[00:00:01] Speaker A: Hi everyone. Welcome to the 248th episode of the Adult Society Asks. My name is Isidora Kualar and I'm the strategy director at the Atlas Society International. I'm very excited to have Stephen R. Zukab join us today to talk about his book the Dictatorship of Book How Political Correctness Captured Big Business.
Stephen, thank you so much for joining us today.
[00:00:29] Speaker B: Thank you for having me. It'sador. I appreciate it.
[00:00:31] Speaker A: Okay, so let's dive in.
We like to start off with definitions and I'm sure that you've had this question so many times before, but how would you define VOC and especially VOC Capital?
[00:00:49] Speaker B: Well, the, you know, one of the things about my book, looking back in retrospect, was that the decision to refer to ESG and stakeholder capitalism and the entire movement to politicize capital markets calling it WOKE Capital may have been a mistake. It was a great title. It certainly made the point that this is a very political movement rather than a financial movement. But it also, I think gave the misimpression that we're talking exclusively about investing for WOKE purposes, which is not what we're talking about. WOKE and Woke Capital are two very related phenomenon, but they're not the exact same thing. WOKE is. I would define it as the political manifestation of identity theories, starting primarily with Herbert Marcuse, his frustration with the fact that culture, the cultural Marxism of the 20th century, didn't produce the revolution that he hoped for, his frustration with the workers of the world that they were too comfortable with capitalism, that capitalism worked too well, and his decision in his middle years to focus on identitarian politics as the spark that the revolution needed, that be racial minorities, sexual minorities and others he saw as outcasts taking the place as the traditional Iskra of the revolution that the workers had always played in Marx and cultural Marxist theories. So that's how I would define woke.
Some of that plays into WOKE Capital. The identity issues play a lot into WOKE Capital and esg, particularly under the S portion, which is social investment guidelines. So they're related, but they're not the exact same thing. WOKE Capital, esg, stakeholder capitalism, all balled together. I think that you can define them as a top down anti democratic movement to alter American business, to alter the relationship between shareholders and corporations, and especially to alter the relationship between citizens and their governments.
[00:03:16] Speaker A: Okay, so you just gave me a great segue into my next question. So in the book you describe this rise of vocapital as a top down revolution rather than a grassroots movement. So can you walk US through what that means and also how major players like BlackRock, for example, have been instrumental in orchestrating this shift.
[00:03:43] Speaker B: Well, it's top down because nobody in the investment world really asked for this. Nobody investing in their 401k or in their IRA or in any other retail investment means looked up and said, you know what? I wish that I made less money but was more socially responsible. That's not something that ever happened. It was an attempt by large asset managers, external political agitators, and a handful of people within corporations who had been ideologically captured to make capital markets and American business into the means by which they could achieve things that were not achievable through the democratic process. If you look, for example, at what American voters vote for, they do not vote for climate change. They vote for economic growth every time. They do not vote for dei.
As you see currently with the Trump administration, most people, including somewhere in the neighborhood of three quarters of Democratic voters, are opposed to dei. So these are things that elites in our society, particularly in the financial community, decided were important, but that were never going to be accomplished through democratic means. And so they decided that they had to sidestep the demos in the democracy and advance these goals on their own. And so this is a strategy that came to us primarily from the C suites, that came to us primarily from large asset management firms, and that has never been embraced in any way, shape or form by retail investors or by the democratic public more generally.
[00:05:37] Speaker A: And could you tell us a little bit about Larry Fink and BlackRock? Because they definitely play one of the central roles in the book. How did a private asset management firm come to wield such outsized cultural and political influence? And also, why should Americans be worried about this?
[00:06:02] Speaker B: Well, part of Larry Fink's strategy since he started BlackRock, you know, some almost nearly 40 years ago, was to buy up other companies and to add to the leverage that his company, BlackRock, had in making decisions in capital markets and in forcing behaviors among corporations that he owned as an asset manager. And over the years, he's been extremely successful. Larry Fink turns out to be one of the villains in my book and one of the villains in the ESG movement. But Larry Fink is also one of the shrewdest operators in capital markets. He didn't get where he is by accident. He's very smart, and he's been very careful about assessing or, pardon me, about growing his assets over the decades. And how did he get this much power? Well, he has almost $12 trillion in assets under management, which in terms of corporations, he owns roughly 10% of every single corporation in the S&P 500. He has an enormous amount of power to affect how they and their executives behave.
