Monday, August 26, 2019

Refashioning corporations in a bonfire of the vanities

Company big bosses decide they are no longer interested in boring old things like profits.  They would rather be loved.  Feel sorry for their shareholders

I forgive Greta Thunberg. She is a young girl with a misguided sense of doom about humanity. Her mission to convince us that ­instru­ments of our magnificent progress, such as airline travel, are weapons of self-destruction would lead us back into a new dark age.

Alas, modern missionaries trying to destroy other instruments of our progress are everywhere. And they get no forgiveness. This week one group of mostly old rich men made their mission public: to get rid of the corporation as we know it. Maybe the wolves of Wall Street are trying to repent for their unimagined wealth by becoming the conscience of Wall Street. Whatever their motivation, their moralising project to change the purpose of a corporation will end up killing it off.

At first glance, the joint letter released by 181 bosses of America’s biggest companies sounds rather appealing. Led by JPMorgan’s Jamie Dimon, who chairs the Business Roundtable, the letter redefines the purpose of the company as follows: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders … We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”

This sort of sweet-sounding bumpf used to be harmless, part of a chief executive’s public branding exercise, like a politician saying he supports motherhood. Back then, chief executives returned to the office with a clear understanding that a corporation cannot exist without upholding the primacy of shareholders whose money and assumed risk holds up the whole damn show.

But this refashioning of the corporation by some of America’s richest men is something else. This is a bonfire of the vanities, where the corporation is being condemned by latter-day Savonarolas as sinful. Now consider what they want to throw on the dust heap of history: recognising the primacy of the shareholder has allowed the company, as a ­vehicle to pool people’s money by limiting their liability to the amount invested, to deliver tremendous advancements that started with perilous merchant ventures by the Dutch and British East India companies in the early 1600s.

These self-appointed corporate moralisers have grown bored with a corporate structure that, for hundreds of years, has ­unleashed unthinkable innovation and creativity, opening borders, employing and moving millions of people, providing ­infrastructure, essential goods and services to mass populations across the globe, not to mention the grand luxuries that we want.

The corporate wowsers have something else in mind for us for the next few hundred years. Exact­ly what, they haven’t made ­entirely clear. And maybe that ambiguity is part of their ruse.

What is clear enough is that their attempt to change the purpose of a company is an audacious attempt to blur its purpose. Are these chief executives proposing an equal commitment to each stakeholder? Or are they after something like Animal Farm where some are more equal than others? Who takes precedence when there is a conflict between interests? Which “community” are they talking about? And who and what determines what is in the best interests of the community? The obvious, but perhaps ­deliberate, flaw in their plan is that the purpose of a company will henceforth be whatever management wants it to be. That means that their stirring commitment to all stakeholders will make them accountable to no one.

Chief executives at the Business Roundtable should also know better than trying to socialise profits and privatise losses. Why would people invest in a company, let alone risky ventures, unless their interests take priority over a nebulous category of other “stakeholders”? After all, when a company goes bust, shareholders, not stakeholders, blow their dough.

Notice that the most vociferous of these self-proclaimed corporate reformers get religion after they get rich — very, very rich. Dimon’s net worth is estimated at $US1.3 billion ($1.9bn); his pay last year was $US31 million. Other signatories to the letter include Amazon’s Jeff Bezos, the richest person on the planet, with a net worth, after his recent divorce, of $US111.7bn; Apple’s Tim Cook (net worth of $US625m); Bank of America’s Brian Moynihan (net worth of $US64.8m); Boeing’s Dennis A. Muilenburg (net worth $US85.2m); Morgan Stanley’s James Gorman (net worth more than $US84m) and BlackRock’s Larry Fink, whose net worth surpassed $US1bn last year.

Good on them for amassing such wealth. These masters of the universe made their fortunes the old-fashioned way, when shareholder primacy and profit mattered. Now they want to pull the drawbridge up, stripping the same opportunities from future generations of shareholders. And what do we get in return?

So far, a chorus line of chief executives committing companies to “the countries, regions and communities where they operate”, to quote from Fink’s annual letter to investors in January.

