The Preposterous Pose Of Mr. Larry Fink

Larry Fink, the CEO of BlackRock, thinks very highly of himself. So highly that he expects the whole of the American corporate world – and, derivatively, you personally – to bow down before him.

Scott Shepard

Scott Shepard

The super-fun kicker? The great height from which he looks down at us and issues commands is built of a gigantic pile of our money. And he claims to make his demands on behalf of all stakeholders (i.e., everyone).

Good thing, then, that everyone agrees with, and is benefited by, his highly partisan commandments, no?   Otherwise, Larry might be not a benevolent corporate lord, but something of a chancer.

Consider the newest installment of Fink’s annual letter to corporate CEOs. The link is worth a click: Larry’s giant head staring sternly down from the top right, reminding you it would be double-plus ungood to ignore Big Fink’s edicts. Apparently business schools don’t go in for dystopian fiction, or don’t quite explain that it’s not meant as a business case to be emulated.

The fairly short letter is a world-wonder of tendentious audacity. Fink first claims that he acts on behalf of his investors. (Legally he must act in their interests, so he must at least maintain this pretense.) He then claims that the interests of these investors and shareholders are the same as the interests of all stakeholders.

This seems unlikely; if all of our interests are all merrily aligned, why do we all keep arguing? Why, for instance, and despite the way that the Biden Administration is beginning, was the last election very nearly an effective tie?

Well, it turns out that what Fink’s shareholders, and in fact everyone, really want – want so definitely that he fulfills his fiduciary duties and enacts stakeholder capitalism by demanding it of the whole private economy – is Fink’s own, personal, highly partisan political agenda. What luck!

Consider his characterization of all of the various public displays of dissatisfaction in the last year or so:

Several months into the year, the pandemic collided with a wave of historic protests for racial justice in the United States and around the world. And more recently, it has exacerbated the political turmoil in the U.S. This month in the U.S., we saw political alienation – fueled by lies and political opportunism – erupt into violence. The events at the U.S. Capitol are a stark reminder of how vulnerable and how precious a democratic system can be.

Now, the Capitol riot was stupid and wrong. But are there no legitimate grievances arising from protests on the right, rather than just incoherent violence? Meanwhile, most Americans think that the BLM/Antifa violence and rioting was stupid and wrong, too. And there was unquestionably a lot more than just “historic protests for racial justice” going on in them. The leaders of Black Lives Matter are self-declared Marxists who seek a new national order through their activities. (How again does one define an insurrection?) Distinguished and left-of-center black scholars like John McWhorter think that the “antiracism” goods that BLM and others are selling is toxic racism. On-the-ground BLM representatives worry that others joining their “protests” have different ends in mind.

In short, the way that Larry characterized 2020 reveals that he’s not making any effort to do his fiduciary duty by his investors or shareholders. He’s just using their money to advance his hard-left political agenda in their names.

And, remember, in everyone’s names. The great fraud of “stakeholder capitalism” is the idea that corporate CEOs either can or even want to somehow divine what “all stakeholders” think. They can’t – there is no such consensus – and they don’t want to.

The fraud of stakeholder capitalism runs deeper. Larry wields his highly personal interpretation of it against disfavored companies to force them to adopt highly unpopular practices such as racial preferences (that even the vast majority of Californians oppose) and zero-carbon mandates that will crush us peasants while making the world an uncrowded garden spot for the Davos crowd. His buddies at the head of the Business Roundtable – like Alex Gorsky of Johnson & Johnson and Jamie Dimon of JP Morgan Chase – who so heartily endorse stakeholder capitalism as a great gamechanger for us all, though, face no such obligations. As they have told the Securities & Exchange Commission recently in shareholder-proposal proceedings, theircompanies need not do anything in response to stakeholder capitalism. Their extended mission statements are enough stakeholder capitalism good enough for them. All that rhetoric about the glories of the new model is just to con the rubes and pressure more déclassé companies that have not yet adopted Larry & Co.’s personal politics.

Neither Larry nor his buddies have any evidence to support their demands. They have not polled the people whose money they wield to confirm that Larry’s worldview aligns with those whose interests he’s bound to represent. They have no evidence that race- and sex-based quotas increase corporate performance (rather than merely being “associated with” it in non-rigorous studies).

And their demands are certainly not responsive to “all stakeholders.” While the corporate titans demand racial and sex-based discrimination, they refuse to even consider an end to viewpoint discrimination. (Clearly, they love that.) And Larry’s only reference to China in his letter is to cheer its rhetorical “commitment to achieve net zero emissions” – never mind the distance between rhetoric and reality. Are Uighur laborers enslaved by the Chinese government on racial grounds stakeholders, Larry?

Time, then, for some lawsuits to explore Larry’s actual fidelity to his fiduciary duties, and the evidentiary basis for his claims that everyonebenefits from his personal policy preferences. And those ready to respond to this abuse of corporate power, on the right and the left, might want to consider getting the band back together – from Golden Gate Park to Zuccotti Park to a site amenable to Larry’s haughty gaze.

Scott Shepard is a fellow at the National Center for Public Policy Research and Deputy Director of its Free Enterprise Project. This was first published at Townhall Finance.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.