “the Party is always right.”

The Party, the Party, it is always right!

And Comrades, may it stay that way;

For whoever fights for the right

Is always in the right.6

It conveys an unironic insistence on absolute obedience to the organization, which in turn is regarded as all-defining for the existence of its members. Worse, the song propagates a radical consequentialism: if one is fighting for the right, one is necessarily in the right—the end justifies the means. No room remains for any ethical limitation on the instruments one uses to reach a goal. As a document of the psychology and values of GDR socialism, “Song of the Party” helps explain the widespread suppression of individuality. Fürnberg’s ethos also displays the desiccation of political life that radical revolutionary writer Rosa Luxemburg foresaw years earlier as a result of the essence of the Bolshevik program and the socialist enterprise.7

The second piece of literary evidence comes in the summer of 1953, after spontaneous worker protests erupt across East Germany, reaching a high point on June 17 with strikes in all major industrial areas. The Soviet occupation forces suppress the uprising quickly, as protestors are shot and executions follow. Poet and playwright Bertolt Brecht responded to the suppression with a poem that has been repeatedly cited to show the mismatch between statist governance and democratic legitimation. In “The Solution” (Die Lösung), he describes the head of the Communist writers’ organization handing out flyers criticizing the workers for disappointing the government. Brecht’s laconic suggestion: the government should “dissolve the people and elect another.”8

The poem captures the distortion of political life inherent in East Germany, corroborating the prediction in Luxemburg’s critique of the Bolsheviks: that the hollowing-out of democracy and the elimination of rights, consistent with Karl Marx and Friedrich Engels’s animosity to “civil society” and merely bourgeois liberty, produces dictatorship as the defining feature of socialism.

Such was Communist culture in the early years of the GDR. Later, just before the end of the socialist regime, matters had begun to change. There is evidence that servility and subordination were giving way to different personality types no longer consistent with authoritarian rule. “Sometimes this results in exaggerated anti-authoritarian behavioral patterns,” wrote Walter Friedrich, the director of the Youth Institute, in 1988. There also were expectations of greater freedom in personal lives and in relationships, such as “the demand for freedom in choosing a partner, and surely also the phenomenon of cohabitation and the high divorce rates here,” Friedrich wrote. “The greater demands by women, especially younger ones, for self-determination should also be regarded from this perspective—right up to feminist postulates.”9 He went on to report on how changes in personality characteristics were also leading to greater engagement in organizations such as church groups and the environmental movement. A protest potential was growing.

A year later, the East Germans were pushing their way into West Berlin. Even after the border opened, some continued to harbor illusions that the GDR might remain a separate state. Parts of the East German intelligentsia and cultural elite promoted this idea; after all, they had often benefited from relatively privileged positions. But in the voices of the demonstrators during the fall of 1989, especially in Leipzig, where a series of “Monday demonstrations” unfolded, and then in Berlin, an important transition took place. The crowds expressed aspirations to end not only the dictatorship but also eventually the division of Germany. Before the opening of the Wall, in October and early November, the demonstrators regularly chanted, “Wir sind das Volk” (We are the people), asserting the democratic claim on popular sovereignty against a regime that had never achieved legitimacy through a free election. “We are the people” was, in effect, a call for a realization of the democracy that had been consistently denied by the dictatorial character of GDR socialism, precisely as Luxemburg had predicted would develop out of Lenin’s pattern of suppressing of elections and civil rights. As in Russia, so too in Germany.

On October 3, 1990, East Germany—or, more precisely, the five Länder in the territory of East Germany—joined the Federal Republic, leading to the formation of a single German state and the end of the post–World War II division. Whether this unification was inevitable is a matter of academic speculation at best. What one can say with certainty is that the specifically socialist character of the GDR—its poor economic performance and its constitutively repressive character that precluded political processes of democratic legitimation—made the continuity of an independent state deeply unappealing.

In the end, East Germans chose to abandon socialism to pursue greater prosperity and political freedom through integration into the liberal democracy and social market economy of the Federal Republic. There are few regrets. 


Workers’rights in the 21st century: Unions and Conscious Capitalism

Is there still a place for labor at the table of a “Conscious” company?

By Larry Fedewa, Ph.D.DrLarryOnline.com

My first experience with a union came when I represented the newsroom’s intention to hold a vote for a union to the publisher of a national weekly newspaper. I had a summer job there after my first year as a high school teacher.

Later, as a training developer, I wrote, produced, and oversaw one of the largest industrial training programs in history for the Railway Labor Executives’ Association (a council of all major rail union presidents). I also executed major projects for the Federal Railroad Administration, AMTRAK, Conrail, and others. Still later, I worked very closely with the National Education Association, the professional teachers’ union in a major joint venture, a national research project, and addresses to two national conventions.

The reason I mention all this background is to establish my position as an ardent supporter of the labor movement. My comments come from a firm commitment to the need for workers to take their place at any table which determines their fate. The purpose of this essay is to explore a possible alliance between unions and “conscious” companies.

The first factor in this dialog would be the fact that “Conscious Capitalism” promotes the most expansive view of workers’ rights ever to be advocated by corporate management in the history of capitalism. At last, workers are accorded the respect due to major stakeholders in the organization, whether a corporate giant or an entrepreneurial start-up. Almost always this means sharing in the profits of the company if not outright stock ownership.

This view of the business flows from an idealistic definition of the enterprise which includes, among other things, the function of profits as a necessary means to a greater good. The greater good is the mission of the firm as providing a community service through the sale of its goods or services. Conscious Capitalism challenges everyone in the organization to contribute to the fulfillment of this mission and provides the resources to do so.

Conscious Capitalists also tend to be anti-union.

Most believe with former Whole Foods CEO, John Mackey, that unions introduce an adversarial relationship between management and labor which detracts from the collegial environment necessary for the Conscious Capitalist company to be successful.

True to that description, the unions argue that underneath the sheep’s clothing, Conscious Capitalists are really hiding their power to dictate and enforce their own definition of workers’ rights. The workers ultimately have to accept that definition or find another job. With every company defining workers’ rights in its own way, no standards will be set or recognized. This is just the same old thirst for power presented in modern dress.

