"The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities." - Ayn Rand
There are too many important things to discuss, and not enough time nor space. Therefore, I will provide a menu-style update this week, walking you through topics such as:
the lie of ESG investing
how US Democrats and Republicans unite in the name of a new “war on terror”
CCP’s brainwashing Chinese children with Xi’s personality cult
the rise of economic fascism in America
the story of Elisabeta Rizea, a Romanian woman who opposed the totalitarian left
So let’s get started. But before we do, please consider subscribing.
The lie of ESG “investing”
In my view, despite the ethical aspirations, ESG (Environmental, Social and Corporate Governance) “investing” has always been a scam for a long list of reasons which include:
it is political more than economically or financially sound;
it is almost impossible to quantify these three letters when conducting valuation;
despite hundreds of guides, there is no agreement of what “ESG” scores are or how much should they be;
companies use it to virtue signal (“look how much moral and better I am than you”) for positive (or, at least, not negative) publicity;
it seems to be driven by an ideological position that demonises mankind as this damaging force and allocating money in an “ESG-friendly” fashion is some form of repentance;
it is used to “greenwash” financial products, meaning that as long as you put “ESG” on the label, money pour in, no matter if the investments are good or not.
However, thanks to the current fiat-based credit-biased monetary system that we have, financial engineering (like ESG “investing”) is in full blossom.
But I won’t bore you with my pro-sound-finance views.
Here is someone with decades of valuation experience, a Professor at the Stern School of Business at New York University, who says that:
“More than ever, I believe that ESG is not just a mistake that will cost companies and investors money, while making the world worse off, but that it create more harm than good for society.”
If you haven’t guessed by the above description who is this mysterious person, it is none other than Aswath Damodaran.
In a deep dive analysis entitled “The ESG Movement: The "Goodness" Gravy Train Rolls On!”, Professor Damodaran looks at ESG investing from the perspective of valuation, i.e. the process through which one reaches a price that one is willing to pay (or not) for an investment.
Here are the key points from the above analysis:
Goodness is difficult to measure, and the task will not get easier:
“The starting point for the ESG argument is the premise that we can come up with measures of goodness that can then be targeted by corporate managers and used by investors. To meet this demand, services have popped up around the world, claiming to measure ESG with scores and ratings.”
Bigger companies have higher ESG scores than smaller ones, suggesting that resources to deal with ESG requirements play a role in how “ESG-friendly” a company is viewed.
“…more disclosure is a tactic used by these companies that want to bury skeletons in their current or past lives, rather than expose them. In fact, a JP Morgan study of ESG Ratings and disclosures also points to a larger danger from enhanced ESG disclosure requirements, which is that the ESG ratings seems to increase across companies, as disclosure increase.”
The corporate governance movement enriched services, consultants and bankers, and left shareholders more powerless.
Being “good” will add to value some companies, hurt others, and leave the rest unaffected.
“The framework for tracing out the effect of ESG on value is a simple one, since ESG, if it affects value, has to affect one of four variables: revenue growth (by increasing or decreasing growth), operating profit margins, reinvestment efficiency (the payoff to investing in new capacity) or risk (through the cost of funding/capital and failure risk). […] An objective look at the data would lead us to conclude that while one can make a reasonable case that companies should work at "not being bad", there is very little evidence that there is a payoff to spending more money to be "good".
The ESG sales pitch to investors is internally inconsistent and fundamentally incoherent.
“If the argument that ESG translates into higher value is weak, the argument that incorporating ESG into your investing is going to increase your returns fails a very simple investment test. For any variable, no matter how intuitive and obvious its connection to value might be, to generate "excess" returns, you have to consider whether it has been priced in already. That is why investing in a well managed company or one that has high growth does not translate into excess returns, if the market already is pricing in the management and growth. Applying this principle to ESG investing, the question of whether ESG-based investing pays off or not depends on not only whether you think ESG increases or decreases firm value, but also on whether the market has already priced in the impact.”
You can read the rest of this excellent article here.
Professor Damodaran is not the only one with tons of experience that is calling bullshit on ESG. Ex-CIO for Sustainable Investing at BlackRock, Tariq Fancy, provides a detail analysis how “ESG” is a false banner for what it claims to stand, a banner under which only profits matter.
US Democrats and Republicans united in post-9/11 propaganda
Taibbi hit the nail on its head with the above piece. The essence is captured right at the top:
“GOP pols in the Bush years kick-started America’s march toward authoritarianism. Now Democrats have embraced Bush’s vision, and are making Republicans targets of their own repressive policies”
Here, Republicans mean not just politicians but also Republican voters. The article summarises how Republican politicians have lamented about Biden’s draconian and authoritarian vaccine mandate while not voicing a single word that it was their party which put the basis of this (il)legal infrastructure that enables the Democrats in power to abuse their position.
“That party has centuries of amends to make before it should ever get a whiff of being taken seriously again on questions of “overreach” and extraconstitutional mischief. Even the current meandering, messageless version of the GOP would have a powerful weapon against Democrats if it could just admit, “We spent much of the early 2000s building some of the most heinously extrajudicial and anti-democratic governmental infrastructure the world has ever seen, and we designed those mechanisms to be secret and exempt from oversight. So it’s somewhere between totally and mostly on us that a Democratic administration is now deploying these ideas in all directions, including against our voters. That’s our bad, and we’re sorry.”