Part of this is because he was one of the pioneers in passive investing.
Part of it is, as I said, he's been very shrewd and very successful in acquiring other companies. Part of it is the fact that he is simply very conscious of wielding power. This is something that he's always wanted to do, and this is something that his position in capital markets has allowed him to do. People should be concerned about it because as I say, he owns a considerable portion of every single company on the S&P 500. And when I say he owns, what I mean is we own, but he controls because it's through our 401ks, it's through our IRAs, it's through management of the federal pension that BlackRock has accumulated all of these assets under management. And they use them essentially for their own purposes to advance their own ends. So part of the issue is that he took a passive strategy and made an active, made his firm an active participant in capital markets, something that really hadn't been an issue before the start of this century. So it's been a long and very well calculated process by which Larry Fink and the other big three, Vanguard and State street, have moved into a position of holding enormous power over American corporations through their accumulation of capital.
[00:09:06] Speaker A: And you've also traced many of these ideological trends in corporate governments back to academia.
So how central is really this capture of educational institutions, especially in this context, business schools, by cultural Marxism and in laying groundwork for vocapital?
[00:09:31] Speaker B: Well, one of the things I do in my book is I trace the history of Cultural Marxism since the end of World War I, since, you know, it's beginning. And it's important to understand that history and to understand the purpose of that movement, because not only does it explain why they're coming after American business and why they're coming after capital markets, but it also explains how they've done so.
Essentially, the plans instituted by the Cultural Marxists, Antonio Gramsci, Georgi Lukasz and the Frankfurt School after World War I and the decade after World War I involved overturning the culture as it existed by capturing all of the institutions of cultural transmission that included, obviously, education and higher education, but it also included media, religion, and the other institutions of cultural transmission. And the only one that was left essentially was American business.
Fortunately for them, and unfortunately for the rest of us, those of us who favor free and fair capital markets. By capturing academia, they were also able to capture business schools and also able to make headway with respect to what is considered ethical behavior in business, what is considered unethical behavior, and how best to, to advance those goals. And that's been an enormous problem.
[00:10:59] Speaker A: And supporters of ESG argue that it's basically all about aligning capitalism with moral responsibility.
So how do you respond to that and where do you draw this line between ethics and ideological coercion on the other side?
[00:11:24] Speaker B: Well, I would argue that in a capital markets based commercial economy, that the greatest moral responsibility of those who manage corporations is in fact to produce a return on investment, the highest return on investment for those for whom they serve as a fiduciary, those for whom they are managing the money.
If you look at what Milton Friedman said, everybody assumes that this is just extremely geared toward creating capital and exclusively based on the idea that we want to make as much money as possible. That's a truncation of the quote that is actually in Friedman's work. But also I think it misses the larger purpose of Friedman's idea, which, you know, his model is essentially a moral model. It is essentially the modern manifestation of the parable of the talents from the Gospels, which essentially says that if somebody gives you their money to take care of, it is your responsibility to do so, and to do so in a way that produces a return on that investment. And so in a capital markets based economy such as ours, that is the highest moral responsibility of anybody in a management position is to produce return on investment for the people, for the owners of, of the wealth.
[00:12:53] Speaker A: Again, you just made a great intro to my next question. So you are highly critical of this shift from shareholder capitalism to stakeholder capitalism. So what do we lose, both economic and morally, when businesses move away from profit as their primary responsibility?
[00:13:17] Speaker B: Well, the stakeholder model, actually.
