Republicans For Financial Regulation

And other novel life forms that aren't what they seem.

Last month I was attending a conference in Washington listening to Larry Kramer, president of the William and Flora Hewlett Foundation, talk about the quest for a progressive new economic paradigm when Kramer’s name popped up in a news alert on my computer screen. The news alert said that Kramer put up $500,000 to cover bail for the cryptocurrency tycoon Sam Bankman-Fried as SBF awaits trial on charges of criminal fraud. He did so, Kramer explained to me after his talk ended, because SBF’s parents are very close friends. I asked Kramer whether the $500k constituted a statement on SBF’s guilt or innocence. (Kramer is former dean of Stanford Law School.) He said it did not; if anything, he said, it was a statement on whether SBK was a flight risk. Kramer did not believe he was.

SBF is kind of a new paradigm himself. His North Star is something called Effective Altruism, a philosophy that’s also attracted Elon Musk and Dustin Moskovitz, a Facebook co-founder. I think it’s self-justifying bunk, reminiscent of the smug utilitarianism lampooned by Charles Dickens in Hard Times. In my opinion you should decide early on whether you want to get rich or save the world, because you can’t do both at the same time.

But these millennials, they want it all, and to feed their hunger the financial sector has created a type of investing called ESG, which stands for environment, social, and governance. It’s hard to know exactly how many of these investments promote social responsibility and how many just fake it. But you can’t fault these youngsters for trying. Certainly it’s better than seeking out investments based on the evil they do in the world. And if the societal dividends turn out to be greater than my cynical self expects, more power to them. I have, on occasion, been wrong.

But of course ESG has been targeted by Republicans as an artifact of “woke capitalism.” Congress this week passed a resolution intended to make it more difficult for retirement investment advisers to recommend ESG stocks to their clients. Partly because just about everyone wants to claim ESG status (there’s no fixed definition), the resolution would play havoc with the markets to such a degree that you kind of wonder whether congressional Republicans (with a crucial assist in the Senate from Democrats Joe Manchin and Jon Tester) would have passed it had they not been certain President Joe Biden would veto it at the behest of Wall Street lobbyists. These and other ironies animate my latest New Republic piece. Please read it here.