Florida’s Divestment From BlackRock’s ESG Hijacking Is Sound Public Policy

Newsweek – “Florida is where woke goes to die,” says the state’s governor and likely future presidential candidate, Ron DeSantis. Florida Chief Financial Officer Jimmy Patronis home drove the point last week, when he announced that our free state will divest $2 billion from BlackRock, the behemoth asset management firm run by lifelong Democrat Larry Fink.

At issue is BlackRock’s use of so-called “ESG”—”environmental, social, and governance”—principles to coerce companies in which it invests to adopt policies demanded by the radical Left. Instead of maximizing investor profits by addressing standard business considerations, BlackRock’s dubious priority, in effect since at least 2018, is to use its massive financial leverage to foster “progressive” social and cultural change and, in Fink’s guilty white liberal formulation, change the nature of global capitalism itself.

“Using our cash to fund BlackRock’s social-engineering project isn’t something Florida ever signed up for,” Patronis said in a released statement, “It’s got nothing to do with maximizing returns and is the opposite of what an asset manager is paid to do.” Accordingly, Florida will immediately remove $600 million in short-term investments from BlackRock and freeze another $1.43 billion in long-term securities, pending their reassignment to new management in early 2023.

The move follows an August 2022 resolution by Florida’s Board of Administration, chaired by DeSantis, which requires financial managers to invest in a way that “prioritizes the highest return on investment” and specifically excludes ESG considerations.

In October, Louisiana and Missouri also removed substantial amounts of capital from BlackRock’s management, while a total of five states have placed general restrictions on ESG investments.

BlackRock’s ESG integration policy statement mysteriously became “unavailable” on its website in the hours after Patronis’s announcement, but other material that remains accessible should sound off alarm bells for any responsible investor. BlackRock is “committed to putting sustainability at the center of our investment process,” one such passage reads, “based on the conviction that integrating sustainability-related information into the investment process can help our portfolio managers manage risk and make better informed investment decisions.” BlackRock makes no attempt to claim that a conviction-based investment strategy has ever created meaningful financial gain for investors, but it does seem worryingly at ease telling Americans that they should entrust their retirement savings—the firm’s major asset category—to somebody else’s idiosyncratic feelings.

In another odd statement, BlackRock insists “there is increasing awareness that material ESG factors can be tied to a company’s long-term performance.” Whether there is any actual evidence of such a connection is an unanswered question—likely because there is none—but the semantic sleight of hand seems intended to push woke ideology over the best financial interests of investors who might not be “aware” of where their money is going.

More mercenary considerations may also be at work. In 2021, no less an authority than Tariq Fancy, who served as BlackRock’s first “global chief investment officer for sustainable investing,” blew a whistle on the entire ESG-based investment industry and denounced it as “vacuous” and a “ruse.” He also alleged that investment firms bill higher management fees for ESG funds than for ordinary funds, thereby incentivizing their own promotion of ESG. According to figures reported by The Wall Street Journal, fees for ESG funds average about 40% higher than fees for standard funds. That’s a lot of greenbacks for green energy. But even then, as Fancy has suggested, “it’s not totally clear” if investments directed toward ESG goals, including more measurable ones such as environmental protection, make any practical difference. It could be that they only exist to signal virtue and pad revenue sheets due to the higher fees, allowing BlackRock to pay Fink his $36 million salary.

Regardless of the rationale, Paul S. Levy, who founded New York private equity firm JLL Partners and is now a Florida resident, told me that “BlackRock and its ilk are violating their obligations to the fiduciaries and should be held to account for infusing investment decisions with their personal values and political views.”

Levy’s new home state leaves no doubts on the issue. “I’m signing up to take care of the state of Florida’s money and look out for the taxpayers,” Patronis said in an accurate summary of his job description a day after his announcement.

There is ample evidence that the free market is joining with responsible state governments to reject BlackRock’s tomfoolery. Netflix, which aggressively adopted diversity, equity, and inclusion (“DEI”) principles into its corporate strategy—not coincidentally after receiving billions in investment from BlackRock—watched its stock price plummet from an all-time high of $690.31 in October 2021 to just $166.37 in June 2022. Defying projections that the streaming service would add 2.5 million paying subscribers in 2022, it instead lost 1.5 million subscribers in the first two quarters of this year.

