 So let's think now about what the alternative being presented, not so much for capitalism, but the alternative being presented today in the guise of capitalism, kind of, you know, the whole ESG movement is saying, we don't want government intervention, although they're going to get it. We want the market to put pressure on companies to behave in particular ways. What are they asking companies to do? The asking companies to do is to stop focusing on profit, to stop having this one dimension for decision making, which is maximizing long-term shareholder wealth, which has been the traditional thing that business is focused on, at least over the last 40 years. If you want to, you know, there's a period in American history from the 50s to the 80s, where I don't think business was quite as focused on the profit motive. If you're interested in why and what they were focused on, I'm happy to answer that in the Q&A. But the last 40 years for the most part, business is being focused on profits and maximizing long-term shareholder wealth. That has allowed them to be focused, to have one mission, one goal. Every decision gets decided by weather and how it contributes to maximizing long-term shareholder wealth. What the stakeholder theorists and what ESG is trying to do is introduce, is to take the profit motive and make it just one of many goals that the government should pursue. Shareholders should become one of many stakeholders in business. Indeed, recently the business roundtable, this is a lobbying group of the largest businesses in the United States, declared that the purpose of business is not to maximize shareholder wealth, but to maximize stakeholder well-being, whatever the hell that means. What does that mean? That means that every stakeholder in a business should have a say above and beyond the fact that they negotiate for the best terms that they can produce. So employees and suppliers and bondholders and the community and anybody who has any relationship with the company, the environment, all now have a stake in the company, all now have a stake in the decision-making of the company, all now get to be equal with shareholders in deciding the future of the company and deciding decisions. What should the next iPhone look like? Well, employees, we should find out what employees think, or we should think about what impact the particular design will have on employees, what impact the particular design would have on suppliers, on environment, on everybody who we might ever touch. Now, let's take a decision that a business actually has to make. Let's assume you're running a company and you have an opportunity to relocate your manufacturing plant to Mexico. And if you relocate the manufacturing plant to Mexico, you actually have an opportunity to increase profitability, to make more money, to improve shareholder wealth. Let's assume that that is a given. So, taking into account all the different factors that go into it, it's good for shareholders to move the plant to Mexico. But you don't want to make decisions based on shareholder wealth maximization. You want to make decisions based on stakeholders. So you poll the stakeholders. You ask your suppliers whether they want you to move the plant to Mexico. Now some suppliers say, yeah, cool, you're going to be more profitable, I'll supply you more stuff. This is great. Other suppliers are not too crazy about it because the fact is you'll probably fire them and get suppliers in Mexico. You'll ask your employees, same thing. Some of them are cool with it. Most of them are negative because they're afraid it's their jobs that will be lost as you move to Mexico. Should you poll the potential new employees in Mexico? Do they fit into the equation? What about the community? Community might say no because you're going to close a plant here and that'll be a downer. What about the new community in Mexico, where you're going to have this new plant? Do they get a voice? What about your bondholders, everybody else? Let's say you have. I've done this many times in exercise with class, we put up all the different stakeholders and we give them a plus or minus. We're pro this decision, anti this decision. How do you make the decision? You add up the pluses, you add up the minuses. What's your algorithm for making a decision about how to move forward? Who's more important? What stakeholder theory does is it paralyzes. It makes it impossible to make any kind of decision where shareholder wealth maximization is clear, unequivocal. I mean, it's difficult. It's hard to calculate the present value of future cash flows and to estimate those and to know the impact on all the different elements. And of course, if you're maximizing shareholder wealth, do you care about what your customers think? Yeah, that's where the revenue is going to come from. Do you care about what your suppliers think? Yeah, because you want good relationship with your suppliers because you want them to be on time and you want them to be able to respond if you have an emergency. Do you care what your employees think? Well, of course, you want them to be at maximum production. So the stakeholder idea falls apart. You can't implement it. It's impractical. And it turns businesses into political games. You know, the decision-making is made based on who can pound on the desk the loudest, the strongest, who can manipulate managers the most. Now, ESG is just a form of stakeholder, of the stakeholder idea. It's a way of making it sexy. And it's a way primarily of elevating above all else, so-called environmental concerns, primarily climate change, carbon emissions, the idea of air and water pollution, biodiversity, deforestation, energy efficiency, waste management, water scarcity. I mean, you can make the whole list spot at ours. I'm not sure where the end of this is. What ESG and E is for environment, S is for social, G is for governance. What the environmentalists are trying to do here is circumvent the political process because if they want cleaner and cleaner water, we have an environmental protection agency. We can argue about whether it's good or not that we have it. We can argue about whether they're efficient or not, but they can just impose regulations on all of them. If they want climate change, they could organize a common tax. They could do a lot of things that would impose on business a standard whereby business would have to cooperate. They could use the law, but they haven't been able