Free Republic
Browse · Search
Topics · Post Article

Skip to comments.

The Long-Term Negative Effects of ESG Will Be Catastrophic
The Epoch Times ^ | February 4, 2023 | Tom Czitron

Posted on 02/05/2023 1:17:57 PM PST by george76

Environmental, social, and governance (ESG) has been a hotly debated topic over the last few years. The seemingly unquestioned march towards corporate utopia has met with resistance among those who oppose the idea that government oligarchs should dictate the affairs of private business firms. The long-term effects of the ESG movement are largely ignored by the mainstream.

ESG is largely justified on the basis that corporations and financial institutions should be socially responsible. They should work obsessively to address the perceived menaces of climate change, racism, sexism, and a host of subjects. Our benevolent political and economic elite define what is virtuous and what is not for a grateful public.

Corporations are compelled to enact policies that will reduce carbon dioxide in the atmosphere, eliminate perceived negative economic outcomes against aggrieved groups, and be “sustainable,” as well as other virtuous goals. It matters little to the “select group of human beings,” as John Kerry called them, who are tasked with “saving the planet” that many of their solutions to these existential challenges are far more harmful than their worst-case scenarios.

The Friedman Doctrine, named after the eminent Chicago School economist, states that the sole responsibility of businesses is to maximize long-term shareholder value. I was exposed to this view in 1980 when I attended the University of Toronto’s Master of Business Administration program. I was surprised by the moral certainty and simplicity implied by the statement.

I remember our professor being challenged by my class on two fronts. One was the issue of charitable donations. That argument was quickly dispatched when it was pointed out that corporate CEO’s had no moral right to give away shareholders’ money. It was not theirs to give. If the benevolent CEO wanted to make charitable donations out of his own pocket he was free to do so. Shareholders had this same ability.

The other argument we put forward appeared a more difficult one for our professor to argue against, or so I believed. What about “social responsibility”? Surely, companies should not pollute, produce dangerous products, or underpay their employees. Without going into minute details, he argued that corporations were subject to the discipline of the marketplace, laws, and regulations (albeit at that time over-regulation). Underpay your workers? They would be hired by others willing to pay them more and your business would suffer due to poor employee productivity. Dump toxins into lakes and rivers? There were laws against that and the bad publicity would harm profitability. It would be counterproductive for a company seeking long-term shareholder value to produce hazardous products.

What is clear is that the Friedman Doctrine, also called shareholder theory, maximizes not only long-term shareholder value, but economic utility as a whole. If the senior management of firms did not maximize shareholder value they would be in breach of their duties. I contend that if the Friedman Doctrine maximizes economic utility, then ESG syllogistically yields suboptimal outcomes. In fact, the negative effects of ESG will be catastrophic. Those who doubt that contention have never noticed the correlation between a nation’s average income per person and life expectancy. ESG will literally kill people, if it is not already doing so.

ESG is socialism by stealth insofar as it enables central government economic planning without having to publicly acknowledge such and deal with the unpleasant repercussions of property confiscation. In the past, democracies could merely nationalize companies by forcing shareholders to sell their shares to the government. This was done frequently with products and services which politicians deemed essential, like utilities. In some cases, such as post offices, governments would simply provide a service that the public sector could not compete with due to heavy government subsidies or legislation to prevent private competition.

Totalitarian regimes like the Soviet Union would simply steal the property of owners for the public good and then attempt to manage those entities. Absent the need to compete, satisfy the consumer, appoint managers based on merit or earn a profit, these entities performed poorly. Any pushback was met with a trip to Siberia or a bullet to the head. Some socialistically inclined totalitarian regimes realized that it was far more efficient to allow the private management system to remain and be coerced, violently if necessary, to do the will of the government. Profits could easily be confiscated covertly by a system of corruption, or merely taxed away.

In a sense, ESG is a novel and brilliant way to place private corporations under the yolk of government. No longer would governments have to deal with having to pay shareholders a fair price. They would not have to use the threat of physical violence to coerce managers to do their bidding. The supporters of ESG merely had to bully companies into adopting policies that destroyed shareholder value by psychologically manipulating employees, shareholders, and the public into believing that these activities were virtuous.

Of course, all too many corporate leaders learned to “love their enslavement.” Why wouldn’t they? Instead of competing in a brutal capitalistic world, they had their markets protected by government dictate creating defacto monopolies and oligopolies. Senior managers would be heavily compensated for playing along, creating a billionaire and multi-millionaire parasite class.

Of course, this brave new world of “stakeholder capitalism” comes at a terrible cost. Economic efficiency declines precipitously. Also, this form of socialism is a huge transfer of wealth to senior managers and corrupt politicians at the expense of shareholders. Whereas as the old Soviet Union engaged in murderous robbery, and the methodology of fascist regimes were more akin to blackmail, stakeholder capitalism resembles a confidence game. In a confidence game, suckers willfully hand over their money in the hopes that the con man will give them a positive return.

ESG is an economic and moral affront to the very concept of private ownership. Shareholders are robbed. Their pension plans end up with less value than they otherwise would have. The managers they entrusted with their wealth, whether they are company executives or portfolio managers of their retirement funds, are betraying them. Yet those people will grow fabulously wealthy, not by excellence but by government edict. Government officials decide the winners and losers in a charade that resembles capitalism the way professional wrestling resembles authentic combat sports.

It is difficult to assess the numeric affect ESG will have on GDP over the next generation. It is early days and we hope and expect that this terrible idea will join the ranks of other missteps like Lysenkoism and apartheid. We will be significantly poorer in a generation than we would be without ESG. Therefore, life expectancy will be significantly lower than if we avoided ESG, especially for the poor in both developed and less developed nations.