“The American Dream is alive but fraying,” Dimon said this week. But which part of the dream is fraying? Who decides how to mend it? And who pays to fix it?

That’s the real kicker behind their project: rich chief executives are using other people’s money to prosely­tise their personal social visions for the future. It’s terrific they care about the American Dream. And when they use their own money to those ends, we might take them more seriously.

When they use shareholders’ money for these pursuits and then try to justify this expropriation by defining down the importance of shareholders within the corporation, their mission will end up killing the structure that has been responsible for hundreds of years of human flourishing.

The claim that we must redefine the purpose of a company to enable long-term decision-­making is simply not true. Old law dating back at least to 1883 ­remains current law: directors and chief executives may look beyond the shareholder and short-term profits, to other stakeholders, when it is done for the benefit of the ­company. But many chief executives today don’t like constraints on their freedom to import social issues and other stakeholders into corporate decision-making. Hence the Business Roundtable’s plan.

Other activists are also champing at the bit to overturn the primacy of the shareholder. Last year in Australia, a cunning group of activists, mostly from industry super funds, tried to hijack the ASX corporate governance principles. The new rules, pages of ­social engineering baloney, would have effectively redefined the property rights of shareholders, creating an armoury of new legal weapons for activists to harass, ­intimidate and blackmail boards at AGMs. Corporate Australia’s response was to leave it to others to defeat this proposal.

One down, more to come. The International Standards Organisation, a body that makes money by drafting and selling standards, is busy putting the finishing touches on ISO 37000, a new global standard for corporate gov­ernance. It’s a safe bet that the ISO’s mission creep will cause the attempted hijackers of the ASX standards to turn green with envy.

Meanwhile in the US, Democrat Elizabeth Warren is still trying to sell her Accountable Capitalism Bill to the country, ­requiring big companies to obtain a charter from government to ­operate. And maybe the senator, dubbed Pocahontas by Donald Trump, is somewhere between 1/64th and 1/1024th correct.

Companies could do with a clear charter of their objects. Not a charter granted by government; that would take us back when the colonial whims of a 17th-century monarch controlled the purpose of a company. Just as controlling are the modern corporate moralisers, and their brazenness has reached the point where we need new laws to rein them in.

So here is an alternative idea to the Roundtable’s proposal to blur the purpose of the company: the law should require that companies have a charter established by those who put their money at risk, namely shareholders, which clearly sets out the objects of the company. That would stop free-range virtue-signalling CEOs in their tracks. To be sure, they could always devote their own time and money to causes that stray from the stated corporate purpose. But they will only be able to use shareholders’ money for the purposes for which shareholders contri­buted the money in the first place.

Corporate law used to have just such a thing — it was called the doctrine of ultra vires. If it sounds dreadfully dull, that’s ­because running a company is not meant to be an exhilarating gig for a social-engineering CEO unless that is a stated purpose laid out for shareholders when they invest. If corporate bosses hate these new legal restraints, shareholders should be all in favour of them.

At the very least, governments could respond to the plethora of grandstanding CEOs by legislating to make it optional for a company to set down a clear purpose that attracts real and enforceable lines of accountability, something the present Corporations Law lacks. In other words, give shareholders a real choice about the kinds of companies they can ­invest in.

There is little to lose from this proposal. Only upside for the real owners of a company, whose money is blown when a company goes belly-up. By contrast, if the Business Roundtable gets it way, other “stakeholders” will be thrilled. But not for long because we will be destroying one of the most important and inventive contributors to global growth over the past 400 years, the limited liability company.


Thousands gathered in Sydney to protest against the abortion legalisation bill

Opponents of a bill to decriminalise abortion gathered in their thousands near the NSW parliament for a rally so loud it could be heard from inside the chamber where the draft laws were being debated.

Holding aloft crosses, pictures of Jesus and signs saying 'stand for life', thousands gathered in Sydney's Martin Place on Tuesday evening to listen to MPs and religious leaders who oppose the bill.

Pro-choice activists had rallied on Macquarie Street earlier in the day.

Some had hoped the bill would go to an upper house vote within days but Deputy Premier John Barilaro on Tuesday confirmed that wouldn't happen amid reports Premier Gladys Berejiklian had buckled to pressure from conservatives.