So, what’s the answer? Is there a place for unions in a Conscious Capitalist company or not?

The first element of the answer is: if the employees want a union, there is a place for a union. During a transitional period such as the current one, there will continue to be employers who do not accept the new ways. The old paradigm of management versus labor will be in place and needs to be followed.

Over time. however, more and more companies will join the new movement – particularly since there is much evidence accumulating that indicates “Conscious” companies are substantially more successful financially.

In order to maintain its relevance, therefore, labor will have to adapt. The first step in that direction is to find a new answer to the question of a union’s role in a worker-friendly enterprise. Here are some ideas.

First, many companies will be trying to transition to the new style. Unions could help them succeed. But why not hire a consultant or new senior staff to guide the company in the new direction? These may be useful measures, but no one outside the organization has the same motivation and investment in success as the people working there now. However, they are generally as inexperienced as the owners.

Involvement of a knowledgeable and sympathetic third party can be welcome to all sides. However, the union must be truly invested in the cooperative approach in order to be credible. To achieve this posture, unions should be reaching out to the small but growing body of Conscious Capitalism experts. Honest discussions about sensitive issues will profit both sides.

Another role for unions in the new world of work we face is that of advocating national (and international) standards of what constitutes workers’ rights in this new century. As movements like Conscious Capitalism illustrate, 40-hour-workweeks, paid vacations, pensions and health care are not always enough to keep the economy going in the right direction.

Today’s workers want to be part of the company in new ways, ranging from profit-sharing, to shareholders, to open communication with governing bodies, including full financial disclosure, to a “cooperative culture”, and many other new practices. Workers want to be treated as persons, not robots.

This transitional period is reminiscent of the early days of the TQM (Total Quality Management) movement, which can be seen as an earlier step in this direction. The eagerness of workers to become involved in contributing their ideas and expertise to product development and manufacturing was often almost tangible. It revealed to many of us just how much talent had lain dormant in our workforce.

The contention here is, of course, that unions as well as management must embrace this new style of company culture as the means to solving our wealth gap between the rich and the middle class. The reduction of taxes and regulations of the Trump era are doing much to enhance the wages of the lowest income workers.

But from a macro view, the real challenge is to enrich the middle class, which is responsible for much of the consumer economy on which our national wealth ultimately depends. The Leftists want the government to use the tax system as the instrument for re-distributing America’s wealth from the very rich to everybody else (legal or illegal). That would weaken the individual’s motivation to work hard on which America’s free market capitalism has been built and which has created all this wealth.

Conscious Capitalism is an answer to the question of how we solve the wealth gap without turning to socialism. Union support – with an updated agenda – will help America achieve the right outcomes.


The oil market doesn’t need an intervention

By George LandrithThe Huntsville Item

In late spring, oil prices dipped below zero for the first time ever. Futures contracts for May delivery traded as low as negative $37 a barrel, as producers and speculators paid refineries and storage facilities to take excess crude off their hands. 

In some sense, this historic moment was inevitable. Oil markets are completely saturated. Worldwide coronavirus lockdowns have depressed energy demand. And in March, Saudi Arabia and Russia announced they would increase production, thus exacerbating the glut.

President Trump has tried to help beleaguered U.S. producers. He recently mediated a deal between Saudi Arabia, Russia, and other major oil producers, who collectively agreed to cut production by nearly 10 million barrels a day.

But prices are still falling. And now, the White House is toying with other ways to prop up U.S. oil producers, ranging from tariffs on imported oil to direct cash payments to energy companies.

This desire to help energy companies, and the millions of workers they employ, is commendable — but ultimately counterproductive. In the long run, the industry will emerge stronger if the White House allows the free market to resolve this crisis.

This pandemic-induced economic crisis is going to be painful for the energy sector. Cost-cutting and layoffs are already underway.

But the industry is strong and adaptive, and has bounced back from past crises by investing in technology. In fact, economic pressure encourages the kind of innovation and belt-tightening that helps companies thrive in the long run.

The United States last faced low oil prices in 2014 and 2015, when Saudi Arabia ramped up output to try to cripple U.S. producers that specialized in fracking — a technique used to extract oil from underground shale rock. By early 2016, prices had dropped below $30 a barrel, well below what U.S. shale producers needed to break even.

The government didn’t come to the rescue, which forced frackers to get creative. They researched how to extract more oil for less, and came up with a variety of new techniques, like drilling several wells simultaneously and using drones to detect faulty equipment. As a result, the average break-even price for frackers dropped from $69 a barrel in 2014 to an average of $40 a barrel by 2017. Had the government tried to solve the problem by slapping tariffs on Saudi crude, the U.S. oil industry likely would have never set its all-time production record of 13.1 million barrels a day in February.

We can be confident the U.S. energy industry will apply its ingenuity to this crisis, too — because these days, it excels at invention. In 2019, the oil and gas sector increased adoption of digital technologies, including cloud data storage and new software. Over the next five years, digitizing could slash the cost of oil production by almost 10 percent.

By using sensor technology — tiny, data-tracking devices attached to oil-field gear — producer ConocoPhillips recently cut in half the amount of time it took to drill new wells in South Texas. Other companies are using data analytics to search for the best drilling locations.

In short, the pressures of a downturn are likely to encourage even more future-focused transformation. The industry doesn’t need to hide behind tariffs. If we trust the free market to encourage creativity, in the long run, we’ll all benefit from a cheaper and more efficient energy supply.


How Advocates of ‘Corporate Social Responsibility’ Distort Shareholder Power

By pressuring companies to put ‘sustainability’ before profit, they hurt pensioners, small investors, and all those who depend on a robust economy.

By ANDREW STUTTAFORDNational Review

Many years ago now, Milton Friedman explained something that should never have needed explaining, when, writing for the New York Times Magazine, he reminded his readers what —and whom — a company is meant to be for:

In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to [the] basic rules of . . . society, both those embodied in law and those embodied in ethical custom. . . .

