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Horror author Stephen King once wrote, “Sooner or later, everything that is old becomes new again.” The US stock market and investor confidence have deteriorated significantly since Donald Trump’s re-election. The reason is simple. After a decade of apologizing for not being progressive enough on causes ranging from the environment to diversity efforts to support for Palestine, investors are confident that companies will once again deliver value to shareholders without apologizing. I know I can focus on delivering.
The horrors of stakeholder capitalism are finally over.
In 1970, eminent economist Milton Friedman said, “A corporation has only one social responsibility: to utilize its resources and engage in activities aimed at increasing its profits, as long as it remains within the rules of the game.” “It is something to do.” , engage in open and free competition without deception or fraud. ”
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For the next 44 years, American business focused on shareholders. Their European counterparts did not. Across the pond, Europeans were embracing stakeholder capitalism. This is a bit of a misnomer, as this is not actually capitalism. This is a theory popularized by Klaus Schwab and the World Economic Forum that states that the purpose of a company is to maximize value for all stakeholders, including community members, activist groups, nonprofit organizations, and government agencies, not just shareholders. It is about becoming.
Stakeholder capitalism, which is not capitalism at all, was promoted by the World Economic Forum (WEF) and its founder and executive chairman, Klaus Schwab. (Reuters/Arnd Wiegmann)
American capitalism has produced superior stock market returns and broad social benefits. US GDP has grown 16 times since 1975. Europe grew only 11 times. Per capita income tells a similar story, with the United States dwarfing Europe in per capita income by a nearly 2:1 ratio.
But for many progressive institutions, improving people’s fortunes was not enough. After the Great Recession, European Sovereign Wealth Funds, Ivy League Funds, Blue State Pension Funds, ESG Promotion Asset management companies like BlackRock It required American corporations to gain a social “license” by using corporate power to shape society in ways that elite leftist organizations deemed prudent.
The stakeholder camp was particularly encouraged when President Trump first took office and withdrew from international agreements such as the Paris Climate Accord and the United Nations Human Rights Council. Businesses ended up doing jobs that the government did not do. In response, the Business Roundtable, a group of 200 U.S. CEOs, fundamentally changed the purpose of companies in 2019. Companies now have a “fundamental commitment to all stakeholders,” not just shareholders.
The impact was immediate. American corporations were at the mercy of progressive stakeholder activists who were far more noisy than everyday shareholders.
Oil and gas companies can no longer focus on providing Americans with affordable, reliable, and abundant energy sources. Instead, they had to apologize to activist groups for their carbon emissions and build net-zero targets without caring what future energy demand would be.
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Internet companies can no longer connect people’s social graphs online or provide a public forum for discussing ideas. They are now forced to apologize for “misinformation” and “hate speech” on their platforms, although the definition varies depending on the political cause at hand.
From beer companies to entertainment powerhouses to retailers, consumer companies can no longer just advertise their products. Instead, they have to apologize for their lack of diversity, equity, and inclusion (DEI) and bow to groups like the Human Rights Campaign, which demand more LGBTQ+ marketing campaigns and gender transition guidelines. Ta.
Businesses can no longer support the military and police. Instead, companies have started apologizing for their role in perpetuating systemic racism and donating hundreds of millions of dollars to organizations like Black Lives Matter to pay tithes. Ta.
American capitalism has produced superior stock market returns and broad social benefits. US GDP has grown 16 times since 1975. Europe grew only 11 times. Per capita income tells a similar story, with the United States dwarfing Europe in per capita income by a nearly 2:1 ratio.
However, the tide has changed. Stakeholder capitalism’s objective of producing maximum profit with maximum social good was an illusion. The result was more of a horror story. Companies have wasted billions of dollars on stakeholder-friendly ESG and DEI programs that have not delivered shareholder value and in many cases destroyed it. Society was not good either. Inflation was high, wage growth was low, and consumer confidence was low. In the run-up to the election, society has become more polarized than ever before.
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But freedom is right in front of you. Looking ahead, companies are beginning to unburden themselves from stakeholder burdens. Unpopular programs like ESG and DEI were already on life support before President Trump was elected. Now it’s unplugged. President Trump has signaled his intention to eliminate ESG considerations from retirement plans and crack down on ESG shareholder proposals. Companies such as Tractor Supply, Harley-Davidson, and Miller Coors have already eliminated their ESG and DEI programs. And they did so without apology.
The market has responded favorably. american capitalism is on the rise again. The old way of doing business is new again. Hopefully more companies will follow suit. The stakeholder capitalism horror series definitely doesn’t need a sequel.
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