It means the upper house debate, which began on Tuesday, is likely to drag into September.

Liberal MP Tanya Davies told the crowd they had been given a 'stay of execution'.

She asked them to 'gather a tsunami of opposition to this bill' [and direct it] to Ms Berejiklian, Mr Barilaro and upper house MPs.

The crowd chanting 'abort this bill' and 'love them both' were so loud they could be heard in the upper house chamber, where the bill was being debated.

Chantal Czeczotko, who is 26 weeks pregnant, took to the rally's makeshift podium, a bench in the middle of Martin Place, where the heartbeat of her unborn child was broadcast over speakers for the crowd to hear.

'This baby's heart is beating strongly for us tonight and if MPs have their way in the house behind us, a baby with this strong a heartbeat has no right to life,' said Right to Life NSW chief executive Dr Rachel Carling, eliciting boos from those gathered.

Sydney's Catholic Archbishop Anthony Fisher said the draft legislation was the 'abortion industry's dream bill'.

He called for more people power and more 'God power' - more prayer, fasting and lobbying - to ensure those opposed to the bill had their voices heard.

Melkite Catholic Bishop Robert Rabbat said the rally had gathered in response to 'the call to defend life'. 'Abortion is not simply a religious or philosophical issue, abortion is not an a la carte menu to choose from. It is a matter of rights and the pre-born do not have fewer rights than the powerful or the outspoken or the legislators,' Bishop Rabbat said.

Federal Nationals MP Barnaby Joyce was the last to speak, telling those gathered the clause requiring two doctors to sign off on an abortion after 22 weeks 'is not a reflection of a civilised society'.

'I am not here to try and espouse a religion. I'm not here saying I'm some saint. I'm here because I'm trying to argue to those people on logic,' Mr Joyce said.

Speaking after the rally, Mr Joyce said people turned up to the rally because they are angry. 'If you keep on working on angry people, they vote for somebody else and the next thing you know, you've got another job,' he told AAP.

His message to the premier was to be 'really focused on this'. 'You thought the greyhound debate was bad - the greyhound debate was for the bush, this is one for the city.'

A petition calling for upper house members to vote against the bill, signed by more than 77,000 people, was handed to Shooters, Fishers and Farmers MLC Robert Borsak who will table it to parliament on Wednesday.

Maketalena Afeaki, 33, travelled from Liverpool with a contingent of the Tongan Catholic Youth who she said were at the rally to 'give our voice for the unborn children'. 'We're all here to just vote no against the abortion bill only because we strongly believe in our faith that abortion is murder,' Ms Afeaki told AAP.


Religious freedom proposal passes cabinet, draft bill imminent

Cabinet has backed Attorney-General Christian Porter’s proposals for a religious discrimin­ation act, with minor changes to be made before a draft bill is released in the coming weeks.

Mr Porter on Tuesday outlined his ambition for the bill to come to a vote in both houses of parliament by the end of the year, ­enshrining it in law if it wins support from a majority of politicians.

After facing calls from the Catholic Church and some ­Coalition MPs for wider-ranging “positive right” protections than were being considered, Mr Porter said his reforms would act as a “shield” against discrimination and not a “sword” allowing ­religious people to discriminate.

“The laws will protect people from being discriminated against, but will not give them a licence to discriminate against other ­people,” he said.

“The draft bill will deliver a ­religious discrimination act that reflects other existing anti-­discrimination laws, such as those covering age, race and disability.”

Mr Porter said he would release a draft bill before the next September sitting weeks and hold consultations with Labor, ­religious leaders and LGBTIQ groups.

“It is my expectation that a bill can be introduced and considered by both the house and Senate before the end of the calendar year.

“Naturally, this will include time for a Senate inquiry,” Mr Porter said.

Opposition legal affairs spokesman Mark Dreyfus attacked Mr Porter for the short time for consultation.

“The Liberals have been arguing about this for two years but now want to give the rest of the country just weeks to debate this important bill,” Mr Dreyfus said.

“Every Australian is affected by this, not just the Liberal Party, and all Australians deserve to be given the chance to properly scrutinise what’s being proposed, and not have this rushed through parliament because of the government’s internal divisions.”

