The new frontline against woke capital - part 2
Derek Kreifels is the head of the State Financial Officers Foundation. His organization is at the front line of the fight against the politicization and ideological capture of the investing industry, frequently under the name of ESG: Environmental, Social, and Governance.
I recently talked with Derek on my podcast Meeting of Minds. Below are a few highlights from that discussion, lightly edited for clarity and length.
This is part 2. You can read part 1 here.
Get Our Latest News for FREE
Jerry: I think there's a particular vulnerability with banks. The banks have been ideologically captured probably earlier than any of the other companies. And I think it's because they're not just highly regulated, but they're also under direct oversight. Most companies are regulated. But at a bank, a big bank, there's somebody who works for the Federal government who's got a desk there. They're there every day. And so there's an oversight function which essentially makes them in danger of being directly under the control of the Federal government. So when you look at the sectors that have gone most ideological, it tends to be the sectors that are most vulnerable to that. At the more local level, utility companies, because they're highly regulated. They're given a monopoly by government in many cases. So it's like, well, what are we getting in return? There's no free lunch here.
Derek: I think that's very true. And I've got a couple examples of how banks have gotten very political. Just a couple of years ago Treasurer John Schroeder in Louisiana, he started paying attention to the way that things were being done by a couple of the largest banks in America in regards to the Second Amendment. He's a veteran, he's a Second Amendment enthusiast, and he said he's not going to do business, hundreds of billions of dollars worth of business and contracts, with a bank that wants to limit my state's citizens' Second Amendment rights. He made a lot of national headlines for that.
In Missouri, Treasurer Scott Fitzpatrick had an interesting situation with a small nonprofit in rural Missouri. The son of a well-known former President of the United States was coming in to speak, and the payment processor was a payment processor called WePay. And they ended up freezing the ticket sale assets because they said that the speaker violated their hate speech and anti-terrorism policies. Turns out WePay was a subsidiary of JPMorgan Chase. So Treasurer Fitzpatrick that night went on Tucker Carlson on Fox News and said they were no longer going to do business with JPMorgan Chase if they continued to discriminate against the conservative half of their state's population. Amazingly, JPMorgan Chase called the Treasurer the next morning and everything was cleared up .
Jerry: That's the power of speaking up.
Derek: That's the power of speaking up. And for the record, the banks are hearing plenty from the left on a daily basis, too.
Jerry: Or even liberals who think that corporations should stick to their day job. Because there are a lot of liberals that really hate this stuff. "Oh, come on, black lives don't matter to you. You're a giant corporation. You're just blackwashing or greenwashing."
Derek: We've had liberals calling us saying, for example, "I don't want the government to know how much medicinal marijuana I'm buying on a monthly basis." We've had people calling saying, "I don't want the government to know how much ammunition I buy on a monthly basis." It was from both sides.
Over and over and over again we're seeing the weaponization of banks, of lending, of capital, from these companies like BlackRock and State Street and Vanguard, and places that are trying to band together to push for global climate change. And now we have companies that are pushing for protecting reproductive rights. And we're hearing more about the Second Amendment in the initiatives that are being proposed to us.
Jerry: Let's talk about the abortion issue, because this is really fascinating. I mean, talk about mental gymnastics. These activists are trying to make the case that doing business in a pro-life state means that you're going to have a shortage of workers because women aren't going to want to live in these states where they can't get abortions, so you won't have enough workers. Are you kidding me?
First of all, the population outflow is away from hyper pro-abortion states like New York. America is moving from north to south, and from east-west to center. America is movingto pro-life states. I agree that there might be a worker shortage but it's not in the growing Sunbelt. And it's not abortion.
For instance, Duolingo here in Pennsylvania, some women who work for the company said, "well, if Pennsylvania passes abortion restrictions, I won't work for you, I'll move out of state." Really, will you? I doubt it. I don't know anyone, except the most extreme activist, who would make a decision like that.
Derek: We're business savvy guys, Jerry. It's cheaper to have to pay for a two-day trip to California than it is to have that employee on maternity leave for 16 weeks.
Jerry: These are people who've said we need parental leave, we need maternity care, we need everything. Babies are expensive. It's better for business not having them. It's amazing that they can make that argument, given their rhetoric in the past, but I guess it's just ad hoc reasoning. They'll just make whatever argument they think arrives at their conclusion.
Derek: That's right. And now that Roe's been overturned, we anticipate seeing this much more widespread. We've talked about, in the past, these three shareholder proposals for TJ Maxx, for Lowe's, and for Walmart. I very much for see that that number growing from three to hundreds next year.
Jerry Bowyer is financial economist, president of Bowyer Research, and author of “The Maker Versus the Takers: What Jesus Really Said About Social Justice and Economics.”