Establishment Republicans (think Mitt Romney) and Democrats (think Clintons) are the same ilk. They serve the same interests (big corporations and big government) which are in opposition to individual freedom.
Here are my thoughts on 9/11, twenty years from the tragedy:
“On this day, we must remember more than the loss of those who suffered in the wake of the 9/11 terrorist attack. On this day, we must recall that the governments across the world, starting with the one in the United States, launched an unfettered assault on individual freedom.
Through lie after lie, defended by propaganda and censorship, the control apparatus at the centre of so many governments has turned its cyclopic eye towards each and every one of us, aspiring citizens of different nations, justifying further limits on our liberty as human beings in the name of pseudo-philosophical and pseud-scientific notions such as “safety”, “protection”, “comfort”, “progress”, “globalisation”, “inclusion”, “diversity” and “the greater good”.
The more we are aware of their unjust activities, the more their self-centred plans and ideas will be set to fail.”
To drive home this message, below is a video from Greenwald on how Republicans and Democrats, supported by corporate media, unite in the new “war on terror”. It walks you through the entire messaging in support of this new tool that the US government is preparing to deploy against American citizens.
PS: Greenwald’s analysis (that the Democrats and Republicans are now on the same page regarding the new “war on terror” and the corporate media - CNN etc. - will be their ally) is echoed by Taibbi as well:
“Trump talked big, but it was Bush who actually smashed norms on a grand scale, from international law to human rights to adherence to the most basic constitutional principles, in pursuit of policies that Brown University just estimated cost $8 trillion and led to 900,000 deaths.”
Read it here.
CCP’s brainwashing Chinese children with Xi’s personality cult
“Chinese children as young as 10 will soon be required to take lessons in Xi Jinping thought. Before they reach their teenage years, pupils will be expected to learn stories about the Chinese leader’s life and to understand that “Grandpa Xi Jinping has always cared for us.””
The above paragraph comes from a recent FT article entitled "The Xi personality cult is a danger to China”. The article is very soft in its tone, barely critical of this development. However, it highlights that the Chinese Communist Party (CCP) is getting more totalitarian by the day.
What Xi is doing echoes of Mao’s actions during and after the “cultural revolution”. As Fan Shen detailed in his book, “The Memories of a Red Guard”, this process of indoctrination with a personality cult was a key tool to brainwash the young, ensuring that they were loyal to whatever the “great leader” was asking of them.
It is not just loyalty that such a process ensures. It also gets read of criticism.
“The real difficulty is that if things do go wrong, it will be very hard for anybody to say so openly. All personality cults are based on the idea that the great leader is wiser than everyone who surrounds him. He cannot be acknowledged to have made mistakes. Chinese critics of Xi’s handling of the Covid-19 pandemic have been sent to prison. There will be no public inquiries or parliamentary hearings into the pandemic in Xi’s China.”
CCP’s hunt for dissidents however is not confined to mainland China. It is global.
More than 8,000 dissidents have been captured by the CCP’s tracking programmes since 2014, according to Bloomberg.
To see just how deeply entrenched the hand of the CCP is in various institutions abroad, especially in the Western world, I recommend you read this book:
Elisabeta Rizea: The Woman Who Defied the Totalitarian Left
Elisabeta Rizea (1912 – 2003) was a “simple” woman, without too much education, who spent her entire life in only two villages (Domneşti and Nucşoara) both located in her natal county of Argeş, under the Făgăraş mountains. Her entire wealth was a little parcel of land, a small wooden house and a few domestic animals.
Despite not having higher education or a substantial amount of wealth, which would more likely justify the risk of opposing such a terrible regime, Elisabeta’s sense of justice, fairness and private property, as well as her love for the land and the Romanian rural life were strong enough to determine her political position: in opposition to Gheorghe Gheorghiu-Dej’s communist system.
Once the communists took hold of Romania, Elisabeta supported the anti-communist resistance (Arsenescu-Arnăuţoiu) from the mountains, supplying the fighters with food, information and money. Her husband, Gheorghe Rizea, also joined the resistance group and fought against the communist regime which, at first was authoritarian, but slowly became totalitarian in nature.
However, the actions of those in the resistance group and of Elisabeta and Gheorghe Rizea quickly attracted the attention of the secret police of the communist regime (Securitatea). Agents from Securitatea began hunting down everyone who was thought to be an “enemy” of the Party.
You can read the whole article on my website here.
The rise of economic fascism in America
I wrote multiple times about corporatism - including in the last issue (What is Socialism). Here is an in-depth article explaining how corporatism gained support in America in the past and how this manifests today.
In essence, corporatism is corporate well-fare, the system we have in place now in America (and in other “developed” Western nations, like the UK and Sweden - see below video).
“The Italian corporative state, The Economist editorialized on July 27, 1935, “only amounts to the establishment of a new and costly bureaucracy from which those industrialists who can spend the necessary amount, can obtain almost anything they want, and put into practice the worst kind of monopolistic practices at the expense of the little fellow who is squeezed out in the process.” Corporatism, in other words, was a massive system of corporate welfare. “Three-quarters of the Italian economic system,” Mussolini boasted in 1934, “had been subsidized by government.” - Mises Wire
Thanks for reading.