The Australian reported on Tuesday that Scott Morrison was headed for a showdown with the Catholic Church over the breadth of the religious discrimination laws.

The proposals that were mostly supported in cabinet aim to provide religious groups with exemptions from discrimination laws, while also banning discrim­ination on the basis of faith in areas such as employment, housing and the use of services.

The country’s largest church demanded the government go further than an exemption-based law and take a “positive approach to recognise religious rights” that would protect schools, hospitals and charities adhering to church teachings.

Catholic bishops, while supportive of an anti-discrimination act, are also asking for changes to the Sex Discrimination Act to provide positive protections to faith-based institutions to act ­according to their teachings.

Current protections under the act exempt religious groups from adhering to sex discrimination laws.

Mr Porter said the rights of faith-based institutions to teach issues such as marriage according to their doctrines would be investigated in a separate process.



Three recent articles below

Climate failures cost us: ALP election review

Bill Shorten’s Labor Party failed a basic test of politics by not articulating to voters who would pay for its climate change policies, how much they would cost and the ­impact on the economy.

A confidential submission to the party’s post-election review from the Labor Environment ­Action Network, obtained by The Australian, expresses “anger and disappointment”, and also “grief”, over the party’s failure to win what was expected to be an unlosable election. The submission is brutal about policy, political and leadership failures.

“Labor was unable to put a price on its climate change action plan,” a LEAN member says in the submission. “It couldn’t say how much it would cost, where the money was coming from or what economic dividend it would deliver or save. It is basic Australian politics — how much, who pays, what does it save. We had no answers.”

The submission reflects poorly on Mark Butler, Labor’s spokesman on climate change and ­energy. While LEAN members thought Mr Shorten was an ­“excellent leader” they concede voters “did not like or trust” him. This damaged Labor’s ability to sell a sweeping policy agenda.

LEAN has called for Labor to reconsider its “specific climate change policies” and how they are communicated, but warns “the party cannot ignore and must ­address the issue of expanding fossil fuel export industries”.

Labor’s franking credits policy, its wishy-washy stance over the Adani coalmine and its failure to “listen to the workers” are ­identified as additional reasons for its loss.

While LEAN members said they were “proud” of Labor’s bold policy agenda, the party failed to connect with voters and persuade them with a compelling message.

“LEAN members … felt we had many, many good and great ­policies but our narrative around them was problematic,” says the submission drafted by co-conveners David Tierney and Felicity Wade.

“Creating a narrative that connects with voters was ­identified as most important to win an election.”

A failure to balance mitigating climate change with the need for “economic opportunities” for workers, industries and rural communities is also recognised. LEAN argues Labor must rebuild its credibility with workers in areas such as the Hunter Valley, which swung against Labor.

“Addressing climate change has to be about the economic possibilities and prosperity, not the moral argument,” LEAN ­argues. “The new jobs need to be led and initiated by clever government policy and investment.”

LEAN urges Labor to stand by a bold emissions reduction target — currently 45 per cent by 2030 on 2000 levels — recommended by the Climate Change Authority and to also support a new federal environment act and the creation of an independent Environment Protection Agency.

However, it argues that Labor must recognise many voters do not trust market mechanisms and there is a worldwide backlash against globalisation, neoliberalism and deregulation. Many ­voters saw specific policy measures as a cost rather than an opportunity to deal with climate change.

“Labor’s policies were generally well received by the climate change, environment and ­renewables ‘industries’,” the submission notes.

“This support, however, didn’t translate to the voting public. While we have walked away from the policy purity of a carbon price across the economy, our policies are still in the technocratic and market mechanism sphere.

“They are supported by ­Treasury officials, corporations and the political class. It is hardly surprising many … people are suspect.”

LEAN urges Labor to build better links internally with members and externally with other environmental groups to help ­develop practical and pragmatic policies so they can help ­communicate and campaign for them.

The blistering submission to Labor’s post-election review comes as Labor, now led by ­Anthony Albanese, is yet to ­officially dump many policies some in the party regard as electorally toxic.


