The European Union marches toward socialism
A few weeks ago, there were heated discussions in the European Union about the so-called “Taxonomy” rule. This will give the EU Commission and other European authorities the power to determine which investments are good (i.e., green and sustainable) and which are not.
The classifications issued in Brussels would then steer investors’ money in the “right” direction. The main bone of contention was whether nuclear energy and natural gas should also be deemed “sustainable.” The French and the Eastern Europeans were in favor, but the Germans opposed.
Now, the EU Commission led by Ursula von der Leyen has proposed a new idea: European politicians are again focusing on “social sustainability.” And again, companies are to be classified. Except this time, it will not be according to environmental aspects but rather to a catalog of “social” criteria.
If politicians and civil servants feel a company is not paying its employees the “right” wages, they can classify that business as harmful to society. For example, if EU politicians feel members of the board of directors are earning too much compared to an average employee, this would be interpreted as another indication of social perniciousness. If politicians and officials believe the rents a real estate company charges should be lower, there is a risk the company would be classified as detrimental to society.
Whether companies serve the “public interest” will then be decided by political committees, not the market. Lobbyists will likely be delighted because they now have a whole new area of business: convincing politicians why their company is “socially beneficial.”
Of course, none of this has anything at all in common with a market economy.
https://www.washingtonexaminer.com/opinion/the-european-union-marches-toward-socialism
“The classifications issued in Brussels would then steer investors’ money in the “right” direction.”
What in the world would this have to do with a company’s profits? I see a lot of people losing money this way.
Or am I thinking about it wrong? A green company’s stock would go up because of the money pouring in. However the company is likely not to be profitable if it follows the green and social rules. I guess if investors money keeps pouring in that would keep it afloat? I’m getting myself confused