I know Klaus Schwab likes to claim credit for it, but he's not the original originator of the stakeholder model. The stakeholder model actually comes in large part from the Stanford Research Institute and the work that they did in the 1960s. And it's gone through various iterations. The original stakeholder model was observational. It's basically a way to. For corporations to look at who their stakeholders are, how best to make them happy, and how to make a profit by making sure that these stakeholders are kept happy. No corporation has ever succeeded by making its customers unhappy. No corporation has ever succeeded for long by exploiting its workers. No corporation has ever managed to create generational wealth by focusing on destroying the environment of the locality in which it's located. So that was the observational model. This is how we build wealth. This is how we build a profitable business through taking care of our stakeholders. The second iteration of the stakeholder model was the comparative model, which essentially says, if I'm Walmart, I look at Target and say, what are they doing right? What are they doing better than we are? What are they doing that makes them a profitable company that I can employ to make me a more profitable company as well? And so that was the second iteration of the stakeholder matter. And again, that's one that's focused primarily on the shareholders and on creating wealth and creating a positive environment and positive business environment for everybody involved. It wasn't until about the mid-1980s that we get the emergence of the normative stakeholder model. And the normative stakeholder model was essentially pioneered by Edward Freeman, who is, who was at the time working at an institute that was connected with Wharton Business School at the University of Pennsylvania and has spent the last several years as a business professor at Darden at the University of Virginia. And what he said was essentially that we have to have a more, that the old shareholder model didn't answer all of the questions that we needed, didn't take care of all of the stakeholders that needed to be taken care of. And so we needed to offer a different morality for business and a different way to operate in a moral environment. And what he created, what he offered was philosophical pragmatism as the moral guiding force behind business. Which is interesting, but it's also, you have to recall that philosophical pragmatism and vernacular pragmatism are not the same thing. It's not just about doing what makes sense in certain circumstances. Philosophical pragmatism is a philosophy that denies objective truth and is based exclusively on the idea that whatever works best is the true objective. Whatever works is the most important moral goal. And so it differs from both the Friedman model and from traditional Western moral applications.
[00:16:49] Speaker A: In the book, you also argue that vocapital basically undermines democratic processes.
So how exactly does corporate ideology do that? And what are some of the long term consequences of letting companies set social policy?
[00:17:12] Speaker B: Well, I think I mentioned at the top of the interview that, you know, one of the things is climate change.
You know, when Barack Obama was president, he lamented publicly that he wanted to be China for a day, that he wanted to be able to do things, important things, to advance what he saw as the common good that the voters wouldn't let him do. That our democratic system, that our Republican system would not allow him to do.
And that is, in fact, where I think that the idea of ESG and the current application of stakeholderism comes from. Is this idea that there are important things that need to be done, but the voters just won't let us do them? Climate change is one of the most important, important of those, as I said. Nobody ever votes to restrict economic growth in order to produce the energy transition. Nobody ever votes to be poorer in order to save the planet. That's not the way it works, especially in the United States. And so these corporations have decided that it's up to them to go around the voters to establish a, a business philosophy that focuses on climate change or that focuses on identity politics or that focuses on, you know, any of 100 different other, you know, ideas that, that some of these business elites believe are important but that the voters will never allow to be passed through the democratic process. And so this is, this is their attempt to do important things, to be China for a day.
[00:18:55] Speaker A: And related to policy, in recent years, we've seen red states like Texas and Florida push back against ESG mandates. Do you see this as a step in a right direction, as a meaningful counter movement, or is this mostly symbolic?
[00:19:18] Speaker B: I absolutely think it's an important movement. I think that, you know, a big part of the problem that we're dealing with here is the centralization of power and the centralization of capital. In fact, the second book I'm working on at the moment is focused exclusively on, on this idea that ESG and stakeholder capitalism were only enabled, they were only able to become a significant part of our culture, in a significant part of our business environment because of the concentration of capital and because of the concentration of power in Washington. And so I think that in order to fight back against this, that we need a refocus on federalism, a refocus on capital formation that enables others to get into business to push back against this concentration of, of capital that we see with the large asset managers. I mean, if you take blackrock and State street and Vanguard and put them together, you're talking about almost $23 trillion in assets under management. You add the rest of the Big Ten, and you're talking well over $30 trillion in assets under management. Under management, you're talking one third of all money invested in the American capital markets. And that's an enormous concentration of power, and it brings significant problems.
The states were able to push back against this because they have a secondary mandate.
The state financial officers for example, the people who are at the head of the federalist push against some of these ESG and stakeholder policies have a responsibility not just to their state pension holders, but also to their constituents. And if you're talking about states like West Virginia or Texas that benefit considerably from fossil fuels, it was a violation of their responsibility to their constituents to allow these corporations essentially to bully the pension plans of their public employees to invest in the destruction of their own economy. And so some of these states, again, and the energy heavy states in particular, who led this, were very important in defining the way in which the pushback against ESG should be handled and in defining the way in which the power that we still have allocated to our states can be used.