Sydney Lord Mayor backs climate change strike, in virtue-signalling madness

When your employer encourages you to go on strike, is it still a strike? And what about the people who pay your wages, should they get a say?

These and other imponderables are the latest questions thrown up by the ongoing spectacle of climate activist madness. While the stunts become increasingly silly, indulged by complicit politicians and media, it is taxpayers who are being taken for a ride.

Just two months after becoming one of the first virtue-signalling local governments to declare a “climate emergency”, Sydney City Council has voted to support the Global Strike for Climate Change.

The strikes in the past have been led by schoolchildren bludging a day out of the classroom, but now they are urging “workers across the world” to join them.

And, incredibly, so is Sydney’s Town Hall. A council motion backs the strike, calls on councillors to attend and even orders its administration to support council staff who want time off to get involved.

Lord Mayor Clover Moore and six councillors supported the motion last night, while three others voted against it. So, on Friday September 20th, when dewy-eyed school students and socialist activists rally in the streets of Sydney to ban this nation’s largest export industry, among other things, Town Hall will be cheering them on.

The council wants its own staff to be part of the strike and the protests; which could get kind of messy if the council needs to block off streets, provide security, issue permits or clean up the rubbish.

The campaign wants to ban all new coal or gas projects, demand all energy be renewable and insist that money, sucked from somewhere, is used to retrain workers from the axed industries so they can take up other unspecified jobs in other unspecified places at another unspecified time.

It sounds like a foolproof economic plan — next, they should demand the installation of a fountain of youth.

Sydney ratepayers, of course, are not left out. They are free to attend the strike and its rally — so long as they don’t mind the risk to their own jobs or the costs to their own businesses. September 20 should be a great day in Sydney; perhaps the rubbish bins will go uncollected, planning applications will sit unassessed, parks and gardens will be left untended and the libraries will be a free for all.

Presumably no parking tickets will be issued on that day. And all ratepayers, no doubt, can look forward to having an amount of their annual rate notice rebated to compensate for the day the council decided its service obligations didn’t really matter.

Strike me pink. If they shut down Sydney City Council, wouldn’t it have a non-existent carbon footprint? And what would be the downside?


Adani refuses to bow to climate activists

A climate activist has locked himself to machinery at Adani's Queensland mine site in defiance of the state government's move to outlaw lock-on protest devices.

The man locked himself to a drill rig at the Carmichael mine site on Wednesday morning, a day after the government announced it would push for an increase in penalties for protesters using the devices. Protesters will face up to two years' jail under the new laws.

Premier Annastacia Palaszczuk denied the crackdown was to silence protesters of the controversial central Queensland mine, which was finally given the green light earlier this year. "Absolutely this is not the case ... It's just this small element that are going to extreme lengths " the premier told the Today Show on Wednesday.

The government's move to outlaw the devices follows the arrest of dozens of Extinction Rebellion climate protesters who have brought major Brisbane thoroughfares to a halt in recent weeks.

They say stopping traffic gets people's attention, and want communities to collectively find solutions that would lead to zero carbon emissions by 2025.

The government claims protesters are filling the devices with broken glass and explosive gas to injure anyone who tries to cut them free.

Protesters say these claims are baseless. "The climate crisis impacts us all. Increasing penalties will not stop good people standing up for the environment and one another," Frontline Action on Coal spokesperson Kim Croxford said.

Adani is this week facing another hurdle in getting the mine off the ground, with engineering firm Aurecon's announcement it has severed its 20-year relationship with the company. Aurecon has been the target of recent protests by climate activists over its link to the project.

An Adani spokesperson said in a statement that company was surprised by the decision and was already in talks to replace Aurecon to ensure the mine went ahead.

"There has been a concerted campaign by extremists against our Carmichael Project and businesses that partner with us," the statement read. "It has not succeeded and construction of the Carmichael Project is well and truly underway."


 Posted by John J. Ray (M.A.; Ph.D.).    For a daily critique of Leftist activities,  see DISSECTING LEFTISM.  To keep up with attacks on free speech see Tongue Tied. Also, don't forget your daily roundup  of pro-environment but anti-Greenie  news and commentary at GREENIE WATCH .  Email me  here

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