What does it mean to say that the corporate executive has a “social responsibility” in his capacity as businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers.

The executives who retool a company’s mission to suit a particular conception of “social responsibility” are spending shareholders’ money on a moral agenda unrelated to company objectives, an affront that’s only made worse if their crusade depresses returns, share price, or both.

Friedman was writing in 1971. Since then, like so many bad ideas, corporate social responsibility has become institutionalized. To take a recent example, in 2017 JP Morgan Chase gave $500,000 to the Southern Poverty Law Center, an organization that, sadly, has strayed far from its original ideals. Had they learned of it, this gift would probably have irritated a good many shareholders. The employee who had to justify it was — you guessed it — the bank’s “head of corporate responsibility,” a title that signifies how deep the rot has gone.

It’s been a long time since companies’ supposed social responsibility could be discharged by a handout or two, but the pressure on them to toe some outsider’s line has, in recent years, been stepped up. Often repackaged as a demand that corporations be measured by the extent to which they match arbitrary and ever-tightening E (environmental), S (social), and G (governance) standards, it is now a way of corralling private enterprise without the bother of legislation. The G, which can cover such issues as transparency and compliance, is relatively uncontroversial, but so far as many shareholders are concerned, insisting on the E and, to a lesser degree, the S, which can range from the benign (worker safety) to the malign (stipulating what legal products a company may or may not sell), is a form of expropriation.

It is a mark of just how ingrained the ideas behind ESG have become that the Financial Times, mistakenly thought by the old-fashioned to be the house journal of capitalism, now has a section presumptuously called “Moral Money,” billed as “the trusted destination for news and analysis about the fast-expanding world of socially responsible business, sustainable finance, impact investing, [ESG] trends, and the UN’s Sustainable Development Goals” — a rebarbative combination for which those running the FT clearly believe there is an audience.

If Davos is any indicator, they are right. Here’s an extract from the World Economic Forum’s “Manifesto for 2020”:

A company serves society at large through its activities, supports the communities in which it works, and pays its fair share of taxes. It ensures the safe, ethical and efficient use of data. It acts as a steward of the environmental and material universe for future generations. It consciously protects our biosphere and champions a circular, shared and regenerative economy. It continuously expands the frontiers of knowledge, innovation and technology to improve people’s well-being. . . .

A company is more than an economic unit generating wealth. It fulfils human and societal aspirations as part of the broader social system. Performance must be measured not only on the return to shareholders, but also on how it achieves its environmental, social and good governance objectives.

Unfortunately, what goes on in Davos does not stay in Davos.

The existence of the FT’s “Moral Money” section is yet more evidence of this larger trend. In a recent edition, we could read about how a Bank of America analyst examined the environmental implications (at least as seen from the perspective of climate warriors) of bringing supply chains closer to home in the wake of COVID-19. The author’s conclusion that doing so would reduce emissions would, in happier times, not have concerned investors — their interest would only have been in the financial consequences of such a change. But we do not live in those times.

Banks are not charities. They would not write research reports of this type unless there was a market for them, and there is. ESG investing is becoming big business. Thus, as one of the “Moral Money” team reports:

According to research from Sustainable Research and Analysis, an independent research shop based in New York, the total assets held in sustainable mutual funds and ETFs hit $1.6tn in 2019, growing from a base of just $400bn at the end of 2018. Even with the coronavirus outbreak sending markets into a tailspin, ESG funds added a further $500bn in assets through Q1 2020.

Reading on, there is a glimmer of hope:

But only a small portion came from net new money. In 2019, investment managers rebranded 475 existing funds to incorporate ESG factors, which accounted for more than $1tn, or 86 per cent of the total “new” ESG assets.

So Wall Street is behaving with its customary cynicism, and in the moral universe of “Moral Money” that will not do:

On the face of it, this seems troubling and sends up red flags for greenwashing.

It would take a heart of stone not to laugh here, but one would be laughing too soon:

Henry Shilling, director of research at Sustainable Research and Analysis, says most asset managers are not just slapping an ESG label on their funds and calling it a day. “Most of the rebranded funds have adopted ESG integration strategies,” he said, explaining that they had explicitly changed their prospectus documents to include ESG as a part of their investment process and were engaging with portfolio companies on ESG issues.

“Engaging with,” however, can mean sending a token memo or doing something more substantive. So it’s time for some more pearl-clutching:

Even with all of the companies making public commitments to cut emissions and look out for stakeholder interests, a shocking minority have gone so far as to tie executive pay to any sort of ESG metric. In fact, new research from Sustainalytics shows just 9 per cent of all companies in the FTSE AW index have done so. And on top of that, the vast majority of those that have done so have only targeted occupational health and safety.

“Only” is doing a lot of work there.

It’s worth pausing to note the citations of Sustainanalytics, which describes itself as “the leading independent global provider of ESG and corporate governance research and ratings to investors,” and of Sustainable Research and Analysis, a firm that serves “as a source for sustainable investment management information, research, opinions and sustainable fund ratings.” Both are part of the flourishing (and profitable) ecosystem that ESG investing has created. It encompasses consultancies, advocacy organizations, “chief sustainability officers,” and many, many more rent-seekers besides. ESG is bad news for investors, but it is not a bad way of filling the wallets of those that feed off it.

None of this is to deny that there is room for ESG-based investment strategies. If investors want to base their stock selection in whole or in part on ESG criteria, that is, of course, up to them, and if investment companies wish to market ESG-compliant funds, that’s fine. Funds that will not invest in companies that, say, sell guns or alcohol have been around for a long time. ESG-compliant funds are simply an extension of the entirely reasonable idea that investors should not be forced to choose between their principles and smart investment. The more choice that such investors have the better.

But choice is the key word here. Much of the pressure for companies to raise their ESG game comes either directly from state or other governmental pension funds, which are not exactly free from political pressure and ideological bias, or from the investment companies that wish to sell to them. Thus “Moral Money” reports on a number of proxy fights over ESG issues brewing at companies such as ExxonMobil and the British bank Barclays. Among those named as leading the charge in these battles are Brunel Pension Partnership, which manages the pension funds for ten local British governments, the Liverpool-based Merseyside pension fund (also for local government employees), and — this is far from just a British thing — the New York State Common Retirement Fund.

