Tag Archive for: ESG

UN Deletes Article Titled ‘The Benefits of World Hunger.’ Was It Real or Satire?

The author of the article in question told FEE it was not a parody.


UN Chronicle, the official magazine of the United Nations, recently deleted a 2008 article titled “The Benefits of World Hunger.”

The article, which now leads to an “error page,” was written by George Kent, a now retired University of Hawaii political science professor. In the article, Kent argued that hunger is “fundamental to the working of the world’s economy.”

“Much of the hunger literature talks about how it is important to assure that people are well fed so that they can be more productive,” Kent wrote. “That is nonsense. No one works harder than hungry people. Yes, people who are well nourished have greater capacity for productive physical activity, but well-nourished people are far less willing to do that work.”

UN Chronicle deleted the article after it began to cause a stir on social media. The magazine said Kent’s article should not be taken literally, contending that it was a work of parody.

“This article appeared in the UN Chronicle 14 years ago as an attempt at satire and was never meant to be taken literally. We have been made aware of its failures, even as satire, and have removed it from our site.”

At first glance, there seems to be little reason to doubt the United Nations. As some writers have noted, previous works written by Kent include Ending World Hunger, The Political Economy of Hunger: The Silent Holocaust, and Freedom from Want: The Human Right to Adequate Food.

These titles hardly suggest that Kent sees global hunger as a good thing. In light of this, some contended that he was taking an approach not unlike Jonathan Swift, whose famous essay “A Modest Proposal” cheekily argued that Irish families should alleviate their mean condition by selling excess children to the wealthy for food.

After reading the UN’s tweet, Yahoo’s report, and several other pieces of commentary on the subject, I initially agreed that Kent’s article likely was written as satire. However, closer examination and a brief conversation with Kent revealed that is not the case.

First, it’s important to note that Kent himself denies the article was intended as a form of satire.

“I don’t think the UN would have published it if they thought it was satire or advocacy,” Kent told Climate Depot in a recent phone interview.

In the interview, Kent explains he was not advocating global hunger but was intending to be “provocative” by saying certain individuals and institutions benefit from global hunger.

“No, it is not satire,” Kent told Marc Morano, founder and editor of Climate Depot. “I don’t see anything funny about it. It is not about advocacy of hunger.”

I reached out to Kent and asked if the quotes were accurate, and he told me they were, adding that he intends to publish a paper this fall that will further detail his views.

“Marc understood me very well,” Kent told me in an email. “I hope my current paper on who benefits from hunger helps to make my position clear to everyone involved in this discussion.”

Additionally, the article’s concluding paragraph supports Kent’s claim that the work was not designed as either satire or advocacy. A careful reading of the text suggests Kent is being quite literal when he writes that some people benefit from global hunger.

“For those of us at the high end of the social ladder, ending hunger globally would be a disaster. If there were no hunger in the world, who would plow the fields?” Kent wrote. “Who would harvest our vegetables? Who would work in the rendering plants? Who would clean our toilets? We would have to produce our own food and clean our own toilets. No wonder people at the high end are not rushing to solve the hunger problem. For many of us, hunger is not a problem, but an asset.”

One senses in these words disapproval. The global poor exist because the wealthy require them to exist. Global hunger exists because humans are simply not doing the moral and necessary things to eradicate it.

But what are those things? A glimpse at Kent’s 2011 Ending Hunger Worldwide offers a clue. In the summary of the book, readers are told the keys to tackling global hunger are “building stronger communities” and challenging “dominant market-led solutions.”

In Kent’s view, one gathers, global hunger is not a complex problem that is being addressed by free market capitalism; it’s a moral one that requires empowering intellectuals like Kent to solve it.

It’s also worth noting that reviews of Kent on Rate My Professor—which gives him a rating of 1.9 out of 5—suggest he’s, well, perhaps a bit of an ideologue.

“Avoid this man with your life. Very opinionated and if your opinion differs, you will fail. He’s the worst professor i’ve had,” one reviewer wrote.

“Horrible professor if you are not politically aligned with his values you WILL FAIL,” another contended.

“Very opinionated and unhelpful,” opined another. “Very critical and extremely boring. Unsupportive and irritating.”

Whether Kent is a good professor or not, or whether his article was satire or literal, are questions that ultimately do not matter a whole lot in the larger scheme of things. What does matter are the policies that cause global hunger and the policies that alleviate global hunger.

And on this front, there has been stunning progress in recent decades. As Our World in Data shows, the percentage of undernourished people in developing countries has plummeted in recent years, falling from 35 percent in 1970 to 13 percent in 2015.