[00:22:01] Speaker A: Now let's talk a little bit about the most recent political developments with Donald Trump returning to the White House. How do you see this political shift impacting the future of Vote Capital and ESG agendas?
[00:22:20] Speaker B: Well, I think that to start with, we're seeing a lot of positive movement.
Again, most of this started with the states, and I'd be happy to see the states continue to push this. But having a president and a very close advisor of his in Elon Musk, who are opposed to tesg, I think is important as we'll see and as I intend to make a bigger deal about in the next couple of weeks.
In part, what we see with the Trump administration is proof of the old adage that personnel is policy. The people that President Trump has appointed, that he continues to appoint and that are going to be announced over the next several weeks, I think are very important people who have pushed back against ESG and understand why it's a problem. So I think that having the SEC be aware of the issues created by this double materiality idea that undergirds much of ESG is important. I think that having the Department of Labor be well stocked with people who understand the problem is very important. So I think that having the federal government on the side of those who favor free and fair capital markets is incredibly important. I think a lot of the fight still is in front of us. A lot of it will focus in the long term on how much power we can decentralize from Washington, how much capital we can decentralize from a handful of wall asset managers. So I think that in the end it's important that the states are involved, but it definitely doesn't hurt the movement for the Trump administration to have appointed some of the people that it's appointed.
[00:24:18] Speaker A: So you've mentioned Elon Musk, but looking at the positive steps that some of the other high profile CEOs like Jeff Bezos and Mark Zuckerberg have already made. And I want to mention here the changes in meta content moderation policies and new editorial policies at the Washington Post where Bezos basically told the staff that they have to now focus on individual liberties and free markets primarily. Do you interpret this as a signal that VOC is in decline and not just in society but also in the business sphere?
[00:25:05] Speaker B: Well, I certainly think that WOKE as it is manifest currently has some problems and I think that we are winning the fight against it in the cultural sphere, which is carried over to the business sphere. But it's important to remember that Elon Musk buying Twitter X was an important signal to some of these others who are involved in media that they needed to change the way their media operations ran as well. So I think it's important to understand that, you know, one person did make a significant difference and he was able to pull the rest of the business world along with him. The thing that's interesting about Musk is that he became an opponent of ESG when he saw that it was far more random than it had been explained as.
And that happened with Tesla. When it was left off of the s and P ESG 500 index.
They left Tesla, the pioneers in electric cars, the pioneers in leaving fossil fuels behind, et cetera. And they left, initially left Tesla off the index because they didn't like the way Tesla, Musk and some of the other executives reported their data.
And so it was entirely arbitrary, had nothing to do with environment and had everything to do with whether or not they could maintain power and compel him to do certain things. So I think he realized early on that this wasn't about the environment at all, that, that it was in fact about maintaining power. And I think it's important to have him have the presidents here and an important development in all of this.
[00:26:59] Speaker A: Okay, and then let's just briefly return to your book where you also mentioned that the way forward is to basically depoliticize business. So how can pro liberty individuals and institutions best respond to VOC capital? I know that you've mentioned that there's few people who are currently seriously dealing with this. So how do we do this? Should we build parallel structures? Should we reform the existing ones? Or what do we do?
[00:27:41] Speaker B: Well, one of the things that I think is important is to understand that Woke capital or woke or you know, whatever is the idea of the day is something is just that the idea of the day it's not that moving past these ideas is going to eliminate the problem and going to depoliticize everything.
That's an issue that we have to contend with. Do we build alternative institutions? Absolutely. You know, one of the things that I think we need in this, in this country is, is for a reassessment of the regulatory regime surrounding the creation of new exchange traded funds or new asset management firms, because the barriers to entry to the business are extremely high and they make it extremely difficult to compete with those who are already in the business. You know, it's your typical, you know, rent sinking and rent extraction problem that we have.