Turn to Brunel’s website, and you find that:

[Brunel’s] investment team [has] the ability to clearly think in 10 to 20-year timeframes. As such, environment and social risk considerations, along with good governance and stewardship, are integrated into [its] decision making processes. . . .

The key objective of our climate policy is to systematically change the investment industry to ensure that it is fit for purpose for a world where temperature rise needs to be kept to well below 2°C compared to pre-industrial levels.

Pension funds ought to be trying to deliver the best possible economic returns for their pensioners, who are, in a sense, captive clients. Equally, where such pensions are funded or, in the case of defined-benefit schemes, underwritten in whole or in part by taxpayers, there is — or there ought to be — a duty owed to those who may end up on the hook for them. But for Brunel, other objectives now seem to have come into play.

A still bigger problem may yet come from investment groups such as BlackRock. As the FT notes, the firm is currently coming under fire from ESG activists, despite the stance taken by its chairman and CEO, Larry Fink, who claimed in a letter earlier this year that “climate change has become a defining factor in companies’ long-term prospects,” and went on to explain how:

BlackRock [has] announced a number of initiatives to place sustainability at the center of our investment approach, including: making sustainability integral to portfolio construction and risk management; exiting investments that present a high sustainability-related risk, such as thermal coal producers; launching new investment products that screen fossil fuels; and strengthening our commitment to sustainability and transparency in our investment stewardship activities.

More details were set out in a letter to clients:

We have been working to improve access for several years — for example, by building the industry’s largest suite of ESG ETFs, which has allowed many more individuals to more easily invest sustainably. . . . We intend to double our offerings of ESG ETFs over the next few years (to 150), including sustainable versions of flagship index products, so that clients have more choice for how to invest their money.

Some of this merely reflected BlackRock’s self-interest — and there’s nothing wrong with that. As noted above, extending investor choice is to be welcomed. But there is also the fact that:

Every active investment team at BlackRock considers ESG factors in its investment process and has articulated how it integrates ESG in its investment processes. By the end of 2020, all active portfolios and advisory strategies will be fully ESG integrated — meaning that, at the portfolio level, our portfolio managers will be accountable for appropriately managing exposure to ESG risks and documenting how those considerations have affected investment decisions.

Investors are free not to invest with BlackRock, but because BlackRock is so large, that doesn’t eliminate the problem that this new policy could pose. Before the coronavirus crisis began, BlackRock had over $7 trillion under management. If a company doesn’t play by BlackRock’s ESG rules, it risks shutting itself off from a potentially substantial source of capital and/or support for its share price. If a company’s management decides that it doesn’t want to run that risk, it may have to adopt policies that damage the business’s long-term prospects. That might help the share price, at least for a while, but it is hardly a desirable outcome.

Even if a company has no interest in having BlackRock as a shareholder, BlackRock may have an interest in it. Once BlackRock takes a stake in a company, the chances are that it will apply pressure on management, as any shareholder has the right to do. Most shareholders only do so to increase their return, but BlackRock, whatever its claims about the connection between “sustainability” and longer-term profitability, has other targets in mind:

We have engaged with companies on sustainability-related questions for several years, urging management teams to make progress while also deliberately giving companies time to build the foundations for disclosure consistent with the Sustainability Accounting Standards Board (SASB) and TCFD. We are asking companies to publish SASB- and TCFD-aligned disclosures, and as expressed by the TCFD guidelines, this should include the company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized. Given the groundwork we have already laid and the growing investment risks surrounding sustainability, we will be increasingly disposed to vote against management when companies have not made sufficient progress. [Emphasis added.]

SASB and TCFD are two other creatures in the ESG ecosystem. The former was once chaired by Michael Bloomberg, while the latter still is. SASB says that it is on a “mission . . . to help businesses around the world identify, manage and report on the sustainability topics that,” it claims boldly, if inaccurately, “matter most to their investors.” Meanwhile, TCFD, the Task Force on Climate-related Financial Disclosures, says it aims to “develop voluntary, consistent climate-related financial risk disclosures for use by companies in providing information to investors, lenders, insurers, and other stakeholders,” an objective with a clever twist: If companies do not go along with these “voluntary” disclosures, their banks and insurers — part of a sector unusually susceptible to political pressure — may turn the screws.4

As a shareholder, BlackRock has every right to insist that the managements of the companies in which it invests comply with its diktats. Equally, other shareholders are free to insist that BlackRock be told to take a hike, at which point the whole thing can be thrashed out at a general meeting. But many of the other shareholders will also be institutional investors. Even if they do not agree with BlackRock’s agenda, they may feel compelled by commercial pressures of the type that I have mentioned above to go along.

In effect, therefore, many companies — and not just those that are publicly listed — will be forced to change the way they do business as they try to keep up with ever-more-stringent rules set not by democratically elected legislators but by the unaccountable, the ambitious, the greedy, and the fanatical. Milton Friedman would have been appalled (if not altogether surprised) that activists such as these ESG vigilantes could exercise such a power through their ownership of shares. Today’s small investors, pensioners, and, for that matter, anyone else who depends on a robustly growing economy ought to be angrier still.


Can America Achieve a “Future Without Waste”?

By Peter RoffAmerican Action News

America used to be the place where, as Emerson is said to have observed, the person building the better mousetrap could be assured the world would beat a path to their door. We were driven by an entrepreneurial spirit that led to an increase in global living standards and produced some of the great advances of mankind.

Nowadays the pathway to prosperity is blocked by plaintiffs’ lawyers, federal and state regulators, crusading consumers advocates, environmental activists and others who believe the only institution on which we can rely to solve the really big problems is government.

That’s a shame because the spirit of free enterprise problem-solving is still alive and well. Everyone who realizes there’s profit to be made coming up with solutions are hard at work doing what so many of the so-called smart people say is impossible.