How this happened is not a mystery. As economist Bob Murphy noted in FEE.org, the proliferation of free market capitalism has “gone hand-in-hand with rapid and unprecedented increases in human welfare.”

“As the World Bank reports, the global rate of ‘extreme poverty’ (defined as people living on less than $1.90 per day) was cut in half from 1990 to 2010. Back in 1990, 1.85 billion people lived in extreme poverty, but by 2013, the figure had dropped to 767 million—meaning the number of those living on less than $1.90 per day had fallen by more than a billion people.’”

Ironically, no better example of this can be found in recent decades than China, which has achieved nothing short of an economic miracle in recent decades. China saw its percentage of underweight children fall from 19 percent in 1987 to 2.4 percent in 2013. As recently as 1990, 66 percent of Chinese people lived in extreme poverty. By 2015, that figure was less than one percent.

How did China achieve this economic miracle? By pivoting to privatization following the death of Party Chairman Mao Zedong (1893-1976), as I pointed out in 2019.

In 1979, China adopted its “household responsibility system,” giving many farmers ownership of their crop for the first time. This was followed by Communist Party leaders opening China to foreign investment, curbing price controls and protectionism, and implementing mass privatization of its economy.

The “market-led solutions” that Kent has disparaged have worked wonders for hunger alleviation. The same cannot be said for initiatives hatched by the central planners at the United Nations, the organization that published Kent’s controversial article on hunger.

Sri Lanka’s current food crisis stems directly from an effort to shift the country’s agriculture sector to organic farming, which saw the import of fertilizers banned and led the country to become an importer of rice instead of an exporter virtually overnight.

Many writers and thinkers are blaming Sri Lanka’s crisis on the global rise of ESG (Environmental, Social, and Governance), which was started in 2004 under the auspices of—you guessed it—the United Nations to encourage “sustainable development.”

And people are right to blame ESG. Writing for the World Economic Forum in 2016, economist Joseph Stiglitz said “Sri Lanka may be able to move directly into… high-productivity organic farming…”

Sri Lanka did. By doing so, the nation earned an ESG score of 98/100—and caused a food crisis that resulted in one president’s resignation and food insecurity for millions of people.

This is a tragedy. And while George Kent is clearly wrong—there are no benefits to world hunger—one begins to understand why his 15-year-old article published by the United Nations is suddenly sparking so much interest

It’s not just Sri Lanka, after all. The NetherlandsCanada, and other countries are all making headlines with food schemes that are likely to goose their ESG score—but cause serious problems at a time when global hunger is on the rise for the first time in decades.

In light of current global policies, anti-population rhetoric, and the track record of twentieth century collectivist food schemes—HolodomorCambodia, and Mao’s Great Leap Forward, which saw tens of millions starve to death because of government policies—George Kent’s “The Benefits of World Hunger” article hit too close to home.

(Editor’s Note: We’ve posted George Kent’s 2008 entire article below since the United Nations removed the article from their site so readers can determine for themselves Kent’s purpose in writing the article.)

We sometimes talk about hunger in the world as if it were a scourge that all of us want to see abolished, viewing it as comparable with the plague or aids. But that naïve view prevents us from coming to grips with what causes and sustains hunger. Hunger has great positive value to many people. Indeed, it is fundamental to the working of the world’s economy. Hungry people are the most productive people, especially where there is a need for manual labour.

We in developed countries sometimes see poor people by the roadside holding up signs saying “Will Work for Food.” Actually, most people work for food. It is mainly because people need food to survive that they work so hard either in producing food for themselves in subsistence-level production, or by selling their services to others in exchange for money. How many of us would sell our services if it were not for the threat of hunger?

More importantly, how many of us would sell our services so cheaply if it were not for the threat of hunger? When we sell our services cheaply, we enrich others, those who own the factories, the machines and the lands, and ultimately own the people who work for them. For those who depend on the availability of cheap labour, hunger is the foundation of their wealth.

The conventional thinking is that hunger is caused by low-paying jobs. For example, an article reports on “Brazil’s ethanol slaves: 200,000 migrant sugar cutters who prop up renewable energy boom”. While it is true that hunger is caused by low-paying jobs, we need to understand that hunger at the same time causes low-paying jobs to be created. Who would have established massive biofuel production operations in Brazil if they did not know there were thousands of hungry people desperate enough to take the awful jobs they would offer? Who would build any sort of factory if they did not know that many people would be available to take the jobs at low-pay rates?

