(Geredigeerde) citaten uit Vivek Ramaswamy (vet toegevoegd): Capitalist Punishment.
Digital Edition APRIL 2023 ISBN: 978-0-06-333776-3; Print ISBN: 978-0-06-333775-6
Chapter 6. Too Big to Compete
> > > > In late 2022, the Investor Advisory Group of the International Sustainability Standards Board (ISSB), a nonprofit dedicated to “integrat[ing] ESG considerations into investment and stewardship decisions across global portfolios,” held a “climate finance” meeting. Members of the Advisory Group include behemoths of finance such as BlackRock, State Street, Vanguard, Goldman Sachs, JP Morgan, and the Carlyle Group.3 There was nothing unusual about such a meeting—just another ESG get-together among Wall Street giants committed to saving the planet. One thing was peculiar, though: no one was allowed to speak until a lawyer read out a disclaimer stating that the group was “not a cartel.”
Why the legal disclaimer? Because cartels are a serious problem in antitrust law, and ESG has a serious antitrust problem. As any antitrust lawyer will tell you, the fact that a conclave of firms says it’s not a cartel doesn’t mean it’s not a cartel.
In an ideal free market, firms act independently. They may react to one another’s production and pricing decisions, but they don’t coordinate their decisions with one another. Instead, they compete, and their competition maximizes social welfare resulting in better products at lower prices.
Consumers benefit from competition, but firms tend to hate it. Lower prices mean lower profits. As a result, firms often look for clever ways to evade competition. The purpose of antitrust law is to prohibit them from doing so. The easiest way for firms to eliminate competition is to form a cartel—to collude.
All their executives have to do is pick up the phone and agree, for example, to charge the same high price for a product. That’s why the first section of the United States’ first antitrust law—the Sherman Antitrust Act of 1890—bars firms from entering into anticompetitive agreements (or, in the words of the statute, from “combin[ing]” to “restrain trade”).
Creating Growth Opportunities in Renewables
Why are the Big Three and the major banks colluding to kill oil drilling? Their stated explanation, of course, is that they’re concerned about the environment. More recently, ESG advocates have been emphasizing the notion that Big Oil is a bad investment on the circular ground that the ESG movement will convince governments around the world to ban fossil fuels.
A more plausible answer might be that Wall Street stands to make a fortune from the “great energy transition.”
A massive Wall Street payday will be a by-product of any large-scale transition from fossil fuels to renewable energy. The scale of the project is vast and will require trillions in “green financing” from Wall Street to accomplish. There will have to be construction of new wind and solar farms as well as manufacturing plants for the batteries, solar panels, and other basic materials of renewable energy generation; the retrofitting of existing power plants; and the development of as-yet-untested technologies. All of this will require financing, and that’s how Wall Street makes its money: by collecting billions of dollars in fees by underwriting such projects.
Brian Moynihan, the CEO of Bank of America, was uncharacteristically blunt about this state of affairs. He said that the great energy transition is a “big business opportunity” for the bank.47 According to an OECD report, the clean energy transition is worth nearly $7 trillion annually.48 If Wall Street bankers base their fees on that total sum, as they traditionally do, it’s easy to see why they are so excited about ESG.
But as long as extracting energy from fossil fuels stays cheaper than using renewable energy sources, renewables will not significantly displace traditional energy sources. The only way to achieve cost competitiveness is by raising the cost of fossil fuel production. No Wall Street asset manager or bank could achieve that result on its own. But through collective action, they can, thereby jump-starting a colossal ESG money pump. < < < < <
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