Profit without Honor

in ,

The socially responsible investing (SRI) bandwagon rolls on.

CNBC:

Longtime hedge fund manager Paul Tudor Jones on Wednesday critiqued the long-held belief that companies should exist for the sole purpose of generating profits.

Jones, whose remarks came during a JUST Capital event with CNBC’s Andrew Ross Sorkin, said [that it’s] a philosophy that allows corporate boards to neglect issues of equity in the workplace and ultimately undermine the stability of broader U.S. society.

“When you just look and say that the only thing that a company has to worry about is making a profit, it gives that company a pass not to pay attention to pay equity, not to pay attention to gender equity, not to pay attention to racial equality. Not to pay attention to a whole host of social factors that at the end of the day are the basis and the foundation of a strong, vibrant society,” Jones said.

But these are matters best hashed out in public debate and where necessary, legislatures, not boardrooms.

Read More

The Protests Are a Preview of Our Turbulent Future

in ,

That the killing of George Floyd would produce both terrible sadness and deep anger was to be expected, and so was a wave of protest. That protest might sometimes degenerate into riot and looting could also, perhaps, have been expected, but the scale of the protests — and of what came next — well, almost certainly not. Part of the explanation lies in double repetition: another killing, replayed again and again, feeding the despair and fueling the rage from cell phone to news bulletin and onto the web.

And yet something else seems to be happening, something that suggests these events are a harbinger of even more serious upheavals in the years ahead. These upheavals will not be averted by justice being done in Floyd’s case, or by reforms in policing, however overdue they may be. And these upheavals (which may or may not be violent) will be “about” a lot more than race. To understand why, it’s necessary to appreciate that the protests over Floyd’s death were both a sincerely felt reaction to an appalling incident (that was itself emblematic of far deeper problems in both policing and race relations), and another round in a broader social and generational fight

Read More

Germany’s Constitutional Court Accelerates the Euro Zone’s Slide toward Crisis

in ,

One of the reasons that the euro zone has survived for as long as it has is the impressive ability of its leaders to postpone dealing with a series of questions that are as fundamental as they are inconvenient. Is it possible to sustain a monetary union without a fiscal union? (Probably not.) Is it possible to establish a fiscal union without genuine democratic consent? (We may yet find out.) And suddenly pressing: What is the relationship between the EU’s law and Germany’s?

For half a century the conflict hinted at by this last question could mostly be treated as theoretical. Then, last week, the German constitutional court (BVG) challenged the legality of the Public Sector Purchase Program (PSPP), the $2 trillion-and-counting quantitative-easing scheme first launched by the European Central Bank (the ECB) in 2015 to prop up the euro zone’s faltering economies, and restarted in 2019. The BVG’s ruling does not concern the ECB’s Pandemic Emergency Purchase Program (PEPP), a new, smaller quantitative-easing regimen under which the ECB will buy up to €750 billion in bonds to help stave off the effects of the mess that COVID-19 has left in its wake. But it may affect how the PEPP is run: Already widely considered inadequate for the task that lies ahead, the program may be hobbled by restrictions flowing from the BVG’s judgment, and that’s before another wave of German litigation tries to bring it down.

Read More

How Advocates of ‘Corporate Social Responsibility’ Distort Shareholder Power

in ,

Many years ago, 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.

Read More

On the Bleach

in ,

Long periods of social isolation can lead to insanity. When I turned to Twitter one day last week and found that the trending items under “politics” included #Lysol, #DisinfectantInjection and the surely superfluous #DontDrinkBleach, I began to think that hallucinations were setting in. A link led me to this headline:

“Lysol and Dettol manufacturer tells customers not to inject disinfectants as possible treatment for COVID-19.”

What?

Then I saw this:

#DisinfectantDonnie

Ah.

Read More

Facing New Crises, Macron Repackages Old, Bad Ideas

in ,

At the end of last week, the Financial Times published a lengthy interview with French president Emmanuel Macron in which Macron referred no fewer than nine times to humility and may, occasionally, have meant it:

I don’t know if we are at the beginning or the middle of this crisis — no one knows. . . . There is lots of uncertainty and that should make us very humble.

Macron’s humility only goes so far, and will not have been encouraged by his starstruck interviewers, who write that he is “overtly intellectual [and] always brimming with ideas.”

They are right, but unfortunately, Macron’s ideas are old ideas, if sometimes repackaged.

Read More

Corona Conspiracies

in ,

Say what you will about Carl Jung, myth-spinning Swiss sage, madman, and psychiatrist, but he wasn’t always (completely) wrong. Writing in the middle of the last century, he noted how:

The Middle Ages, antiquity, and prehistory have not died out, as the “enlightened” suppose, but live on merrily in large sections of the population. Mythology and magic flourish as ever in our midst and are unknown only to those whose rationalistic education has alienated them from their roots.

Sadly, that argument falls apart in the second half of the second sentence, perhaps even more than when those words were first published. In an era of apocalyptic environmentalism, revived Marxism, and goop, mythology and magic are finding dismayingly large audiences among those given the benefit of, at least nominally, a rationalist education.

Read More

Back to the Future: The Return of the Euro-zone Crisis?

in ,

In 2011, amid controversy over the euro zone’s bailouts for Greece and other casualties, Germany’s head of state, President Christian Wulff, did what German politicians — and, even more so, a German president — are not meant to do. He said the unsayable:

Solidarity is the core of the European Idea, but it is a misunderstanding to measure solidarity in terms of willingness to act as guarantor or to incur shared debts. With whom would you be willing to take out a joint loan, or stand as guarantor? For your own children? Hopefully yes. For more distant relations it gets a bit more difficult . . .

The unsayable is even more unsayable when it is true. Brussels may look down on the nation-state as dangerous anachronism, but it is, however imperfectly, a family in a way that the EU is not. The European “family” did not exist in 2011, and it does not exist in 2020. None of this is to deny that there is a certain degree of fellow-feeling among the EU’s “citizens,” but for most of them, it only goes so far, which was Wulff’s point. To Bavarians, Saxons are family in a way that Greeks are not.

Read More

Cuomo’s Moment?

in ,

The fact that I am writing this from home, in a New York City that has been more or less shut down, with the National Guard checked into neighboring hotels and, just a few blocks away, Gotham’s principal conference center hosting an emergency hospital, is a reminder that to dismiss almost anything these days as an impossibility is unwise. And so, yes, it is possible that Andrew Cuomo could be chosen as the Democratic nominee at whatever sort of convention the party is able to hold in Milwaukee in August. But it is also extremely unlikely.

Read More

Setting a Precedent

in ,

Whether Britain’s COVID-19 lockdown will be worth what it will cost — a bill involving far more than just money — was and is, for now, unknowable. That it would be used as an excuse by empowered authoritarians to go even further than highly intrusive regulations allowed them to go was, by contrast, all too predictable. When the state is given a mile, its rank and file will generally add a few inches all of their own. Between them, police and local bureaucrats have already distinguished themselves with stunts such as pulling over cars to check if their drivers are on “appropriate” journeys, dyeing a beautiful lake black to discourage visitors, and deeming Easter eggs “non-essential” purchases.

Read More