Much of the hunger literature talks about how it is important to assure that people are well fed so that they can be more productive. That is nonsense. No one works harder than hungry people. Yes, people who are well nourished have greater capacity for productive physical activity, but well-nourished people are far less willing to do that work.

The non-governmental organization Free the Slaves defines slaves as people who are not allowed to walk away from their jobs. It estimates that there are about 27 million slaves in the world, including those who are literally locked into workrooms and held as bonded labourers in South Asia. However, they do not include people who might be described as slaves to hunger, that is, those who are free to walk away from their jobs but have nothing better to go to. Maybe most people who work are slaves to hunger?

For those of us at the high end of the social ladder, ending hunger globally would be a disaster. If there were no hunger in the world, who would plow the fields? Who would harvest our vegetables? Who would work in the rendering plants? Who would clean our toilets? We would have to produce our own food and clean our own toilets. No wonder people at the high end are not rushing to solve the hunger problem. For many of us, hunger is not a problem, but an asset.

AUTHOR

Jon Miltimore

Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune. Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

Will ESG Reform Capitalism—or Destroy It?

What “stakeholder capitalism” really means for the world.


Stakeholder capitalism has taken the global economy by storm in recent years. Its champions proclaim that it will save—and remake—the world. Will it live up to its hype or will it destroy capitalism in the name of reforming it?

Proponents pitch stakeholder capitalism as an antidote to the excesses of “shareholder capitalism,” which they condemn as too narrowly focused on maximizing profits (especially short-term profits) for corporate shareholders. This, they argue, is socially irresponsible and destructive, because it disregards the interests of other stakeholders, including customers, suppliers, employees, local communities, and society in general.

Stakeholder capitalism is ostensibly about incentivizing business leaders to take these wider considerations into account and thus make more “sustainable” decisions. This, it is argued, is also better in the long run for businesses’ bottom lines.

Today’s dominant strain of stakeholder capitalism is the doctrine known as ESG, which stands for “environmental, social, and corporate governance.” The label was coined in the 2004 report of Who Cares Wins, a joint initiative of elite financial institutions invited by the United Nations “to develop guidelines and recommendations on how to better integrate environmental, social and corporate governance issues in asset management, securities brokerage services and associated research functions.”

Who Cares Wins operated under the auspices of the UN’s Global Compact, which, as the report states, “is a corporate responsibility initiative launched by Secretary-General Kofi Annan in 2000 with the primary goal of implementing universal principles in business.”

Much progress has been made toward that goal. Since 2004, ESG has evolved from “guidelines and recommendations” to explicit standards that hold sway over huge swaths of the global economy.

These standards are set by ESG rating agencies like the Sustainability Accounting Standards Board (SASB) and enforced by investment firms that manage ESG funds. One such firm is Blackrock, whose CEO Larry Fink is a leading champion of both ESG and SASB.

In December, Reuters published a report titled “How 2021 became the year of ESG investing” which stated that, “ESG funds now account for 10% of worldwide fund assets.”

And in April, Bloomberg reported that ESG, “by some estimates represents more than $40 trillion in assets. According to Morningstar, genuine ESG funds held about $2.7 trillion in managed assets at the end of the fourth quarter.”

To access any of that capital, it is no longer enough for a business to offer a good return on investment. It must also report “environmental” and “social” metrics that meet ESG standards.

Is that a welcome development? Will the general public as non-owning “stakeholders” of these businesses be better off thanks to the implementation of ESG standards? Is stakeholder capitalism beginning to reform shareholder capitalism by widening its perspective and curing it of its narrow-minded fixation on profit uber alles?

To answer that, some clarification is in order. First of all, “shareholder capitalism” is a misleading term for laissez faire capitalism. It is true that, as Milton Friedman wrote in his 1970 critique of the “social responsibility of business” rhetoric of the time:

“In a free‐enterprise, private‐property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom.”

Since the owners of a publicly traded corporation are its shareholders, it is true that they are and ought to be the “bosses” of a corporation’s employees—including its management. It is also true that corporate executives properly have a fiduciary responsibility to maximize profits for their shareholders.

But that does not mean that shareholders reign supreme under capitalism. As the great economist Ludwig von Mises explained in his book Human Action:

“The direction of all economic affairs is in the market society a task of the entrepreneurs [which, according to Mises’s technical definition includes shareholding investors]. Theirs is the control of production. They are at the helm and steer the ship. A superficial observer would believe that they are supreme. But they are not. They are bound to obey unconditionally the captain’s orders. The captain is the consumer.”

