It’s not just ESG, it’s BHD and it’s a BFD
Apparently, we still need government to legislate basic human decency.
Basic Human Decency (BHD)
President Biden just quietly used his first veto in defense of ESG and it’s a BFD (big f*ing deal). Here’s the situation:
Environmental, Social, and Governance (ESG) investing refers to a set of voluntary standards investors can use to screen investments based on their environmental and social impact, as well as their internal behavior, including treatment of workers and diversity in hiring and management. It is now a fairly common practice for investors.
ESG often means not investing in fossil fuels, which is why certain companies and political figures are itching to get rid of it. When Republicans refer to “woke” investing and “woke” corporations, this is usually what they are talking about.
NOTE: Do not repeat their terminology!
Former President Trump passed rules discouraging state retirement funds from using ESG standards. In November, President Biden loosened those rules. Twenty-five GOP-led states sued the Labor Department to overturn the new rules, and a few weeks ago, the U.S. House and Senate passed bills to do the same. Today, President Biden used his first veto in defense of the rights of investors to use ESG standards if they so choose.
Here's my question:
Why would investors need special permission to consider their impact on human beings and society as a whole? Why would any corporation? Being a responsible person and practicing basic human decency should be the default, not the exception. Sadly, in our economy, greed is out of control and the exploitation of workers, consumers and our natural environment is standard operating procedure. We have the right to use government to legislate the boundaries between acceptable and unacceptable behavior. At what point does economic exploitation cross the line? This question goes right to the heart of conservatives’ fifty-year war on government.
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People on both sides of the aisle are angry and frustrated with big corporations, but sometimes, our public debate lacks the right language to address what is going on. The problem is that, while you can feel something without words, you can’t reason about it without words. That inability to intellectually process or communicate feelings or experiences because you don’t have the right words, is called hypocognition.
What do we call it when high risk banks like SVB lobby to exempt themselves from stability “stress tests”? What do we call it when railroad company executives force their workers into intolerable permanently-on-call schedules, or take risks with people’s lives by lobbying to gut brake safety rules?
What do we call it when apartment landlords hold units off the market and collude to keep rent prices high? What do we call it when hospital managers understaff nurses, creating grueling schedules and making it impossible to give their patients the care they need?
What do we call it when the actual business plan of America’s second biggest employer is to hire people, use them up in two or three years and then replace them? What do we call it when oil company executives know the damage they are doing to our only survivable human habitat but fund campaigns to deny the truth?
People may not know what to call this, but they’re definitely feeling it. While small businesses are viewed positively by 80% of Americans, large corporations are only viewed positively by 25%.
Exploitation and Greed
The term “inequality” as in “record wealth inequality” is a macro-economic abstraction. It conveys very little of how inequality actually feels to people. People feel that our economic system is increasingly unfair. People feel like large corporations are taking advantage of people.
In a recent issue, I talked about how people want us to fight for “economic fairness.” Americans were raised to believe that if we work hard, people will treat us with respect and pay us enough to raise a family on. More and more, people believe that large corporations aren’t holding up their end of the deal.
The common thread between all of the above situations, is that due to the size of these companies, or their access to massive pools of funds and/or new technology that allows for processing massive amounts of information, they have an unfair power advantage over regular people. They also use this disproportionate power to influence government, to change the laws intended to prevent this kind of behavior.
This problem needs a name, and “un-fairness” doesn’t quite get the job done. That name could be “exploitation.” It has the right meaning: “taking advantage of an imbalance in power to benefit from the unfair or even inhumane treatment of others.”
The most politically effective trigger language creates associations: it neurologically transfers useful qualities to whatever is going on.
The term “exploitation” is more commonly used in the context of sexual exploitation, but that works fine for our purposes because people are (if only metaphorically) getting screwed.
“Exploitation” triggers visceral and unquestionably negative moral judgment. Part of that judgment comes from the accusation of a negative motive: greed. The terms “exploitation” and “greed” escalate acts of “unfairness” and “taking advantage of people” to a level of greater moral urgency. They make us feel like this behavior should be illegal.
The Republican War on Human Decency
The Republican culture war against ESG would actually require people to remove the consideration of basic human decency from their investment decisions. To them, if you can make money by ruining people’s lives, you should. According to the doctrine of shareholder primacy, you even have a moral obligation to do so.
As usual, Republicans have their own moral narrative: a version of events in which their behavior is morally right. When they talk about the obligation banks and companies have to the people whose retirement funds they are investing, they are making an assertion about what is morally right.