ESG will literally kill millions. To a narcissistic and Machiavellian elite, however, this would be a small price to pay for personal wealth, diversity, and the average global temperature being half a degree less than predicted by climate change models.

TOPICS: Business/Economy; Front Page News; News/Current Events; Politics/Elections
KEYWORDS: 2030; agenda21; climatechange; esg; greatreset; reset; socialism; un
Navigation: use the links below to view more comments.
first 1-2021-39 next last

1 posted on 02/05/2023 1:17:57 PM PST by george76
[ Post Reply | Private Reply | View Replies]

To: TEXOKIE; Whenifhow; MileHi; Mr. Silverback; Alamo-Girl; abigailsmybaby; ...

UN Agenda 21 / 2030 / Great Reset . ( Let me know if you wish to be added or removed from the list.)

2 posted on 02/05/2023 1:18:50 PM PST by george76 (Ward Churchill : Fake Indian, Fake Scholarship, and Fake Art)
[ Post Reply | Private Reply | To 1 | View Replies]

To: george76

Even worse than MSG.

3 posted on 02/05/2023 1:22:15 PM PST by Colinsky
[ Post Reply | Private Reply | To 1 | View Replies]

To: george76
If only there was an American political party that would put a stop to this nonsense.
4 posted on 02/05/2023 1:23:04 PM PST by Major Matt Mason (To solve the Democrat problem, the RINO problem must first be solved.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: george76

Amazing how rebranded fascism sells so easily to liberals. Like it’s everything they’ve been waiting for.

5 posted on 02/05/2023 1:23:14 PM PST by Track9 (You are far too inquisitive not to be seduced…)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Track9

ESG is a cancer only the elitist leftist scumbag globalist benefit from

6 posted on 02/05/2023 1:33:23 PM PST by ronnie raygun
[ Post Reply | Private Reply | To 5 | View Replies]

To: george76
You realize the author began two immediate paragraphs with "Of course,"

Which proves you didn't even read that far.

Not only that, but you missed the conclusion where "Feng shui rill save everything, it's the ronery way!"

L. O. F. L.

7 posted on 02/05/2023 1:36:47 PM PST by StAnDeliver (Tanned, rested, and ready.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: george76

True fascism.

8 posted on 02/05/2023 1:38:10 PM PST by jacknhoo (Luke 12:51; Think ye, that I am come to give peace on earth? I tell you, no; but separation.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: ronnie raygun

“ESG is a cancer only the elitist leftist scumbag globalist benefit from”

Very true. But the majority of the “masses” will never understand that.

9 posted on 02/05/2023 1:42:41 PM PST by laplata (They want each crisis to take the greatest toll possible.)
[ Post Reply | Private Reply | To 6 | View Replies]

To: george76

WHEN the MILLIONS of WELFARE RECIPIENTS become RESPONSIBLE-—I will think about giving a damn.

10 posted on 02/05/2023 1:42:58 PM PST by ridesthemiles
[ Post Reply | Private Reply | To 1 | View Replies]

To: Colinsky

“Even worse than MSG.”

But better than STD. ;)

11 posted on 02/05/2023 1:45:23 PM PST by Diana in Wisconsin (I don't have, 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set. )
[ Post Reply | Private Reply | To 3 | View Replies]

To: george76
ESG is socialism by stealth...

Surely. But so is: BLM
Climate Change
Open borders
Critical Race Theory
Bail Reform
Gun Control
Earned Income Credit
Covid mandates
Defunding the police...

We have a hell of a mountain to climb here, boys...

12 posted on 02/05/2023 1:51:41 PM PST by fhayek
[ Post Reply | Private Reply | To 1 | View Replies]

To: fhayek

Soccer ? Lol

13 posted on 02/05/2023 1:54:40 PM PST by csvset (tolerance becomes a crime when attached to evil)
[ Post Reply | Private Reply | To 12 | View Replies]

To: george76

Time to go Galt and let the useful idiots starve.

14 posted on 02/05/2023 1:57:16 PM PST by joma89 (Buy weapons and ammo, folks, and have the will to use them.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: StAnDeliver
ESG is a novel and brilliant way to place private corporations under the yolk of government.

I guess that explains the sudden egg shortage. :)

15 posted on 02/05/2023 2:01:19 PM PST by Mr. Jeeves ([CTRL]-[GALT]-[DELETE])
[ Post Reply | Private Reply | To 7 | View Replies]

To: csvset
Soccer may be the worst of the lot. So stealthy that it even sucks in people around here. The enlightened globalists LOVE soccer. So much superior to our brutish, American football. Not fooling me for an instant.


16 posted on 02/05/2023 2:04:50 PM PST by fhayek
[ Post Reply | Private Reply | To 13 | View Replies]

To: george76

I hope that most conservatives have permanently moved on from the idea that empowering giant coporations is a good thing.

17 posted on 02/05/2023 2:13:31 PM PST by Arcadian Empire (The Baric-Daszak-Fauci spike protein, by itself, is deadly.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: ridesthemiles

Restore fathers to families and the number of women on welfare will plummet.

18 posted on 02/05/2023 2:14:28 PM PST by Arcadian Empire (The Baric-Daszak-Fauci spike protein, by itself, is deadly.)
[ Post Reply | Private Reply | To 10 | View Replies]

To: Arcadian Empire

I’m afraid that’s not going to happen until the thousand-year reign of the godly.

19 posted on 02/05/2023 2:21:30 PM PST by firebrand
[ Post Reply | Private Reply | To 18 | View Replies]

To: StAnDeliver


20 posted on 02/05/2023 2:25:33 PM PST by nicollo ("I said no!")
[ Post Reply | Private Reply | To 7 | View Replies]

Navigation: use the links below to view more comments.
first 1-2021-39 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794 is powered by software copyright 2000-2008 John Robinson