The “sovereign consumers,” as Mises calls them, issue their orders through “their buying and their abstention from buying.” Those orders are transmitted throughout the entire economy via the price system. Entrepreneurs and investors who correctly anticipate those orders and direct production accordingly are rewarded with profits. But if one, as Mises says, “does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him.”

Under laissez faire capitalism, consumers, not shareholders, are the principal stakeholders whose preferences reign supreme. And shareholder profit is a measure of—and motivating reward for—success “in adjusting the course of production activities to the most urgent demand of the consumers,” as Mises wrote in his paper “Profit and Loss.”

This is highly relevant to the “stakeholder capitalism” discussion, because it means that, to the extent that the profit-and-loss metric is discounted for the sake of competing objectives (like serving other “stakeholders,” the sovereign consumers are dethroned, disregarded, and relatively impoverished.

Now it’s at least conceivable that ESG standards are not competing, but rather complementary to the profit-and-loss metric and thus serving consumers. In fact, that’s a big part of the ESG sales pitch: that corporations who adopt and adhere to ESG standards will enjoy higher long-term profits, because breaking free of their fixation on short-term shareholder returns will enable them to embrace more “sustainable” business practices.

In a free market, whether that promise would be fulfilled or not would be for the sovereign consumers to decide, and ESG would rise or fall on its own merits.

Unfortunately, our market economy is far from free. The State has rigged capital markets for the benefit of its elite lackeys in the financial industry: like the “Who Cares Wins” fat cats who started the ESG ball rolling in 2004 under the auspices of the United Nations.

One of the prime ways the State rigs markets is through central bank policy.

The prodigious amount of newly created money that the Federal Reserve and other central banks have pumped into financial institutions in recent years has transferred vast amounts of real wealth to those institutions from the general public. As a result, those institutions—big banks and investment companies—are now much more beholden to the State and much less beholden to consumers for their wealth.

As they say, “he who pays the piper calls the tune.” So it’s no surprise that these institutions are stumbling over themselves to get on board the State’s ESG bandwagon.

And that means that non-financial corporations also have to get with the ESG program if they want access to the Fed’s money tap and thus to capital. Especially as the average consumer becomes increasingly impoverished by disastrous economic policies, the incentive for corporations to earn market profit by pleasing consumers is being progressively superseded by the incentive to gain access to the Fed’s flow of loot by meeting the State’s “social” standards.

By increasingly controlling capital flows, the State is gaining ever more control over the entire economy.

This may explain the recent willingness of so many corporations to alienate customers and sacrifice profits on the altar of “green” and “woke” politics.

It is no coincidence that Klaus Schaub, the preeminent champion of the “Great Reset” also co-authored a book titled Stakeholder Capitalism. The upshot of stakeholder capitalism is that the State supplants the consumer as the supreme stakeholder in the economy. The sick joke of stakeholder capitalism is that it “reforms” capitalism by transforming it into a form of socialism.

AUTHOR

Dan Sanchez

Dan Sanchez is the Director of Content at the Foundation for Economic Education (FEE) and the editor-in chief of FEE.org.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.

How Corporate America Got Woke: A Review of ‘The Dictatorship of Woke Capital’

In his new book “The Dictatorship of Woke Capital,” Steve Soukup’s explores the rise of progressivism as a cultural force and explains why corporations increasingly are taking sides in politics.


How did corporate America, long considered one of the most conservative American institutions, become a lead protagonist in a culture war over all manner of progressive activism?

We now have a routine spectacle of corporate social responsibility seminars and environmental, social, and governance—or ESG—conferences, where widget makers of all kinds commit to promoting climate activism, identity politics, union labor, and sundry other causes. Somehow, selling an honest product at a fair price seems like a secondary concern in a corporate America increasingly focused on an array of stakeholders with such diffuse boundaries as “the local community,” “the global environment,” and “society at large.”

How did we get here?

Finance professional and political analyst Steve Soukup gives us a fascinating and in-depth answer in his disquisition on modern politicized investing, The Dictatorship of Woke Capital.

The first half of Soukup’s book is a high-intensity sprint through about a century and a half of intellectual history that name-checks everyone from Adam Smith and Karl Marx to Woodrow Wilson, Theodor Adorno, Saul Alinsky, and Milton Friedman. In Soukup’s telling, the shift began when Johns Hopkins University was founded in the image of Germany’s Heidelberg University in the late 19th century, and progressive political theory began to grow in popularity in the United States. The same trends later accelerated when a new generation of continental Marxism hit the US in the mid-20th century.

These developments brought about a revolution in how left-leaning theorists viewed the functions of government—and other large institutions like corporations.