“We are a nation that knows how to solve big problems when we set our minds to it,” says Nate Morris, the CEO of Rubicon, a technology company at the leading edge of 21st century waste management. “Waste is a big problem, and we should not wait for someone else to try to solve it. We should do the work, we should use innovation and free markets to drive transformation, and we should build a stronger, more resilient economy in the process.”

The numbers alone are scary. According to some estimates over the next ten years nearly 95 million metric tons of plastic waste the United States once sent to China for permanent disposal will have to go put elsewhere thanks to import restrictions.

Whether or not it can be done, an effort must be made to try. Right now there are two approaches: one, as typified by Rubicon’s efforts, relies on innovation, investment, and consumer-driven demand to creates a new infrastructure relying more on the use of recycled goods to manage waste and prevent the build-up of discarded plastics and other items the American shopper depends upon. The other approach, the one government regulators, social justice warriors, and those like them prefer is to the use and manufacture of certain items no matter how expensive, inconvenient, or comparably unsafe the alternatives might be.

On Wednesday Rubicon issued a report, Toward a Future Without Waste, that shows how technology-based solutions can increase the proliferation of sustainable products The evidence comes from its experiences delivering results for its customers, with plenty of examples demonstrating the market-based approach to waste and emissions reductions works. The company found, for example, that local governments could generate significant cost savings while sending fewer materials to landfills through the making better use of technology.

Using the RUBICON SmartCity technology suite “helped the city of Atlanta save up to $783,453 annually while reducing the recyclables going to landfill by 83 percent by adjusting the city’s solid waste service schedule,” according to the report. As one estimate has it, it has the potential to save US cities up to $208 million over the next 10 years through reduced disposal costs, optimized fleets, and other metrics. For cash strapped urban centers like Atlanta, that’s money that can instead be channeled into childhood conservation education and other environmental stewardship projects that can create a pathway to the clean air, water, and environment everyone wants but is so often too expensive to get, we’re told by experts, without draconian changes to the way we live our lives.

Advances in technology have also made it easier to dispose of products that are hard to recycle. The fast-food chain Chipotle partnered with Rubicon to create a mail-back pilot program at 25 of its locations to keep single-use gloves out of landfills. From April 2019 through December 2019, the report says, more than 625,000 gloves were recycled, giving the company plenty of incentive to expand the program to all its stores.

“There are currently two ways to make money from waste. One is by setting up the equivalent of a utility, where big corporations and big government agree to a one-size-fits-all approach, charging businesses and households to haul away their waste and bury it,” Morris says. “The other is a free market-based, dynamic approach: cooperate with others and innovate to help people reduce or reuse more of their waste— and inspire a new generation to build on our progress to bring about the end of waste as we know it.”

This is the kind of private sector, technology-based innovation that can change the planet for the better while adding favorably to the corporate bottom line. It requires no government regulation, no special licenses, and no additional fees to bureaucratic institutions that “feed the beast” while giving us all a cleaner world to live in.


I Work From Home. Here Are Some Tips To Make It Easier

Working from home is a massive lifestyle change, but there are things you can do to make it easier.

By David MarcusThe Federalist

This week, owing to the coronavirus, many Americans are going to experience the highs and lows of working from home. While there are definite plusses to working from your own abode, it’s not all sliding across the living room floor in a white button-down shirt and socks.

I have worked from home for the past two years and it takes discipline, fortitude, and a solid work ethic. I have none of these things. So how do I manage?

A friend years ago told me that his mother and father met at work. The first thing his mother noticed was that when the boss left, his father was the only one who kept working. That’s a big part of working from home, that kind of self-motivation. But there’s a flip side to that: when home and work mix you are always at home, but you are also always at work. It’s important to set some boundaries.

Small things can make a big difference when you work from home. My biggest piece of advice might be to go outside during the day. Did you ever have that thing where you neglected to drink water for several hours and then you feel awful and you’re like, What is wrong with me? Then you drink water and instantly come back to life? Going outside is like that when you work from home. You go stir crazy like a boiling frog otherwise.

It’s very easy for the walls to start feeling like they are closing in when you telecommute. That’s why keeping your place clean is more important and more difficult. Not to sound too much like Jordan Peterson, but a messy place makes it harder to work effectively.

If you work 9-5 outside the house, then you probably spend about 7 or 8 hours awake in your house at most on a weekday. Now you will be doubling that, and the more time you’re in your place the messier it gets. Trust me on this: it accumulates fast. Maybe while everyone is hoarding toilet paper you can hoard some paper plates. Work is an excellent excuse to not do the dishes.

Now, this is going to sound pathetic and sad, but social media can be your friend when you work from home. In an office environment you chitchat, water cooler yak, call it what you will. The day at work is sprinkled with social interactions. Checking in on Twitter or Facebook isn’t just a time suck when you work from home; it helps keep you sane by socially interacting, albeit imperfectly, with other people.

Another thing worth considering is the concept of a virtual commute. Whether your IRL commute is short or long, it’s probably riddled with ritual. You might stop for a bacon, egg, and cheese, read the Post on the subway, pull in for a Half and Half at Dunkin, etc.

The commute is a home to work limbo. You aren’t working, but you are compelled to be where you are. Giving yourself a half-hour before and after working with similar rituals, like listening to a podcast, reading a book, or playing a game on your phone can help.

The most overwhelming thing about working from home for an extended period of time is that it is a lot of time in your own head. Traditional workspaces are full of novel diversions and distractions; your place is kind of just your place. In the absence of external stimulation, your mind turns in on itself, which can be a little jarring. Weird stuff will pop into your head. If you get mental claustrophobia, take some breaks. There’s no reason the rhythm of your workday has to be the same at home as it is at work.

Making your home your office, especially if it goes on for a long time, is a major lifestyle switch. But it’s one that is in many ways under your own control. Give some thought to what you want it to be like, how you want it to flow, and experiment with schedules and work patterns that work for you.

Finally, when you close the laptop, close the laptop. This is easier for some of us than others. As a journalist I’m always at work in some sense; news never stops, especially these days. But I still need to carve out time to log out and watch a movie, or do some cooking while listening to music. Let your home become your home again — at least until you wake the next day and start it all over again.