And so we need to create an environment in which capital formation is possible and in which we can build new asset management firms to, to contend with some of these, with the big three and some of the other massive passive firms that are controlling our capital markets right now. Until we do that, they're going to have the opportunity to change the appearance of the politics they're pushing, but nevertheless to continue to push a political agenda. You know, you look back at the early 1990s, for example, the issue then was political correctness. And there were a number of conservatives, my publisher, Roger Kimball among them, who pushed back against this and said, look, they have taken over academia and this is a big problem. Woke was the secondary manifestation of that, and there will be a tertiary manifestation as well. This is not the end of it. As long as we allow these handful of people to have so much power and so much capital collected in their few hands, that's an enormous problem for us and that's something we have to deal with. So, yeah, I think that, you know, Strive was an example of an asset management firm that tried to challenge the big three.
I think that we need more asset managers like that to challenge the big three and to push for fiduciary responsibility and for profits for shareholders above all. So I think that's important and we need to figure out a way to enable our system to create competitors to those who are continuing to control the markets, even as they say that they're backing off of WOKE and WOKE Capital.
[00:30:45] Speaker A: Well, I have still so many questions for you, Steven, but I'm sure that the audience is getting a little bit impatient to ask theirs, so let's take a look at some of them.
So the first question is, where did the ideological capture of business start? Was this the result of our colleges?
[00:31:10] Speaker B: Well, I think the colleges played a significant role, but that's not the start of it.
I think, as I identify in the book, there are two Ideological streams. One is cultural Marxism, which as I mentioned, the goal of which was to take over the institutions. And it became in fact the dominant ideology in higher education probably about 50 years ago. And so that is a significant problem. But the other ideological foundation of this is American progressivism. And the idea fostered primarily by Woodrow Wilson as one of the godfathers of progressivism and as the godfather of American public administration, that the people are too stupid to make their own decisions, that they're not smart enough, they don't understand the intricacies of modern governance well enough to make the decisions. And so we need this guardian class to make the decisions for us, this unelected guardian class to make this, these decisions for us. I think that's an enormous part of the problem and that that has been, that has grown over the last century plus to become a system that not only enables actual public servants in the bureaucracy to overstep their bounds, but also for elites who see themselves as better and smarter and equipped to handle the important problems of the day, to believe that is their role, to, to subvert the democratic process and, and to make the capital markets function for their political ends.
[00:32:59] Speaker A: Okay, the next one is why do so many influential people in business have this mindset of voc? Shouldn't there be more pro capitalist individuals in this field?
[00:33:14] Speaker B: Well, I think part of the problem is, as I said, we have had an ideological capture in higher education for probably the last 50 years that's translated slowly but surely into business schools. And so that's part of what influences the way our would be capitalists think. Part of it also is that these people see themselves as important enough to drive moral conversations.
And yet they feel guilty about the fact that they've benefited from the capitalist system and they want to give back somehow. They want to buy grace on the cheap, they want to buy indulgences, you know, whatever you want to call it. That this is their way of trying to make amends for the fact that they've become, you know, sent a billionaires or billionaires by, in part by exploiting those who have put their faith in them.
[00:34:23] Speaker A: In your study, how has cultural Marxism evolved over the decades? Race Marxism seems to be a predominant derivation in modern times.
[00:34:35] Speaker B: Yeah, I think that's true. You know, in some of the other work that I've done and a chapter I wrote in a book for Engelsberg Ideas, which should be published soon. You know, I focus on Herbert Marcuse and his role in this. As I say, Marcuse was very unhappy with the American worker. He you know, in his book One Dimensional man, he essentially gave up. He said, the workers have been, have been taken by the capitalist system. Capitalism simply makes them too comfortable. And so we have to develop a new vanguard class. And in part, that was, that was, as I say, racial minorities and sexual minorities were who he saw as the new vanguard class, people who were still considered outcasts and people that he thought could, in fact, lead the revolution. And so he did, in fact, push very hard for a focus on race and on sexuality. You know, identity politics traces in large part to the work that he did and in his frustration with, you know, One Dimensional Man. So I think that that's been a big part of it. I think that it's certainly evolved over the years and it continues to evolve. But, yeah, absolutely, race and sexual identity have been a big part of the evolution since the 1970s.
[00:36:12] Speaker A: And M asks, are Trump's tariffs at least partially meant as a counter to the progressive globalist agenda?
[00:36:25] Speaker B: Good question.
I think he sees them that way.
You know, I'm not in a position to comment terribly on, you know, whether or not they're, they're a good idea or a bad idea. I think that he sees this, and his supporters see this as, sees that, see this as a pushback against the globalist agenda.
