Revenge of the Free Market Utopians
by John Laumer, Philadelphia on 02. 2.06
A group of General Electric Company shareholders has filed a resolution urging GE not to back regulatory approaches to mitigating climate change. No matter if such regulations could give GE a competitive advantage with a host of resource efficient products and services. The Action Fund Management LLC, an investment advisor to the Free Enterprise Action Fund, has filed a shareholder resolution asking GE to justify its support to curb greenhouse gas emissions. Apparently GE requested the U.S. Securities and Exchange Commission allow it to exclude the resolution, but the commission denied that request.
The following cite from the Free Enterprise Action Fund website tells us all we need to know.
The Free Enterprise Action Fund was created in response to the growing threat of the anti-business movement, i.e. social and political activists operating under the banners of "Corporate Social Responsibility" (CSR) and "Socially Responsible Investing" (SRI). These radical activists target law-abiding corporations with threats of organized boycott, negative publicity, shareholder controversy, litigation and/or product disparagement unless and until their demands are met.
'Tip-of-the-hat' to Disinfopedia for this perspective piece:
"According to a January 26, 2006 report in the Chicago Tribune, "The fund's advocacy stance boils down to opposing many of the things supported by traditional 'social investment funds,' because issues like global warming or corporate governance distract business from its real role of operating in the best interests of shareholders." "
"The Tribune called it the "Stupid Investment of the Week ... Strip away the rhetoric, and you're getting a very expensive, underperforming index fund, while Milloy and partner Thomas Borelli get a platform for raising their pet issues. ... An expense ratio capped at 2 percent--ridiculously high for a portfolio of corporate giants--makes stock market returns unrealistic. From inception on March 1 of last year through Dec. 31, Free Enterprise Action returned 2.32 percent; the S&P 500 returned 4.72 percent. That's ugly.""
Isn't the free market fun?
As an investment management major I have an interest in SRIs and CSRs. The major problem with American investing today is the lack of forward thinking. The whole market is currently tooled toward fast trades and quick money. People like this investment group choose to ignore the future impacts of business in favor of instant returns. No intelligent person, business oriented or otherwise, can claim that environmental issues will not have an impact on the future of our economy. Even if they are completely human-centric people they have to at least realize that pollution is eventually going to cause insurmountable health problems across the globe. The really amazing thing I’ve experienced is meeting these pure capitalists and learning that they have children and grandchildren and that they are completely unconcerned with their future. Never ceases to amaze me.
The staunchest advocates of free markets have in recent years been known to defend such economics as ultimately more beneficial to environmental and social causes. Without assuming the ethical views of the management of this company's funds, we can guess that any progress (ecological or otherwise) that would seen by them as being made in industrialized societies today would be through market forces. How are these forces to be given the liberty to operate if not through "organized boycott, negative publicity, shareholder controversy, litigation and/or product disparagement"?
Sole dedication to the growth of capital, oblivious to issues at hand, is irresponsible and usurps the power of the free market and, ultimately, democracy.
Socially responsible investment is the only viable alternative to government regulation on many social issues. It's a tragedy that this company is so crippled by its own argument that they can't even seeing the free market doing its best work yet.
You can't exactly say this group is in favor of instant returns when their portfolio had a dismal return of 2.32 percent. Surely they could do better than that if they weren't so bent on pursuing their own agenda... which makes them just as guilty as the companies they attack. No?