Democratic Capitalism: The American way

The Right to Life, Liberty and the Pursuit of Happiness

By Dr. Larry Fedewadrlarryonline.com

Before Capitalism

Through most of human history, there have been two ways by which humans have organized themselves: tribal and totalitarian. Tribes were based on families which came together to form clans, which combined to create tribes. In the end, what united the various clans into a tribe was the culture they all shared – language, values, customs and religion.

The primary driving factor in this move toward greater numbers was the greater power -and defense – afforded by greater numbers and the greater accumulation of wealth made possible by a greater variety of skills and a heightened group ability to take on ever larger projects, such as cities, roads, dwellings, and monuments. These factors eventually resulted in cities and nations. And empires. It was called “civilization”.

Nevertheless, the original loyalties to families and tribes have remained forceful elements in all societies.

As the more advanced “civilizations” grew in power and wealth, they grew also in territory, mostly by conquest of other countries. The management of the conquered territories was solved by the creation of a hierarchy of different classes of inhabitants: the ruler, his direct followers (usually military), the wealthy who provided financial resources, and the poor who were the vast majority of the population, whether slaves, peasants, serfs or servants, who supplied the labor on which the entire nation depended.

The average life span of mankind was about 35 years. This pattern, with a few exceptions, endured for most of human history. Until the 18th century. Then human life began a radical series of changes. Between 1700 and 2020 human life span grew from 35 years to over 70. The average annual income grew from a few dollars a year to $10,000 a year. (Gallup 2012) And world population grew from an average 1% annual increase for 1000’s of years to about 610 million in 1700 and nearly 8 billion in 2020 (Source: Worldometer).

What happened?

Capitalism happened

It started with one of the exceptions to totalitarianism mentioned above. Beginning in the early Middle Ages (c. 11th century), some European merchants began to form caravans to travel from place to place buying and selling merchandise. Since merchants in general were discriminated against in Medieval Europe, they were not subject to any specific prince, and they were freemen. They soon banded together for defense against outlaws and princes alike forming the Great Caravans of Europe. In time, many began to accumulate wealth and became bankers as well as traders. They were the first middle class, instrumental in the formation of the guilds of tradesmen which consolidated the identity of a middle class — neither nobility, peasants nor clergy – all of whom opposed them. [Note: trade routes and caravans existed throughout the ancient world from time immemorial but were not “free” of any jurisdiction.]

There had been numerous intellectuals who taught the separation of Church and State (including Thomas Aquinas in the 13th century) and limited government (e.g. John Wycliff in the 14th century), but none had the political and financial strength to effect cultural changes. In the 18th century, however, these ideas combined with an emerging middle class to begin the most radical change in history. A new movement came into being and caused the revolutions which characterized the next two centuries, from the American Revolution (1776) to the Russian Revolution (1917).

This movement yielded three major views of how a country should be run: socialism and democracy as political systems and capitalism as an economic system. All involved the overthrow of the totalitarian government. The difference was in who led the revolt: the Europeans (and later the South Americans and others) were led by the poor people; the Americans by the middle class. The poor people had no experience of handling money or building an economy. They considered the wealth of the nobility a bottomless pit and they invented socialism. The Americans were led by wealthy middle class lawyers, plantation owners and merchants. They feared the power of governments and invented democratic capitalism.

The different types of socialism will be discussed next week. But first, let’s look at America’s democratic capitalism.

The American Way

The United States of America was a land controlled by people who had escaped both the walls and the comforts of the Old World and had survived in an environment which rewarded courage, skill and endurance, rather than birth and privilege. Their bias was against rather than favorable to government. They saw government as a greedy king out to take away their liberty. They therefore fashioned a government which was limited in every way by competing forces: the federal government by the states, the president by the legislature, each House of Congress was limited by the other, everybody by the courts – and so on down the line to the local dogcatcher.

The purpose behind this design was to keep government officials from ascending to the powers of that old king. They understood intuitively the saying of John Lord Acton a century later: “Power tends to corrupt, and absolute power corrupts absolutely.”

What they have left us is the American version of a capitalist society. It is dynamic, constantly changing. The poor may not always be poor; the rich may not always be rich. In fact, most Americans (58.5 percent) will spend at least one year below the poverty line at some point between ages 25 and 75 according to Yale University’s Jacob S. Hacker (The Great Risk Shift, New York, 2006). The wealth of the society is expected to grow constantly through the creation of new opportunities, new products and services, new jobs, new skills, and new technologies, leading to new and expanding wealth.

For Americans, the fundamental error of socialism is that it does not account for the creation of that wealth in the first place. Government cannot confiscate what isn’t there. Socialists foresee the proverbial pie of underclass income being cut into more and more pieces; Americans keep creating a bigger pie.

America’s Democratic Capitalism

The United States of America has brought together economic capitalism and political democracy in a dynamic tension which we call democratic capitalism, and which has produced the most prosperous nation in the history of the world. Its greater attribute is that it provides hope – hope that the poor may be able to escape the bonds of poverty as so many Americans have done in the past. This hope is the shining city on the hill which still attracts the envy of millions.

It has taken Americans most of our history as a nation to achieve the balance by which capitalism is accountable to democracy, and there are still many problems to be solved. Nevertheless, Americans are always optimistic.

The motivation for individual Americans to persevere in pursuit of their personal goals is provided by the real and potential ownership of private property. No other motivator – not coercion, not slavery, not charity, not communal property – not even religion – has ever been found which can impel vast numbers of individuals in a society to be hard working and creative. Providing a good life for oneself and one’s family is a motivator above all others.

Life, Liberty and the Pursuit of Happiness – the American Way

Our history has proven that personal freedom is a necessary prerequisite for the success of this system. An oppressive government – even if well-intentioned – sucks out the initiative required to make an ever-better life for all of us. Personal freedom without economic freedom is no freedom at all. Capitalism, in a refined and mature linkage with democracy, provides the economic power which makes freedom possible.

