For most of rich America, the prioritization of deregulation and lower taxes drove corporations and their richest shareholders, directors and officers to the feeding trough of the Republican Party seeking contributions. Billionaire Trump, willing to perform complicated dance steps to garner MAGA social conservatives, coincidentally was the proponent of the great 2017 slashing of the federal corporate income tax rate from 35% to 21%, falsely pledging that these “job creators” would reignite “a rising tide to float all boats.” Instead, very few new good jobs were created, buybacks and dividends exploded… but as a result, the federal deficit continues to generate a multi-trillion-dollar steady increase and a GOP demand to cut “entitlements.”
But liberals and conservatives often press corporations to embrace and prioritize their ideological mandates. Some of these “presses” are to address existential threats that are exacerbated by corporate indifference or a need to increase profits. Climate change, for example. Others are to reduce governmental regulatory “helicoptering” over internal corporate strategies and policies. At first blush, the former “climate” initiative would seem to be a liberal directive and the latter a conservative prerogative. Enter MAGA and “culture war” warrior and one of the current two GOP frontrunners for the party’s nod as its nominee for president: Ron “anti-woke” DeSantis. And a lot of corporations are worrying over government interference where it has never been.
Whether you agree with Disney’s support of its significant LGBTQ+ cadres of employees or not, opposing legislation that would legitimize discriminatory practices against this demographic, you’d think that maintaining good morale within a major segment of a company’s employees would be an appropriate corporate focus. You might also believe that a company so engaged would be well within its rights to proceed to implement their policy and push back on government efforts to the contrary.
Well, we all know that Florida Governor Ron DeSantis launched a head-on attack against Disney World and its longstanding jurisdictional prerogatives as to its land and the surrounding area. DeSantis’ control over the MAGA dominated Florida legislature attempted to terminate Disney’s rights, place a very anti-Disney board over those properties and end Disney’s support of “woke” policies. Disney did an end-around before the new board took office… and mutual piles of litigation, which will cost Florida taxpayers plenty, has moved this culture war to the courts. But to corporate America, the message is clear: States and local governments can punish companies within their jurisdictions for not embracing the political ideologies of those in power… unless courts put an end to this hostage-mentality. Remember, this anti-woke culture war is raging throughout red state America. Corporate America is watching… and is not happy about what this means for their ability to do what they perceive is best for their shareholders.
But now, this attempt to control what used to be lawful business and investment decisions as a private company choice has now lifted into the investment committee executives within investment and merchant banks, private equity funds and pension fund deciders. Attempting to attract a certain kind of investor, many such financial institutions have created investment parameters that include policies that resonate with the particular values of targeted investors. Unfortunately, many of these values conflict with those of the relevant state officials.
As a result, we have seen a number of red state executive orders and legislative directives that prohibit such financial institutions from instituting such investment qualifiers. For example, nothing annoys red state legislators and governors in fossil fuel-heavy jurisdictions more than fostering alternative energy at the expense of carbon-based extraction. Likewise, preferring companies with focused diversity, equity and inclusion (DEI) programs is also popular with a segment of investors. Not so with red state elected officials. And many of these red state officials have outright banned funds from operating within their borders if they embrace such “ESG” preferences in their funds.
Writing for the May 13th FastCompany.com, Clint Rainey, describes the surrounding landscape: “At the World Economic Forum in Davos, Switzerland, earlier this year, Coca-Cola CEO James Quincey admitted that the forceful backlash to environmentally and socially responsible business practices by U.S. conservatives have made so-called ESG (environmental, social, and governance) principles ‘toxic’ in America. But he explained that the soda giant would not be abandoning them—oh no. ‘I’m just going to stop saying ‘ESG.’ ’
“Such stubbornness in the face of mounting pushback, not only from Coke but also woke Wall Street banks, woke theme parks, and woke sports leagues, is proof to the nascent anti-ESG movement, which has sprung up on the political right, that there is a mind virus that, to quote one leading critic, the former fast-food CEO Andy Puzder, is ‘more insidious than communism or the Nazis.’…. Anti-woke Republican presidential candidate Vivek Ramaswamy writes about Quincey’s Davos admission in his new book, Capitalist Punishment, arguing that Coca-Cola’s ‘bid to chase the freshest buzzword while dodging scrutiny’ ought to ‘draw alarm from regulators.’
“Ramaswamy, the high-haired, quick-tongued face of the anti-ESG movement, deftly signals to corporate leaders that merely backing off their public extolling of ESG will not satiate their concern that businesses have been captured by the political left. This new counter force has sprung up rapidly in the last few years and united everyone from canceled business execs to evangelical thought leaders to Silicon Valley techno-capitalists. Together, they’re mounting an aggressive response to the belief, now widespread in corporate America, that businesses ought to have a ‘social purpose beyond financial performance,’ in the words of BlackRock CEO Larry Fink, the face of ESG who is the movement’s favorite villain.
“This coalition feels strongly that corporate America has abandoned the political right, convincing at least this cadre that Big Business is now threatening freedom as much as Big Government, all because of the rise in companies adopting pro-ESG initiatives such as net-zero emissions and boardroom diversity and the investment products that incentivized this behavior.”
In fact, this anti-woke constituency seems to believe that only its ideology is appropriate; they also miss the bigger issue: whether it is remotely the business of any governmental entity to micromanage otherwise lawful investment and marketing strategies. Be careful what you ask for. Aside from the 1st Amendment issues being litigated, there is a non-legal maxim that should be restated: “what’s good for the goose is good for the gander.” And welcome to the resulting rich-folk, former GOP donor backlash, against anyone interfering with the traditional right of businesses to make business decisions. DeSantis is already witnessing this firsthand. DeSantis writes about “freedom” and then proceeds to destroy those who try and practice it.
I’m Peter Dekom, and unless this polarization accelerant is nipped in the bud, given the rising anger from major funds and corporations, Republicans, you ain’t seen nothin’ yet!
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