Our response so far has been centered on the idea that ESG issues can pose a financial risk to investors.
“I just signed this veto because the legislation passed by congress would put at risk the retirement savings of individuals across the country. They couldn't take into consideration investments that would be impacted by climate, impacted by overpaying executives, and that's why I decided to veto it.”
This validates the Republican position that returning the highest possible profits to investors is the only valid consideration.
What if your evaluation shows that not capping your old oil wells and letting tons of methane leak out into the atmosphere is your soundest financial decision, because you have successfully externalized the costs? Just-in-time scheduling, skirting safety rules and other exploitive practices are being used because they are highly profitable.
We frequently make the strategic mistake of trying to argue rationally with Republicans on their terms. This rarely works. Instead, we need to make an emotional appeal about what’s morally right. We need to reframe the situation from the perspective of our values. We believe that behavior that exploits people, society and our environment is morally wrong, no matter how profitable it may be.
Lately, Robert Reich, one of our favorite economic voices, has been using the terms “democratic capitalism” and “corporate capitalism.” His terminology captures the heart of the problem:
Do we, the American people, have the right to cooperate, using the tools of democratic government, to make rules about what kind of economic behavior is or isn’t in the best interest of our society?
Of course we do. We make laws about fraud and white-collar crime. We have laws banning child labor and setting the minimum wage. We have the constitutional authority to “regulate commerce.” Between crypto pyramid schemes, collapsing banks and train crashes, stronger government oversight and regulation of economic behavior may be more popular than ever.
Some people would like us to forget that we have that right. They would like us to believe that the freedom to seek profit is different than all other behaviors, that somehow it falls outside the reach of governmental authority.
The Big F*ing Deal
The Federalist society. Trump. The culture wars. Citizens United. The “major questions” doctrine. If you ignore what conservatives say and focus on what they actually do, the mission of the Corporate Right is to crush the ability of the American people to decide what limits there should be on economic activity and rein in the abuse of accumulated economic power.
President Trump’s Commission on Unalienable Rights, led by then Secretary of State, Mike Pompeo, concluded that private property (the right to seek profit by any means necessary), and religious freedom (the right to discriminate on religious grounds) are the most important human rights. For this activist, pro-corporate judicial movement, these rights are unalienable, which is to say, they should be outside the reach of majority rule.
Robert Reich’s term “democratic capitalism” reminds us that capitalism should operate in the service of society, and under democratic authority, while “corporate capitalism” is a useful descriptor for capitalism in the service of private corporate power, operating beyond the reach of, or able to supersede, democratic authority.
The Bottom Line
The public debate is about right and wrong. What’s morally right is economic fairness. Taking advantage of an imbalance of power to benefit financially from the unfair or abusive treatment of others is economic exploitation. Using terms like “greed” and “exploitation” effectively conveys that these actions are morally wrong.
Just because you can profit by taking advantage of people, that doesn’t mean you should. If people can’t act fairly and respect basic human decency on their own, then we have an obligation to each other to make laws and rules to ensure fairness and basic human decency. Republicans have been working and organizing for decades to demonize government and spread constitutional theories that would make it much more difficult for us to protect ourselves from behavior that is detrimental to society.
We could also use the following terms: “democratic capitalism,” defined as an economic system that operates in the service of society, under democratic authority, and “corporate capitalism,” defined as an economic system that operates in the service of private profit, beyond the reach of democratic authority. These terms could serve to remind us of our right to make collective decisions about economic behavior.
“Behavior that exploits people, society and our environment is morally wrong, no matter how profitable it may be.”
“Human decency, whether in the form of rooting out discrimination, treating workers like partners and human beings with lives and needs, recognizing that you can only squeeze consumers so far, or that we share responsibility for stewardship of the planet, ought to be the default behavior for our society, not the exception.”
“ESG is basic human decency. Investors shouldn’t have to ask permission to say, ‘I don’t want to invest in companies that exploit people’.”
“When does profit maximization become exploitation? Where do we draw the line?”
“It's okay to make a profit. It’s not okay to screw people over in order to do it.”
“It’s okay to make money. It’s not okay to use that money to buy political power.”
“We have the right to outlaw child labor, to outlaw fraud and wage theft, to outlaw dumping your pollution in the river. How is this different?”
Thanks, as always, for reading and subscribing. I hope you are able to use this in your work and your activism!
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Capitalism does not include anything about human decency. This has to be legislated.