No sane person could describe this outcome as a success, but Netflix began to recover as soon as it jettisoned DEI, embraced free speech principles, laid off hundreds of its “diversity”-minded content creators, and modified its content accordingly. As of last Friday, its stock price was back to $320.41. In the third quarter to 2022, the service added 2.4 million subscribers. BlackRock’s ownership stake has correspondingly declined, from 6.6% in March 2020 to 4.2% now. Coincidence?

Astonishingly, BlackRock still claimed to be “surprised” by Florida’s divestment. But now that it realizes not all of its investors are self-abnegating MSNBC viewers, BlackRock is clearly in defensive mode. Attempting to gaslight the third-most populous state’s investors, it issued a risible statement declaring, “We are disturbed by the emerging trend of political initiatives like this that sacrifice access to high-quality investments and thereby jeopardize returns, which will ultimately hurt Florida’s citizens.” One might wonder if “high-quality” is the same as “profitable,” or if the jeopardized “returns” are “financial” in nature, but the issue never would have arisen without BlackRock’s reckless politicization of Floridians’ investments.

“Fiduciaries should always value performance over politics,” the statement patronizingly continued. Maybe now BlackRock will do that, too.

The Banality of Good

Tabletmag.com – In his recent book, Mattias Desmet takes on a new totalitarianism not enforced by jackbooted thugs, but dull bureaucrats imposing consensus.

It might have been expected that the first scholarly study of what has happened in our society over the past few years should hail from abroad, where nonwoke discourse remains far freer. Mattias Desmet has said that his 2022 book The Psychology of Totalitarianism was received with some caution in his home country of Belgium, but he has yet to suffer any consequences in his career as an academic clinical psychologist and practicing psychotherapist. Tellingly, his book’s English translation was not picked up by any notable American or British publisher, virtually all of which are reliably woke, but by rural Vermont’s Chelsea Green Publishing, a small employee-owned and self-distributing house whose books are mainly about sustainable craft farming. From this humble entry into the marketplace of ideas, Desmet has won right-wing celebrity and attracted attention from such prominent media personalities as Tucker Carlson and Joe Rogan. His book has topped Amazon’s bestseller lists in relevant political science categories, consistently exceeding sales of similar recent books by Timothy Snyder, Jason Stanley, Rod Dreher, Ruth Ben-Ghiat, and even the perennially popular classics by Friedrich Hayek, Robert Paxton, and Hannah Arendt, whose Totalitarianism (1951) is the jumping-off point for Desmet’s analysis.

Desmet seeks to improve upon Arendt’s thesis with the argument that the “soft” totalitarianism she predicted would evolve after the horrors of Nazism and Stalinism is now a nightmare come true. Our current tyranny is not the menacing dictatorships of old, which were built on fear and operated by compliant functionaries practicing banalized evil, but by a subtler regime enforced by “dull bureaucrats and technocrats” convinced that they are advancing a greater good for humanity. The new agents of persecution are not jackbooted secret police thugs instilling fear, but almond milk latte-swigging university officials imposing unpleasant consensus. George Orwell’s vicious O’Brien has yielded to Ken Kesey’s passive-aggressive Nurse Ratched.

Much of the book dwells on how we got here. Desmet traces the evolution of human societies from the scientific revolution, when free inquiry battled with religious dogma to understand the natural world per se. Confirmed by the Enlightenment’s triumphant claims to have found the correct path forward, not merely for science but for society, we entered a modern era defined by what he calls a “mechanistic ideology” that held out “the utopian vision of an artificial paradise” as a perfect, and inevitable, future. The universe and everything in it, to the purely scientific mind, thus follows impersonal patterns and motions that science alone can reveal. Potentially, this offered humans immense power and insight, but it also reduced them to existence without meaning or purpose. As a result, industrial economies instrumentalized people, separating them from community, traditions, imagination, nature, emotions, the fruits of their labor, and other factors that had once made life worth living. As a result, atomized individuals developed a generalized and unmoored anxiety that could be resolved when focused on an object or scapegoat that was assigned responsibility for their plight. Collectively blaming a common object of loathing primed these populations for rule by “masters,” leaders who played to their atavism to build a new society united by little more than submission to their generalized authority.