The challenge to Americans is not to change an evil system; it is to live up to the ideals which are required for that system to succeed.


A Stake in the Heart of Capitalism

Alex Gorsky, Chairman of the Board and CEO of Johnson and Johnson announces the Business Roundtable "Statement on the Purpose of the Corporation," August 20, 2019. Photo: Kevin Allen, Business Roundtable.

By DOUGLAS J. DEN UYLLaw & Liberty

Lenin reportedly said, “When it comes time to hang the capitalists, they will vie to sell us the rope we will use to hang them.” This reference to greed as the essence of the motivation of capitalist actors might seem to stand in sharp contrast to the latest pronouncement of the Business Roundtable. According to them, the obligations of management are no longer primarily to the shareholders and the maximization of profits, but rather to what are called “stakeholders.” The Roundtable, composed of CEOs of nearly 200 major corporations, stated that they “share a fundamental commitment to all of our stakeholders”—each of whom “is essential”—while pledging “to deliver value to all of them, for the future success of our companies, our communities, and our country.”

Stakeholders are various groups in the public, including shareholders, that may be impacted by the actions of a business. These groups include employees, suppliers, advisors, and customers, but could conceivably include any social grouping one might imagine as being affected in any way by a business. Unlike the limited group of shareholders that once claimed priority—even exclusivity—over those who manage a corporation because of their investment in it, the members of the Business Roundtable now see their obligation to be essentially to the public at large. Investors are no more compelling to the attentions of management than any other stakeholder.

The greedy capitalists of the old shareholder model of corporate responsibility had one thing in common with their shareholders, namely, both were largely motivated in the same way. Management was incentivized to maximize profits, and investors invested so that those managers would do so. Under the new stakeholder dispensation, presumably management is to be concerned with the public good. Greed and self-interest are replaced by concern for public well being. Of course there might still be a way to interpret the actions of management under this new dispensation as self-interested. They can now avoid having to answer solely to the group most likely to monitor their activities—their investors—in favor of a concern for their stakeholder pool in general. This might be another way of saying they don’t have to answer to anybody while pretending to care about everybody. 

But let us not descend into such cynical speculations. Let us suppose that corporate executives are genuinely moved by public spiritedness towards all their stakeholders. We need to be clear, however, about one thing before moving on: the shareholder model did not say to either ignore or treat badly one’s “stakeholders.” It simply said that one’s actions in this regard should always keep in mind the primary obligation to the shareholder in the form of return on investment. Good practices towards “stakeholders,” were often sensible and good business. But once that “bottom line” measure is removed as the primary standard and motivation, it’s not at all clear what is to replace it, since “stakeholders” are an amorphous body with amorphous, and potentially conflicting claims and desires. Although the so called “separation between ownership and control” (shareholders and management), does pose some issues—not the least of which is opening the door to the very claims of the Business Roundtable—it still retains the traditional structure of obligation. Return on investment is a clear and measurable standard when compared to what it means to “provide value” to one’s stakeholders.

Assuming the best of intentions also does not touch the problem of fiduciary responsibility. Under the shareholder model, executives had a fiduciary responsibility to the shareholders. In effect, the shareholders “hired” them. Under the stakeholder model, by contrast, it is not only not clear to whom exactly managers owe their responsibility, but more importantly who will be deciding those lines of responsibility? It’s a good bet that it will not be the managers themselves. Most likely it will be the state through various sorts of public “committees.” The reverse side of this issue of responsibility is equally troubling: who exactly has the liability when things go wrong and what is to keep a corporation from being liable for just about everything? In the first case, since managers now work for the public at large perhaps “the public” is liable when things go wrong. But if managers think that by this move they can foist responsibility off of the corporation on to the general public they might need to think again. When the lines of responsibility are fuzzy, it is more likely that liability payments by the corporation will increase, not decrease. Accompanying this probability of having to pay out more is the growing opportunity for more liability claims to be made in the first place. After all, now that the corporation is a thoroughly public entity with ambiguous lines of responsibility, virtually any claim can be foisted upon them.

Ambiguity, however, is not the central problem here. The problem is one of identity. However well-intentioned we might want to imagine corporate executives to be, they still presumably manage a private and partial dimension of society. What kept corporations private and partial was their limited scope of services and limited obligation to their investors. To now make their realm of obligation to stakeholders as wide as “the nation” is to effectively make them equivalent to the state itself. The logic of this is such that it is now even unclear what exactly is the nature of the product the corporation is to provide? Since maximizing profits is no longer the central measure, perhaps what is “good” for people should define our product choices or perhaps need should determine the price paid for a product. And when one firm wants to merge with or acquire another, removing the bottom line simply means that other “social” criteria will be used instead of looking strictly to financial benefit. 

Elizabeth Warren calls this economic patriotism, but another name for all this might be socialism, since the call here is for corporations to become thoroughly socialized. This goes well beyond “crony capitalism,” where corporations buddy up with the state for benefits that arguably might also return financial gains to the shareholders. This is corporations saying, “L’etat c’est moi.

It might be objected that the stakeholders are different from one corporation to another, thereby allowing corporations to retain their private character. But apart from the impossibility of sorting out where exactly the lines are being drawn between businesses when “community” and “nation” are the standard, such a claim simply highlights the identity issue by trying to be at once both private and public. The pull here, however, can only be towards ever more socialization, since any disaffected stakeholder group can always appeal to the corporation’s general obligation to society at large. However badly the state may often be at general impartiality, such impartiality towards all is nonetheless the government’s function. The capitalist, by contrast, is a private “person” pursuing private ends. To conflate or merge the two can only result in the obliteration of the private portion and thus of the essence of capitalism. 

The capitalists are thus not competing to sell the rope to the state; they are simply handing it over. They may think they’ll have a role to play as business persons in this new world order. Lenin was wiser.


The Wages of Woke

Column: How the left uses corporate America to evade democracy

By Matthew ContinettiThe Washington Free Beacon

Time was, CEOs of mighty enterprises shied away from politics, especially hot-button social and cultural issues. They focused instead on the bottom line. They maximized shareholder value by delivering goods and services to customers. Some businessmen still operate by this principle. In doing so they provide not only for their employees and CEOs and board members but also for the institutions—pensions, individual retirement plans, index funds, hospitals, philanthropies—invested in their companies.

