What the Devil won't tell you
Az AG Brnovich's threats to investment firm BlackRock a sign of GOP threats to come
Arizona Attorney General Mark Brnovich is leading a coalition of Republicans from 19 states in demanding private equity group BlackRock "come clean" about how its "leftist politics" compromise shareholder value.
Because apparently while Republican money is speech, funds invested with an eye to the long term are an anti-trust violation. Or something.
I'm diving into this because sometimes fascism is funny when it's so stupid. Well, that's true right up until you realize just how easy it is to become an enemy of the state.
Basically, what Brnovich is complaining about corporations practicing ESG (environmental, social and governance). It used to be described as "good corporate citizenship." Places like Fox Business News say it's what "leftist corporations" use to decide "how people live."
BlackRock likes to tout itself as an environmental ally as it swallows the world's economy whole. But they've demonstrated that there's money in what's probably a smart long game.
Brnovich's effort can be boiled down to a simple form of paranoia: If the Right doesn't control everything, any one thing will probably enslave them. It's the conservative oppression fantasy gone wild.
Arizona's (for the next few minutes) attorney general could be going after equity funds (private and not) for blockbuster rent hikes, and truly have the backs of the people of Arizona. If he wants to say these funds are just too big and powerful, then go Mark, go.
Brnovich and 18 other yahoo state lawdogs are calling the firm out for sacrificing shareholder value in search of woke politics.
OK, OK, OK, wait a minute, wait a minute, wait a minute, hold on ... just ... one sec.
BlackRock is an equity fund the size of the Andromeda Galaxy. It controls $9 trillion in assets – a sum built in just 35 years. It owns portions of every major sector in the world's economy. Its stock is selling just under $700 a share.
And Brnovich – a government lawyer making $90,000 a year – is going to tell BlackRock how to make money. Right. Rolling around on the floor laughing my you know what off.
Just do a little thought experiment: your grandpa died and left you a chunk and you want advice on how to invest it. Who would you ask? BlackRock CEO Laurence Fink, arguably the most powerful man in global finance, whose start-up has been described as "the company that owns the world?" Or the guy who just lost to Blake Masters by 20 points?
Anyway, Brno's letter dated Aug. 4 is one of those missives that could be the precursor to further legal actions. His office didn't respond to questions asking what those might be but the text warns the state prosecutors "will not sit idly by."
Brnovich warned BlackRock, which holds some Arizona pension dollars, that the company has a fiduciary duty to maximize shareholder returns. Instead, he claims, they are focused on climate and saving the planet. And to be honest and fair to Brnovich, BlackRock appears to be doing a lot of that.
"The stated reasons for your actions around promoting net zero, the Paris Agreement, or taking action on climate change indicate rampant violations of this duty, otherwise known as acting with “mixed motives.”
Really? BlackRock isn't greedy enough? It's not big enough? It's failing to return sufficient earnings? Then why is its stock trading six and a half times the price of Exxon-Mobil?
Pensions don't take maximalist views on return on investment. Arizona's pension fund boards tried that 20 years ago and damned near busted. They've since aimed for much more conservative but stable returns. The public safety portion of the retirement system assumes a rate of return of 7.3 percent. That's hardly a high-stakes table.
BlackRock's stock has returned 400 percent in the last 10 years.
Speech and people
Let's start with the basics. Does Brnovich no longer consider corporations to be people with the same rights to act on their thoughts and beliefs as actual homo sapiens?
The multi-state warning to BlackRock is part of a new GOP push to prove they are anti-corporate. It's like liberals proving they're anti-vegan. That's a tough sell.
The Republican letter argues that an investment fund must only concern itself with making fast money, and should not engage in any acts of conscience or have an eye to protecting assets for the future.
Any suggestion that for-profit corporations are incapable of exercising free speech because their purpose is simply to make money flies in the face of modern corporate law. States, including those in which the plaintiff corporations were incorporated, authorize corporations to pursue any lawful purpose or business, including the pursuit of profit in conformity with the owners’ principles.
I completely plagiarized that last paragraph. I didn't write it. U.S. Supreme Court Justice Samuel Alito did in Burwell v. Hobby Lobby. I just replaced references to "religion" with "free speech" and "principles."
It's the case allowing business to practice religion. And because the Supreme Court ruled money is speech, both are protected under the 1st Amendment.
If Alito doesn't convince Brnovich, maybe Brnovich will convince Brnovich. He defended the Hobby Lobby ruling in 2014 when he talked to the National Review:
“Just because you open your business to the public doesn’t mean the public has the right to run your business."
Actual conservatives spent decades arguing the coercive power of the state isn't the answer to problems. Work through the private sectors, they said. As soon as that happens, these same Republicans threaten with the the coercive power of the state to stop companies from making decisions.
Yeah, I'm crazy believing the modern incarnation of the GOP means today what it said yesterday. Freedom only applies to views that conform to his own, even if they change on a daily basis.
It's real simple. The state is under no obligation to buy BlackRock's stock. I'm under no obligation to shop at certain stores.
If I choose to eat at Chick-Fil-A or shop at Hobby Lobby, I'm supporting right-wing religious zealots. I should have every right to shop somewhere else:. The problem is, I kinda like Chick-Fil-A.
BlackRock is by any measure a successful company. It's Brnovich who has the fiduciary problem if he wants to forego strong returns from companies that fight climate change.
Let's just be clear: When oil companies fight to protect their subsidies and keep us using their product, they are controlling how we live and forcing us to cope with climate change for centuries to come.
