A slew of recent missives of a quantity sufficient to lead me to believe that printing ink, and not spit, issues forth from the hyperactive salivary glands of "the left," at least now that they have been stimulated, in Pavlovian fashion, by the distant ring of non-zero probabilities which suggest that they might, just might put their grubby little mitts on the magnets necessary to skew the moral compass of the United States to a direction more to their liking (but far again from magnetic north) makes it fairly clear that a massive press for "ethical investing," "social investing," "green investing," "stakeholder democracy," (quite a different animal from shareholder democracy mind you) or whatever you would like to call the new market corrosive noise, is just around the corner. Be afraid. Be very afraid. You would think the likes of the UAW would have learned their lessons, but I assure you, they have not.
As a rule I avoid political discussion in the entries that comprise Going Private unless they have some direct bearing on finance. I find it, however, almost impossible to keep ignoring the literal onslaught of anti-capitalism that glares menacingly at us from the other side of the looking glass. I can perhaps be fairly accused of too many viewings of Richard Dawkins' work now that I have taken it upon myself to use these pages in sounding the alarm that the most palpable threat to capitalism and free market economies is poised to spring a lethal ambush in an environment well calibrated to multiply the damage.
We are faced with the most basic of conflicts. Between rationality, reason and scientific method on one side, and the mud-like foundation of "ethical conduct" or "social responsibility," on the other. This basic conflict, between the lighter forces of knowledge and discovery and the darkness of ignorance by design and demagoguery, is likely to be the defining cultural exchange of our era, and one that spans disciplines from economics, to politics to morality. Or, perhaps, it is merely my intoxicating cocktail of a long hospital stay, constant pain and narcotics.
Some time ago, Jon Entine penned "What Should Bill Gates Do?" (subscription required) in the Wall Street Journal, a piece that highlights what must be the most important observation yet penned on the folly that is "social investing," namely that:
The dark secret of "social investing" is that it is neither art nor science: It's image and impulse. It reflects perceptions, not performance.
The social investing community also suffers from the hubris that it can separate the good guys from the bad guys.
We would do well to remember that when capital allocation decisions are made on criteria other than underlying economic prospects or value that it is the mob, more than economics, that rule returns. That which was popular (though impractical) as a business cause last year may well find itself out of favor and without any economic merit this year. (Some of the denser ethanol projects I have seen recent come to mind).
I ask you, where is my political party? The fiscally conservative party with the goal of reducing government size by 25% in ten years? The party that has absolutely no position on religion at all, and doesn't intend to discover one in my lifetime or that of my children to be? The party that doesn't care who I sleep with or how. The party that isn't dense enough to start taxing "windfall profits" on the firms that seek out the scarce energy supplies required for the country to grow at a reasonable pace over the next 20 years? The party that won't regulate the United States out of global capital markets? The party that won't fuel the Social Investing bubble?