That is no longer enough for many of America’s richest and most powerful. Suddenly, corporate America has a conscience. Every week brings new examples of CEOs intervening in political, cultural, and social debate. In every instance, the prominent spokesmen for American business situate themselves comfortably on the left side of the political spectrum. Shareholder capitalism finds itself under attack. Not just from socialism but also from woke capitalism.

These outbursts are not just virtue signaling. Nor is the left-wing tilt of corporate America merely a response to the “rising American electorate” of Millennial, Gen Z, and minority consumers. What is taking place is not a business story but a political one. What is known as “stakeholder capitalism” is another means by which elites circumvent democratic accountability.

Corporate managers find themselves at odds with at least 46 percent of the electorate. The divergence is not over jobs or products. It is over values. The global economy generates social inequalities as much as economic ones. Many of the winners of the global economy justify their gains by adopting the rhetoric, tastes, ideas, and affiliations of their cultural milieu. Their environment is inescapably center left.

Even so, the social justice agenda of corporate America is not only meant to appease voters, or even to placate Elizabeth Warren. Some of these businessmen really believe what they are saying. And they are beginning to understand that they have another way—through social position and market share—to impose their cultural priorities on a disagreeable public.

The trend began as a response to the Tea Party. In 2010 the “Patriotic Millionaires” began advocating for higher marginal tax rates. A few years later, when state legislatures passed laws opposed by pro-choice and LGBT groups, corporations threatened or waged economic boycotts. Large individual donations made up more than half of Hillary Clinton’s fundraising; for Donald Trump the number was 14 percent.

CEOs protested the implementation of President Trump’s travel ban in 2017. The following year, after two black men were arrested at a Philadelphia Starbucks, Howard Schultz closed stores nationwide so his more than 175,000 employees could be trained in diversity, equity, and inclusion. Earlier this summer, Nike pulled shoes featuring the Betsy Ross flag after Colin Kaepernick raised objections. Recently four major auto companies struck a deal with the state of California to preserve fuel economy standards the Trump administration opposes.

Business has provided ideological justification for its activities. In mid-August, a group of 181 members of the Business Roundtable, including the CEOs of Morgan Stanley, GM, Apple, and Amazon, issued a statement redefining the purpose of a corporation. “Generating long-term value for shareholders” is necessary but insufficient. In the words of Jamie Dimon, business must “push for an economy that serves all Americans.” A few weeks later, one of the Business Roundtable signatories, Walmart CEO Doug McMillon, announced that America’s largest retailer would end sales of ammunition for handguns and for some rifles. Once its current inventory is exhausted, of course.

“We encourage our nation’s leaders to move forward and strengthen background checks and to remove weapons from those who have been determined to pose an imminent danger,” McMillon wrote. “We do not sell military-style rifles, and we believe the reauthorization of the Assault Weapons ban should be debated to determine its effectiveness.” Note the use of the first-person plural. Of Walmart’s 1.5 million employees, more than a few, one assumes, do not believe it is necessary to “strengthen background checks” or debate “the Assault Weapons ban.”

To whom does the “we” in McMillon’s statement refer? To everyone who thinks like he does.

“You have a business acting in a more enlightened and more agile way than government,” is how one MSNBC contributor enthusiastically describedWalmart’s directive. Left unsaid is why government has not, in this case, been “enlightened” or “agile.” The reason is constitutional democracy. The electorate, like it or not, continues to put into office representatives opposed to gun registration and to a renewal of the Assault Weapons ban. And these representatives, in turn, have confirmed judges who believe the Second Amendment is just as important to self-government as the First and Fourteenth.

Much of Western politics for the last decade has involved elites figuring out new ways to ignore or thwart the voting public. Barack Obama was following in the EU’s footsteps when he went ahead with Obamacare despite Scott Brown’s victory in Massachusetts in January 2010, and when he expanded his DACA program to the parents of illegal immigrants brought here as children despite Republican gains in the 2014 election and despite his own admission that he lacked authority.

James Comey’s towering ego and self-regard compelled him to interfere in the 2016 election with consequences we can only begin to reckon. Over the last two-and-a-half years, district judges and anonymous bureaucrats have impeded and obstructed the agenda of a duly elected chief executive. A few weeks ago a former governor of the Federal Reserve suggested in Bloomberg that the central bank should thwart Trump’s reelection. And in England, elite resistance to the results of the 2016 Brexit referendum and to the 2017 parliamentary invocation of Article 50 has brought the government into a crisis from which there seems no escape.

In such an environment, one begins to see the appeal of nongovernmental instruments of power. What might be rejected at the ballot box can be achieved through “nudging” in the market and in the third sector. If you can’t enact national gun control through Congress, why not leverage the economic and cultural weight of America’s largest corporations? The market, we are told, is not a democracy.

Oh, but it is. The market may be the ultimate democracy. “The picture of the prettiest girl that ever lived,” wrote Joseph Schumpeter, “will in the long run prove powerless to maintain the sales of a bad cigarette.” Woke capitalists remain accountable to consumers and to shareholders. The audiences of ESPN and of the NFL cratered when those institutions elevated politics over consumer demand. Hollywood’s anti-American offerings routinely flop. Public opinion, in the form of popular taste, rules. Shareholders of publicly traded companies are a type of electorate. The companies that do not satisfy customers will disappear. Or shareholders will demand changes to management to prevent such an outcome.

The politicization of firms is a double-edged sword. The responsible stakeholder CEOs may have the best of intentions. They might assume they are doing the right things not only by their companies but also by their societies. What they fail to understand is that corporations acting as surrogates of one element of society, or of one political party, will not be treated as neutral by other elements, by the other party. By believing their superior attitudes will save capitalism, our right-thinking elites are undermining its very legitimacy, and increasing the severity of the ongoing populist revolt.


WP2Social Auto Publish Powered By : XYZScripts.com