Again, I, you know, I don't, I don't feel comfortable commenting on whether or not that's going to be successful. But, but I certainly, I think that that's the way he sees it.
[00:37:07] Speaker A: And Ilike Numbers asks, once a business adapts WOKE policies, won't they tend to keep them in place even if the restrictions get lifted?
[00:37:21] Speaker B: Won't they keep the WOKE policies in place once the restrictions are lifted? Some of them will. There's no question. And some of them are, in fact, simply changing the names of their WOKE policies, their DEI policies, et cetera, to give them, you know, a little bit of COVID But there are, there have been some significant steps forward. For example, the work that Robbie Starbuck has done in convincing corporations, starting with corporations with conservative customer bas, which was a brilliant idea, to push back against these corporations, but moving on to bigger corporations. One of his demands is that these corporations cease their participation with the Human Rights Campaign and with its Corporate Equality Index. And that's an enormous thing. I mean, the Human Rights Campaign is largely the reason why Target ran into the problems that it ran into a couple of years ago. The Human Rights Campaign has for a long time been one of the most successful pressure groups in American business and has forced a lot of companies to do things that they would otherwise not do. And so focusing on separating these corporations from the HRC is one of the brilliant strokes of what Robbie Starbuck has done, and good for him. And I think that that will have a lasting impact as we peel away at the power of HRC bit by bit, corporation by corporation, the better off all of us, and particularly shareholders will be.
[00:38:57] Speaker A: And do you think companies can get too large and controlling? And shouldn't free market advocates be concerned if any company, especially the ones led by VOC individuals, has too much influence?
[00:39:12] Speaker B: Yeah, I definitely think that corporations could get too big. I think that asset managers can get too big. I think that that's one of the problems that we face is that the regulatory regime has enabled them to get so big. The problems are, you know, well documented that if you, if you continue to push regulation in, to address these issues, that what in fact they do is simply raise the barriers for entry to the business and they help the big corporations. So I think that in fact, people should be concerned about it, people should be worried about it, and the only solution is to lower the barriers of entry, to remake the regulatory regime, to undo essentially the regulatory regime that we live under. So that is an enormous problem and it's something that I definitely think that conservatives and libertarians, and frankly, everyone should be focused on.
There are various market friendly economists at various business schools around the country who have long argued that one of the problems with the Republican position on business is that they're pro business when they should be pro markets. And I agree with that wholeheartedly, that we should be pro markets, we should be pro free markets, pro fair markets, and that business can fend for itself and that we should in fact be removing those barriers that are often used by business to protect themselves from competition.
[00:40:51] Speaker A: So Candace Morena has a comment and then a question. So she says, yes, they've circumvented the voters, but I do see government actors marching in lockstep with them. What do you say about that relationship?
[00:41:11] Speaker B: Well, it's a very collusive relationship. And I think we saw in the last administration that even as ESG followed or started to falter in the marketplace, that the various government mandates enabled it to stay alive, that the various government mandates to, you know, the whole of government approach to climate change, the whole of government approach to dei, et cetera, enabled ESG to extend its lifespan beyond what the market would otherwise have provided. So I think that there is definitely a collusive relationship between the administrative state and esg, between the administrative state and world capital. And I think that that persists even with the change of administration.
Nowhere near as obviously and nowhere near as dramatically. But until we undo the dam damage that can be done by the administrative state, there's going to continue to be a push from government to politicized business.
[00:42:18] Speaker A: And Alan Turner asks, we saw what Covid allowed government to get away with during the lockdowns. How did ESG and Vogue Capital benefit from this?
[00:42:32] Speaker B: Well, ESG was very much a byproduct of the rise of esg, was very much a byproduct of the COVID era. The idea that somehow we as a people were destroying the environment and were setting ourselves up for this, these massive global plagues that we needed to take better care of. We needed to be better stewards of our environment. And so the two played hand in hand. As Covid started to dissipate, so did the infatuation with esg. So I think that the government lockdowns, the government focus on, pardon me, on Covid, certainly enabled those who were interested in this, interested in pushing this political agenda through the capital markets. They certainly worked hand in hand.
[00:43:25] Speaker A: And another question from Alan. People often talk about the Green New Deal as a prime example of ESG influence legislation. Are there any earlier examples that you think gets overlooked?