This process of “mass formation” allowed early totalitarians to appeal to science or, more likely pseudoscience, to justify the new status quo and carry out outrages and absurdities. Those regimes, however, were isolated, short-lived, and prone to internal collapse. The new totalitarianism of which Desmet warns is far more pervasive. As science and technology exploded in recent decades, popular faith in them “tipped from open-mindedness to belief.” The values of free inquiry and spirited debate, of regarding hypotheses merely as assertions that had yet to be disproved, were overwhelmed by a new dogma determined not by priests, but by practitioners. For those who followed, “science became ideology.”

Desmet’s notion that mass formation, and consequently totalitarianism, “are in fact symptoms of the mechanistic ideology” struck him strongly during the COVID-19 pandemic. Globalized information technology not only helped spread the virus, but also united the world in what he calls a “Great Leap Forward” toward “totalitarian technocracy.” Confined to near house arrest, with strict limitation on mobility and human contact, a new and purer form of atomization seized the minds of anxious publics looking for enemies to blame and dissenters to punish. “Never before were the societal conditions so prone to totalitarianism,” Desmet argues, as they have been in the last few years. To add empirical insult to psychological injury, many establishment precepts initially advanced as irrefutably sound turned out to be exaggerated, contingent, harmful, and, in some cases, simply wrong, with little or no accountability for individuals and institutions that had erred but still clung to authority.

Despite these deficiencies, a confused and traumatized bulk of society still indulged in “a kind of intoxication” in their new sense of belonging. As we saw all too often in our own country, those who shamed the unmasked or unvaxed, who snitched on their neighbors for noncompliance, who kept schools and places of worship closed, were formed into a new mass “convinced of their superior ethical and moral intentions and of the reprehensibility of everything and everyone who resists them.”

One might quibble with Desmet’s arguments about the extent to which “the Science™” got things wrong, or riposte that the unknown severity of the virus excused overreach, but it is difficult to argue that the pandemic fundamentally accelerated extant trends in how our society is monitored, who has overweening authority over it, and what the consequences of noncompliance can be. The book might have enjoyed even greater success if Desmet had considered the complementary woke phenomena ushered in by the #MeToo movement, critical race theory, radical gender ideology, and their consequences for free speech and behavior. Like COVID and its performative safetyism, all of those orthodoxies advanced broad social controls based on emotion, anxiety, and shaky data, much of which have also been exposed as exaggerated or fraudulent. Strikingly, they emerged in the Anglosphere at times that overlapped with the pandemic. The technocratic authorities who enforced them were similarly bland, bureaucratized, and in most cases protected from any significant liability. We might forgive Desmet for leaving them out, however, for the collective hysteria around race, gender, and sex did not travel well outside of the English-speaking world.

The question we should all be rushing to answer, of course, is how to fight back. Desmet parrots the standard middle-class professional’s argument that dissidents should speak out, but only in polite, sincere ways that avoid antagonizing the dominant ideology. His hope is that this will penetrate the mass formation sufficiently to expose its dynamics to broad majorities who go along with it without necessarily believing in it. He would know better if that could work in Belgium, but Americans have already amassed decades of evidence showing that this spells failure, if not disaster. However strongly worded their letters may have been, polite dissenters have proved remarkably easy to ignore for at least the last 50 years. Meanwhile, increasingly powerful woke mandarins have implemented their agenda of social control, long secure in the knowledge that their opponents were little more than gracious losers. Like him or not, it took the abrasive Donald Trump and his army of “deplorables” to challenge this dismal outcome with considerable success, through aggressive media activism, the majesty of the law, and perhaps most significantly, ridicule that no tyranny can withstand.

That phenomenon might merit study if Desmet wishes to examine the question of what should come next, but he favors a far more idealistic solution. Perhaps predictably, he places a great deal of faith in his own academic discipline, advocating for a more psychological than physical or biological approach to the human condition. “The real task facing us,” he writes, “is to construct a new view of man and the world, to found a new foundation for our identity, to formulate new principles for living together with others, and to reappraise a timely human capacity—speaking the truth.” He may be comforted to know that more and more people across the Atlantic are now doing precisely that, over the furious opposition of our would-be totalitarian rulers, who believe truth is a monopoly that belongs to them.