Coercion Is Not Capitalism
A response to Larry Fink's 2022 address to CEOs
Dear CEOs,
What is capitalism, but the free exchange or commerce of specializations. Capitalists compete in the sphere of ideas, services and commodities and, the more that competition is unencumbered by external forces, whether that be governments or colluding business blocks, the better capitalism serves humanity. Societies as a whole, as well as individuals, benefit from the free exchange of specialization which is capitalism's raison d'etra. And with that brief explanation of capitalism, becoming excellent at whatever your corporation produces is (or was) the inspiration for your company’s existence.
Before I get into my redress of Larry Fink’s letter to you titled The Power of Capitalism I ask all CEOs to perform this simple task. Compare you company’s mission statement now to that of 20 years ago. Has your mission stayed on track with your founding principles or has your company experienced mission creep? If your mission has migrated to ESG and stakeholder value you must ask yourself, what do these concepts have to do with our product or service? If your mission statement has remained unchanged, ask yourself what are the Board of Directors priorities? Are they discussing your mission statement or are they discussing ESG and Stakeholders value?
I know there is a family entertainment company whose mission statement has remained innocuous but has publicly shifted from providing wholesome entertainment for children to immersion into school room policies of sexuality. I know we have a sneaker company where “Just Do It” has added “Or Else” to its iconic slogan with regard to forward facing ESG standards. Does the shoe company or the cell phone producer list among their “stakeholders” the child labor and abhorrent working conditions of their manufacturing plants in China and the African Subcontinent? I implore you CEOs to take a hard look at your mission statements to determine if that is indeed the work you are doing. Because, Larry Fink’s letter is asking your to abandon your individual purposes and sign onto a mono-world-view of “new speak capitalism.”
To fully digest the CEO of Blackrock's annual letter to you, the leader of companies he invests in, you may need some guidance understanding the language used in Mr. Fink’s letter. The following guide will help you unpack his letter by listing the term he used and what it really means:
Environmental, Social, Governance ESG (Pg.9, P3) – Socialization of capitalism by voluntary (for now) adherence to government desired policies that could not be passed by the normal legislative process, The “public” in the new public / private partnership infecting our business landscape.
Efficiently Allocated (Pg. 2, P5) – Forgo short-term value to investors in favor of long-term political goals.
Stakeholdes (Pg. 3, P3) – Individuals that make up a political block that agree with the socialized ESG Standards. (Not to be confused with workers, community members, distributors or investors that expect wages, jobs, products or return on investment)
Corporate Values (Pg. 3, P4) – New speak for a mono-political new world order used by leaders to deceive shareholders and workers of their actual purpose in the organization.
Show Humility (Pg4, P5) – Simply means don’t complain about these changes to the definition of capitalism.
Net Zero World (Pg6, P3) – Atheistic view that humans can control all the natural and artificial emissions of Planet Earth while, ironically, deifying climate scientist that proclaim this is remotely possible.
Phoenix (Pg.6, P2) – Warning that all Blackrock invested companies must conform with Stakeholder, ESG standards of they will be canceled. The metaphor of the Phoenix rising from the ashes is meant only for those companies complying with coerced capitalism. All non-compliant companies will be eliminated.
Center for Stakeholder Capitalism (Pg. 10, P5) – a “Blue Ribbon” panel at the pinnacle of a New World Order public / private partnership that will “suggest” investment rules that determining whether or not companies meet prevailing political standards thus elevating them to a privileged status for receiving capital investments or another name for a self-licking ice cream cone.
The best skill to have when you are playing poker is learning someone else’s tell. In his letter to you, Larry Fink emphatically states (emphasis mine), “Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke.’ It is capitalism, driven by mutually beneficial relationships between you and the employee, customers, suppliers, and community you company relies on to prosper.” When someone rich and powerful goes to great pains to tell you what something is not it most undoubtedly is. And when it appears the evidence starts to prove that it is, they will than go to greater lengths the manipulate the language to justify their actions. Need I remind you of Pres. Bill Clinton's famous line, "that depends on what the definition of 'is' is."
Simply put, CEOs are hired primarily for their ability to make decisions. In fact that is all you do 365 day a year. Yet, in nearly lock step, you all decided to followed Anthony "Wormtongue" Fauci to edge of the cliff with Covid lockdowns, that nearly crashed our economy, injured our supply chains and spawned the work from home movement. I know many of you are trying figure out how to put those genies back in the bottle. I implore you, do not make the next catastrophic mistake by blindly following another self-serving “expert” down this ESG path.
What is ESG and how is this public / private scheme to manipulate CEOs into following investment and banking regulations that put investors behind everything bad? ESG is a developing set of self-governing standards that measures how your companies manages Environmental, Social and Governance issues. These standards are not based on what is individually best for your company or your own moral compass, but on a World Economic Forum group think. ESG standards are not meant to improve your company, they are intended to coerce you into compliance to a world-wide greater good by rewarding you with a favorable ESG rating and thus investor support from the Blackrocks of the world. And, if you fail to comply, banking and investing for your ventures will dry up, regardless of economic viability. The only way your investors will accept diminished returns for the sake of the stakeholders, is to wrap this whole ESG scam into the world's greatest virtue singling façade. You are already making business decisions to satisfy innumerable local, State and Federal tax regulations. Why on earth would you wish to go further down the rabbit hole with self imposed ESG regulations just to satisfy the “New World Order” crowd at Davos?
I therefore divested all my retirement funds from Blackrock. I furthermore demand that congress add managed funds to antitrust legislation. No single fund or manager should be allowed to get as big as Blackrock for the true heart of capitalism beats to robust competition. Right now, the top three managed funds control 25% of your proxy votes and despite the fact that they have a fiduciary duty to maximize returns for their shareholders, they will forgo that sacred responsibility and use their voting power to push your company further down the ESG path. It is not just me that is concerned about woke ESG standards invading the upper echelons of the corporate world. Currently 25 States have passed or are considering passing legislation banning the use of ESG scores in banking or investing decisions.
Finally, you CEOs must resist with all your might the woke ESG train rolling down the tracks toward your annual reports. Every one of your companies was founded on and grew out of a vision of a needed or desired specialization. The ESG that Larry Fink refers to in his 2022 address is designed to shift all companies focus away from their primary business plan and to bark at the shiny new ESG moon. ESG is straight up socialism cloaked in sheep clad capitalism and you are in the nudge phase of this ideological conversion. The next phase coming is push. When enough CEO’s follow the Fink toward ESG nirvana, the investment and banking and government rules will try to push the remaining CEOs into ESG compliance. Let us all pray common sense prevails before the Finks of high finance partner with governments to create the shove part of this progression. This nudge, push shove method is how all socialist revolutions progress. I implore all you CEOs to resist Larry Fink’s nudge towards stakeholder capitalism and ESG standards for these are just flowery whispers of sweet nothings to coerce you into abandoned free market principles and to make your companies beholden to an arbitrary, and yes, politically motivated set of socialized standards. And, if my 45 years as a business operator have taught me nothing else, I know the coercion is not capitalism. Lastly, if you are a CEO worthy of receiving this message, you are already doing all the ESG items anyway, but you manage them within your mission to be the best at your specialization not despite it. Do not be seduced by an invitation to the “cool kids” table at Davos. That collective membership has no bearing on the individual judgment that awaits all who are lent the power to lead their fellow man.
Sincerely,
Bruce L. Nelson
Capitalist & Former Blackrock Investor