[00:43:45] Speaker B: Legislation isn't usually the culprit. It's the administrative state. It's regulation.
And a lot of that, I think that tends to go under the radar.
For example, near the end of the Trump administration, the Department of Labor created a regulation that said that ERISA government, or pardon me, ERISA governed pension plans could no longer couldn't use ESG unless they could document the materiality of it. That's an easy thing to do. If you think that ESG is important, if you think that it affects the way a company performs, then you just show how it, how it does. You just demonstrate the materiality and then you can use esg. Well, that really upset the people in the ESG movement because they didn't like the idea of having to demonstrate materiality. So on day one, one of the executive orders that President Biden issued was to undo this regulation from the Department of Labor and to create a new regulation that allowed these ERISA governed plans to use ESG without having to prove materiality. So it often happens under the radar. I don't think legislation is usually the way in which ESG and environmental manipulation of capital markets happens. Very often it happens through the regulatory process, and very, very often people don't even notice.
[00:45:14] Speaker A: And we have a question that asks, and what inspired you to write this book?
[00:45:22] Speaker B: Well, I've worked in capital markets in the financial services world for 30 years, and I've worked covering the intersection of politics, policy and markets and the impact of politics on markets. Not quite a decade ago, I met Justin Danhoff, who was the director of the Free Enterprise Project at the time, who, who was the lone conservative voice in the wilderness trying to raise the alarm about what was going on with esg, what was going on with shareholder activism, and how this was going to change the way our capital markets functioned. I was surprised by his story. Despite the fact that I'd worked in capital markets for so long, I wasn't aware of this. So I decided to put him on a conference call with my clients and he told his story. And I can't even tell you how many phone calls or emails I got immediately after from people who've been in the business themselves for 50 years, for 40 years running money, asset managers, wealth managers. People who should have known about this were like, we had no idea. This is something that we did not, was never even on our radar. We had no idea how bad it was. We understood that ESG was a thing, but we didn't understand why it mattered. And so I took that as an indication that if we didn't do something, we were going to get beat and beaten badly. So in conjunction with Justin, he and I decided that perhaps the best thing to do would be to raise awareness and that given my background as a writer, that the thing that I could do would be to write a book that would serve as the tip of the spear for the pushback and the conservative movement against esg. And that's exactly what we did.
[00:47:14] Speaker A: Well, I gotta say that I really enjoyed reading the book and I recommend it to everyone.
And I also look forward to reading the next one that you publish. But let's see, there's another question. What is the best way for stakeholders to pull power away from vogue shareholders? Is there any viable method of influencing company policy?
[00:47:44] Speaker B: Yeah, the. The most important thing that we can do right now is to engage corporations. Shareholder engagement has been an incredibly powerful and incredibly important tool. It was perfected by the ESG people, by those who were interested in changing the way corporations behaved to introduce politics, but by reverse engineering it, people like Justin Danhoff, Scott Shepard at the Free Enterprise Project, Jerry Boyer at Boyer Research, David Bonson, a lot of people who have been very effective at this have reverse engineered what the left did to bring ESG into the financial markets. And, and have done the same. And they've engaged with corporations to say, look, we're in this because we think it's your moral responsibility to take care of your shareholders, not your moral responsibility to engage in politics, and we would like you to do the same. And so engagement on behalf of shareholders has been incredibly successful, and I think that it will continue to be successful as we move forward and as, as the winds tend to shift in our favor.
[00:49:03] Speaker A: Okay. Lock, stock. And Beryl asks, I think I already know the answer, but why did you choose the COVID you did for your book?
[00:49:15] Speaker B: Well, I didn't. The brilliant designers engaged by Encounter Books chose it. And I think that they came up with a fantastic, a fantastic cover. And in fact, the primary graphic on that has been turned into a little logo that is sprinkled throughout the paperback edition of the book. But yeah, those are the companies that I focus on in the last third of the book.
Apple, Amazon, and Disney. Netflix is also sort of hinted at in the COVID graphic, but those are the companies that I dedicate a chapter to in the book that have been particularly bad corporate actors in the ESG world.
[00:50:06] Speaker A: Okay, I want to ask you one of my questions. So what do you think is the role of employees in all of this? Do you think they are in some way also driving this? Especially, you know, because a lot of them got hired through these ESG policies. And looking at Disney, for example, it seems to me that it's not just people on the top driving this, but also at least partially, employees who work in those companies. Or do you think they are more on the victim side.
