Does “Woke’ Capitalism Make Sense?

I have been noticing an increasing trend towards ESG investing. (Environmental, Social, Governance) Is that likely to be better for businesses, their investors, the market as a whole, or even the customers? We know it is a win for the ones who want to rule us.

The idea is not so new

Can business leaders expect to win? It depends on how you define win. If their goal is to solidify political support for their business they will do better than the ones who do not subscribe. Using political influence to support business used to be called mercantilism. It didn’t work very well because it extracted costs from the customers that they should not and need not pay. It was a form of protection racket that supported corrupt governments.

Even Adam Smith in the late 1700s opposed the idea. We see his reputation as supporting free markets and capitalism, but he had no love for the shopkeepers of the day. Though Smith was not pro-business, he was pro-markets and there is a big difference. Governments and businesses can tamper with markets. Free-markets don’t match their ambitions.

Wokeism is anti-market.

Normally, markets are open to all and the rules are known. Wokeism is about political power and it is about choosing sides and preferred players. Shut out the rest. How difficult will it be for competitors to existing politically connected businesses to arise? As my friend Max Ma would say, “That’s not a problem; that’s impossible.” Governments like to influence markets because that’s where the money is. They tend not to reach some point where they have enough. There is always another project that needs even more money, and there are always a few businesses wiling to buy protection.

You can spot them by the virtue signalling. Major League Baseball, the NBA, Coca-Cola, most big banks, Amazon and especially Amazon Web Services, the Alphabet companies, Facebook, Twitter, Hollywood, and the list goes on.

Milton Friedman on the idea

Like Adam Smith, Friedman thought free-markets were optimal. Sure they needed some control to prevent the worst aspects of corporate greed, but they provide tremendous benefits.  The problem comes when the government regulators becomes a player –  influencing the markets through manipulation of the corporations.. That’s where we are now.

From the 1970’s, Friedman saw the problem. “The two greatest enemies of free enterprise in the United States … have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country.”  Milton Friedman. Which Way Capitalism? Reason, May 1977, page 21.

Think bailouts, think subsidies, think custom regulation. The government in the past 20 years has worked at great expense to the taxpayers to buy the big businesses, the media and the entertainment industry. How does the benefit anyone other than the government officials and for a little while the businesses?

It will of course implode as there is no benefit for the added costs.

What to do.

It is probably too late to fix the government side of it. The catastrophe is both near certain and necessary for future reform to be possible.

There are two ways to think.

  1. For the people it is a conundrum. I don’t see much hope there. Maybe precious metals bought with borrowed money. Maybe Bitcoin or others. Maybe real estate. Work you can do that can earn a living, although there may not be many who can pay you.
  2. For the businesses. Government loans, grants, and guarantees. When the money gets lost, at least it looks like theirs. Really just other taxpayer’s money, but they were going to lose it anyway, so no new harm.

The big question.

It is no longer a question of being paranoid, the question is, “Are you paranoid enough?”


I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email don@moneyfyi.com

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