First, in the progressive view, neither the old aristocracy nor liberal democracy were equipped to achieve the necessary goals of society. Rather, a professionally educated elite of administrators and bureaucrats was needed. This was the progressivism of theorists like Woodrow Wilson, Herbert Croly, and John Dewey. They carved out a large realm of governmental authority for administrators, but still considered their role to be outside of politics itself.

Eventually, however, political scientists and management experts, led by academics like Syracuse University’s Dwight Waldo, decided that expertly implementing democratically chosen policies was no longer enough. A subsequent generation of experts would be expected to substitute their own ethical and philosophical standards for those supported by voters.

“Public servants should become active, informed, politically savvy agents of change,” as one of Waldo’s colleagues would later put it.

This is the recipe for what critics of big government have come to call a permanent governing class—civil servants with effective lifetime tenure, collaborating with like-minded activists outside of government, who place their own judgment ahead of that of the voters and their elected representatives.

Yet, the trend of enlightened university graduates turning institutions toward progressive goals wasn’t confined to government agencies. The same logic would eventually apply to the management of corporations as well.

Soukup also recounts how, at the same time that American scholars of public administration and management were expanding their disciplines, self-proclaimed radicals like Antonio Gramsci in Italy, György Lukács in Hungary, and Max Horkheimer in Germany were attempting to revive Marx’s reputation and influence by explaining away many of Marxist theory’s failed predictions. When the German academics of the infamous Frankfurt School went into exile in the United States during Hitler’s rise to power, they began to exert significant influence on academics and writers in the US, culminating with unlikely pop-culture celebrity Herbert Marcuse.

Marcuse was widely associated in the popular imagination with political movements in the 1960s, from student radicalism on college campuses to free love on communes and beach blankets across America. While Soukup argues that he was less of a direct influence on left-wing politics than some have given him credit for, his ideas about the evils of capitalism and bourgeois society were very much part of the liberation politics that swept much of the world in the late 1960s and early 1970s. When soon-to-be Supreme Court Justice Lewis Powell lamented the increasing anti-business influence of radical leftists in his 1971 memo to the US Chamber of Commerce, one of the few people he criticized by name, besides Ralph Nader and Eldridge Cleaver, was Marcuse.

This revolution held that not only was a capitalist economy inherently exploitative, as classical Marxism teaches, but the entirety of modern society is repressive and dehumanizing, with everything from the nuclear family, organized religion, and formal schooling conspiring to circumscribe our essential natures and limit our infinite potential.

With so much of “the system” losing credibility, it was not surprising that public attitudes toward business, ambivalent even in the best of times, turned more hostile. Unfortunately for people with anti-establishment attitudes, there are never enough university fellowships and socialist newsletter editorial positions to go around. Well over 70 percent of Americans work in the profit-seeking private sector, once we subtract everyone who works for government agencies and non-profit organizations. This means that anti-capitalist ideas are coming from inside the building.

This conflict, in which many people—at both the entry-level and management-level—work at companies about which they feel morally ambivalent isn’t entirely a product of progressive ideology, but the academic theory behind it certainly didn’t help. My Competitive Enterprise Institute colleague Fred L. Smith, Jr. has written extensively on this problem—business leaders afflicted with an inferiority complex over their chosen profession and feel the need to “buy back” their moral standing in the world with leftist virtue signaling.

The second half of The Dictatorship of Woke Capital catalogs a series of controversial activist campaigns by some of the biggest names of Wall Street: Apple, Disney, and Amazon. The issues are varied, but the overall trend is nevertheless worrying. Rather than concentrating on what they know best and staying neutral in the culture wars, major companies have hitched their brands to one side of a contentious political divide. The verdict on whether this will ultimately be good for business is still very much uncertain.

Specific issues aside, the influence of all of those progressive and Marxist scholars the book documents can be seen in the modern claim that no institution should be outside the political realm. Soukup writes that “this battle is between those who believe that politics is and should be the overriding force in all human interactions and those who believe that politics is just part of the human experience, a part that is best kept as narrow and limited as possible.”

Attempting to turn every corporation in the world into a political combatant will not make the world a better place. One doesn’t have to be a conservative, like Soukup, or a free-market warrior of any description, to appreciate that.

Review of The Dictatorship of Woke Capital: How Political Correctness Captured Big Business (Encounter Books, 2021), 208 pp.

COLUMN BY

Richard Morrison

Richard Morrison is the Senior Editor at the Competitive Enterprise Institute.

EDITORS NOTE: This FEE column is republished with permission. ©All rights reserved.