Companies used to be in business to make money, sell stuff and employ people. They were run by executives who were proudly capitalist and believed in the country’s founding principles.
No longer, it seems. Big businesses’ support of green-energy legislation, various social-justice edicts and the silencing of right-wingers on Twitter have become so routine it’s almost not news anymore.
The question is, why? People who work at these companies regularly complain to me that most employees view their employers’ new corporate leftism with disdain. They believe it’s a nuisance pushed by a vocal fringe of the workforce.
Companies cave, they say, because they just don’t need the hassle of explaining to the left-wing business media why they’re not supporting AOC’s Green New Deal.
The conventional wisdom among economic conservatives I speak to is that corporate America’s wokeness can’t last forever because in the long run it’s unprofitable. Example: Ratings for the social-justice-posturing NFL were weak all year, as was this year’s Super Bowl. That means the NFL will have to go back to football.
If Nike sales decline amid the sneaker brand’s embrace of the ultimate social-justice warrior, former NFL QB Colin Kaepernick, the founder of the down-on-one-knee movement, market forces will likely prod the company in a new direction.
That’s why the NBA — another big business — just made the pre-game national anthem mandatory after one of its owners, liberal tech entrepreneur Mark Cuban, enraged many fans by pulling it from the start of Mavericks games.
Remember, 74.2 million consumers voted for Donald Trump in part because they can’t tolerate virtue signaling being thrown in their faces every minute of their lives.
All of which makes sense until you understand the left-wing forces that have assembled to transform corporate America into something resembling the progressive wing of the Democratic Party. The left might hate capitalism, but it has been busy implementing capitalist tools to bend big business to its will.
Changes in the money management business underscore just how successful the left has become. Shareholder votes once focused on prosaic topics such as approving mergers or rubberstamping CEO pay or changes in leadership.
Today they’re fraught affairs where companies are getting bombarded by demands for corporate diversity (more women, minorities and transgender people in positions of power), green energy and overt support of what the left calls social justice.
OK, corporate diversity is a worthy goal. But since when were many shareholders, looking to invest for retirement, so concerned about whether they were holding stock in a company that supports eliminating greenhouse emissions or canceling Columbus Day?
Answer: When those shareholders became progressive activists, who learned how to influence money managers to tout politics instead of profits.
Proxy advisory firms are hired by big money managers to provide guidance on various corporate-governance issues and shareholder votes. That makes the advisory firms very powerful since most Americans invest through mutual funds and other managed accounts.
And it’s no secret that the progressive-left agenda has gained support from these outfits in recent years. With that, trillions of dollars in shareholder votes from places like Larry Fink’s BlackRock and Vanguard are now openly supporting left-wing causes.
You might say these firms are pushing an agenda that’s based on rigorous analysis. Some studies show that corporate diversity leads to higher profits. Global warming could destroy the economy.
Studies also show the opposite — that diversity has no impact on profits. Global warming is real, but not the immediate existential threat that requires us to kill jobs by killing the Keystone XL Pipeline during a pandemic recession.
But the power of the left is hard to ignore. They find common ground with public pension funds run by liberal politicians who also want to sway corporate behavior leftward.
It wasn’t so long ago when companies used to ignore the investor crank who bought one share of stock and came to shareholders meetings to lob insane questions at the CEO. Money managers and proxy firms weren’t swayed by outside forces to vote a certain way.
But most shareholder votes now involve progressive edicts under the guise of so-called Environmental Social Governance investing. ESG, as it is known on Wall Street, is a way to measure everything from a firm’s compliance with green-energy initiatives to its embrace of causes such as Black Lives Matter.
The average retail investors in mutual funds have no say or vote in this vast transformation even as their money is being used for political purposes. The fund is responding to the vocal minority that figured out how the game is played.
Vincent Harinam, a law- enforcement consultant and Ph.D. candidate at the University of Cambridge, in an article last July on the Web site Quillette wrote: “When it comes to the culture wars, the goal of a corporation is not to maximize profits, but to minimize losses.”
That means constantly appeasing the vocal and organized minority, and corporate America’s lurch to the left won’t end anytime soon.