Snuffing out an Az boom
Let's dive down the maximum-profit rabbit hole anyway.
Climate change will happen regardless of Brnovich giving it permission to transform the Earth's ecosystem. Stopping the worst of it is in everybody's interest.
Who is to say protecting organized civilization from catastrophic climate change isn't a good business decision? If BlackRock wants to manage assets so investors can have the proceeds in retirement decades in the future, it would be a good idea to keep the planet's surface from bursting into flames.
Second, in 2003, Battelle Laboratories conducted a study that found Arizona could be the Silicon Valley of sustainability with our academic centers in geosciences, water resourse management, arid land management and the clear solar advantages the state has.
(I wrote a story about it but there's no way to link to it because Gannett lost the Tucson Citizen archives. But I remember the day I read the study at an Arizona Board of Regents meeting. Returning to the newsroom I told and editor "this is big news" and he said, "yeah, well, Summerhaven just burned down. Yours is Page 2)."
Right now, Lucid Motors employs 2,000 people at a plant in Casa Grande. They cater to the post-petroleum market. Last I checked, big oil doesn't do much drilling in Arizona.
So by stabbing in the back the post-fossil economy, he's drawing blood from his own state's economy. And he's doing it just to troll the libs and make more CO2.
No... it's national security
The Brnovich letter tries a couple ways to get around the free speech argument. First it insists environmental stewardship and government principles weaken America.
"BlackRock’s past public commitments indicate that it has used citizens’ assets to pressure companies to comply with international agreements such as the Paris Agreement that force the phase-out of fossil fuels, increase energy prices, drive inflation, and weaken the national security of the United States.
BlackRock should dump its climate stocks and buy oil, the letter suggests.
Alright, Sparky. Step back a few paces.
Volatile energy prices are a feature and not a bug of the resource-based energy markets. American dependence on an energy resource controlled by the likes of global despots from Russia's Vladimir Putin and Saudi Arabia's Mohammed bin Salman weaken the nation more than sustainable technologies. The country wouldn't have to go hat in hand to anyone (assuming the rare earth components to battery technology get worked out) selling it oil if it had an energy alternative.
Another thing: Who buys oil stocks heading into a possible recession? Nobody. That's such a basic rule of stock even I know it. I guess Brnovich is really bullish on Biden's economy.
No... it's a matter of trust
The letter claims that BlackRock violated anti-trust laws when it linked investment to environmental stewardship and governance.
"BlackRock’s actions appear to intentionally restrain and harm the competitiveness of the energy markets."
And bingo here we are at the crux.
Efforts to bring about change through commerce – under this interpretation – are illegal because they restrict the natural flow of a goods and services through greed and profit.
Liberals have power in the consumer market because Gen Z and Millennials like companies to have a social conscience. Big business is trying to appeal to them because they are the future. Even Exxon-Mobil has a mission statement discussing sustainability.
BlackRock, at worst, is competing for market share. That's exactly what Brno's letter says he wants them to do.
So he takes it an extra step. Big oil has a right to my investment dollars. If I choose to invest in BlackRock because it practices environmental stewardship, I am restraining trade by failing to give oil companies what is rightfully theirs.
Conservative money trying to change the world is free speech. Liberal money is an anti-trust violation.
A threat to democracy
Brnovich's letter dovetails nicely with something Florida Gov. Ron DeSantis said recently, in a similar attack he's making on corporations practicing environmental stewardship.
"Do we govern ourselves through our Constitution and through our elections or do we have these masters of the universe occupying these commanding heights of society?” DeSantis asked, ignoring a century's worth of conservative thought arguing volunteerism is the best agent of change.
Our free speech is limited to the conduct of elections. Any free speech once political campaigns end, are undemocratic.
Wow. Is that some impressive Orwellian pretzel-making.
Our elections tend to be about voting for candidates, who may not share all our beliefs. We still reserve the right to cajole and pressure them on the things we care about.
That majority has the right to vote for Republicans and still pressure them to tackle the issue or try to achieve it through he private market.
The Republican vying to replace Brnovich can help provide the final bit of context.
This is why Abe Hamadeh declaring on his website he's running for attorney general of Arizona has stuck with me:
"For too long, we've sat back as we’ve watched our country turn into a place we no longer recognize. While the left dominates every part of our lives, from sports and entertainment to business and government, and even education -- the question we all should be asking is: who let them?"
Are you as shocked as I am to discover the Left has run Arizona for too long? When did that start? Th Left has historically controlled very little in Arizona. This was a freaking Red State for 50 years and is only now maybe turning purple.
Even if the Left heavily influences culture, the media and academics, the Right does the same with the cops, the courts, the clergy, heavy industry and most state and local governments in the country. Greed governs corporations and Wall Street but politically, they break more Right than Left.
But to guys like Hamadeh, DeSantis and Brnovich, the presence, the mere mention, of any opposition is a threat to Trumpist white nationalism everywhere.
Increasingly, American politics feels like a Thanksgiving dinner with an armed cousin off his meds and convinced the whole family is going to kill him. He better strike first, scream the voices in his head.
The new Trump-flavored GOP isn't anti-corporate. They are just freaking out because they've been convinced that they can only be "free" if they are rid of any and all political opposition. And if that opposition is a majority, that is an enemy of the state and must be a silenced majority.
Blake Morlock is an award-winning columnist who worked in daily journalism for nearly 20 years and is the former communications director for the Pima County Democratic Party. Now he’s telling you things that the Devil won’t.