[00:50:53] Speaker B: In the conservative pushback against esg? We have a saying that the influence causing stakeholderism and the influence pushing ESG comes from three directions. It comes from the outside in, which is shareholder engagement, particularly on the part of large asset managers. It comes from the top down, which are the executives that we spoke about, those who you would expect to be full throated capitalists, but who are not. And it comes from the bottom up. There are in fact employees, a lot of them clustered in HR departments that believe that this stuff is important. And again, this is a big part of the ideological capture of American higher education. But in fact, you get a lot of people, a lot of, again, these are influential, an influential minority of employees. The squeaky wheel. But of course, the squeaky wheel is the one that gets the grease. So there is in fact a component of pushback or pushing for ESG that has come from the bottom up. As I say, a lot of is HR Directed, but there are others involved as well.
[00:52:08] Speaker A: And Scott asked a question that I think a lot of us want to know the answer to. Are you an Ayn Rand fan? And have you heard her imploring of businessmen not to sanction their destroyers?
[00:52:26] Speaker B: I can't say that I'm an enormous fan. I'm not opposed to Ayn Rand. I'm not an objectivist, I'm not a libertarian. I am a full throated conservative. So I have my issues. But certainly in terms of not sanctioning their destroyers. She's spot on about that. There's a lot of what she wrote that is important and a lot of what we should take to heart in our pushback against the regulatory state.
[00:53:02] Speaker A: I think we have time for a few more questions.
So one thing that I wanted to ask you also is is it fair to say that book is a type of secular attempt at religion? I think that argument has been made many times.
So what do you think?
[00:53:24] Speaker B: Yeah, I think that, you know, if you go back to, you know, Even the late 19th century with Hilaire Belloc, his book about the great heresies, the last one that he discusses is essentially, he doesn't refer to it as Marxism or socialism, but he discusses, you know, what amounts to Marxism and explains how it is essentially a reformation of Christian teaching with, you know, a heretical component. Max Stirner, who was originally one of Marx and Engels friends, mocked communism because he said that, you know, he, he said people are too selfish. They don't want to overthrow the current religious regime just to have another one imposed on them by Marx and Engels.
If you look at some of the 20th century's, the mid 20th century's greatest academics, you'll see that a lot of them have said the same thing, that this is a quasi religious movement, that it has all the components of a millenarian movement or a gnostic movement. The totalitarian regimes are all very religiously or quasi religiously founded. And so I think that all of Marxism, including Cultural Marxism, including woke, which is a current manifestation of cultural Marxism, all have a very heretical, millenarian, gnostic religious component to them.
[00:55:08] Speaker A: And okay, so there's another question from the audience. Who do you think of as one of the leading figures standing up to stakeholder capital is a Trump elon or someone else?
[00:55:25] Speaker B: Well, in the paperback edition of my book, I mention a couple of different people and the one that most people would be familiar with is Vivek Ramaswamy. Vivek took a flyer, he left what he was doing at Royvant and took a flyer on creating an asset management firm to push back against this. He wrote a couple of books of his own. Obviously, they were extremely successful to push back against this. And then he ran his political, his presidential campaign based on it. I think that a lot of what he's doing in Ohio is based on the same fundamental principles as well. So I think that if my book was the tip of the spear, pushing back against it, against ESG and stakeholderism, Vivek's books and his involvement in the movement has, you know, was the very, you know, important physical thrust of the spear.
Without him, I don't know if we get to the point that we're at right now. Without the publicity he brought to the issue both through Strive and through his presidential campaign, I don't think that we are in the position we are now. So I think that, you know, if I had to point to one single person who's made an enormous difference, that it would be Vivek.
[00:56:44] Speaker A: Well, thank you so much, Stephen, for joining us today, and thank all of you also for, for being here today. And also if you enjoyed this video or any of our other materials and content, please consider making a tax deductible
[email protected] donate. Be sure to join us next week when the Elsadi CEO Jennifer Grossman returns to interview Anson Freirex, former president of Anheuser Busch, about his new book, Last Call for Bud Light, the Fall and Future of America's Favorite Beer. See you then.