to because the fact is that politically these ideas are not acceptable. People don't like them. People don't vote for them. Well, let's circumvent democracy. Let's circumvent the political process. And let's go straight to the companies and use the shareholders, use particularly big shareholders like BlackRock to force companies to behave in this way. So BlackRock has announced that it is not going to focus on profitability. It's going to focus on ESG, social by the way, as things like data protection and privacy as if companies are motivated around that already, gender diversity, whatever that means, employee engagement, again, whatever that means, community relations, human rights, labor standards, governance is both composition, bribery and corruption, executive compensation, lobbying, whistleblower protection and things like that. The environment one is really what is really being pushed to the forefront though. That and I'd say gender diversity kind of are the two big issues that ESG is pushing. Instead of using politics where it's unpopular, the idea is let's let some big investors like BlackRock dictate, BlackRock is the largest, I think, institutional investor in the world, certainly in the US, dictate to companies, use their votes, use their influence, use their ability to sell or buy shares, to try to manipulate companies into abiding by these principles. And it's not just BlackRock, you know, every hedge fund, every mutual fund company out there, every private equity fund is now being pressured by institutional investors, by pension plans, primarily, to live up to have an ESG policy, to shift from a shareholder world maximization perspective to this focus on the environment of social and governance, and using so-called free markets to be able to establish that. Now I think this is incredibly corrupting. It's legal. It's not much that can be done to stop it from a, you know, I think any kind of perspective. Although my view is that pension plan holders should sue BlackRock. If I had a 401k that was managed by BlackRock, I would sue them. I gave my money to BlackRock not to pursue the CEO BlackRock social agenda. I didn't give my pension plans money so that they could pursue their politics. I gave the pension plan money in order to maximize my wealth over the long run. I gave their money so that I could retire. This is using the political views, the political ideas, the political motivation of a few people at the top to dictate policy for millions of people who've given their money. I think it's unjust. I think it's immoral. And I think somebody should start a class action lawsuit and see what happens because I don't think it's what pensioners want. Just most of them are just ignorant of what is actually going on. They don't understand this. So I think it's a violation of the investment funds mandate to be pursuing this agenda that is removed from maximizing shareholder wealth. Who are the shareholders? The pension plan owners, the people who gave BlackRock the money for the pensions. And it's unbelievably destructive to the system that we have today that has produced such amazing results and produced an amazing increase in the standard of living, an amazing increase in the quality of life, an amazing reduction in poverty around the world. It is a direct attack on all of that, but it's an attack that uses so-called market processes instead of using the traditional route, which is politics, and therefore gives actually certain elites like the people who run these investment funds far greater power than they have in the political process. Because by fear, they can just declare this is how it's going to be. So my view has always been that managers should have no politics. Business should not be involved in politics or in any kind of social agenda, but it should be focused on achieving financial success. Investment funds should try and maximize the risk return relationship for their investors, not try to push for particular social aims or social goals. Once shareholders get their money, whether through dividends or whether through selling the stock or whether through just the wealth effect, they can then contribute money to any social cause they want. They can put pressure on politicians. They can send money to PACs and lobby and do what they want. Businesses should stay out of that game. The so-responsibility, as Miller Friedman said a long time ago, is to make money. Do it morally, do it responsibly, do it in a way that does not alienate the people who you're trading with, but that's all part of maximizing shareholder wealth. If you alienate your customers, you're not going to maximize shareholder wealth. If you alienate your employees, you're not going to maximize shareholder wealth. If you alienate the so-called community, you're not going to maximize shareholder wealth. We need to fight the CSG movement. I think the only way to fight it is to take up the morality of the profit motive. It's right. It's just for companies to pursue profit. It benefits all of us when they do, but they're not, they are producing, they are creating, they are making. I mean, we don't have enough of an appreciation for how much business actually creates in the world around us. We don't have enough of an appreciation for the value the business creates for us and for the people in these businesses and what they do. So ESG is just a new way of bringing in old ideas. It's a new way of effectively attacking the profit motive. It's a new way of trying to undermine capitalism and free markets. It's, I fear, a particularly effective way because our investment funds have grown so big and they have become so powerful. And again, why have they become so big? Why have they become so powerful? Is that a consequence of capitalism or something else? I would argue it's not a consequence of capitalism. You can ask me why BlackRock even exists. It doesn't exist because of capitalism. It would never be this big under capitalism. But we need to resist the urge of ESG. We need to resist stakeholders and we need to do it by celebrating the success and the virtue of the profit motive. Thanks guys and I'll take any questions you might have. Thank you for listening or watching The Iran Book Show. If you'd like to support the show, we make it as easy as possible for you to trade with me. You get value from listening. You get value from watching. Show your appreciation. 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