Puzder on Stakeholder Capitalism: A Tyranny for the Good of Its Victims
January 21, 2025Puzder On Stakeholder Capitalism: A Tyranny For The Good Of Its Victims
Andrew Walworth spoke to Andrew F. Puzder about his new book, "A Tyranny for the Good of its Victims: The Ugly Truth about Stakeholder Capitalism," which makes the case that BlackRock, State Street, Vanguard, and other large asset managers have imposed their political agendas on public companies to the detriment of the American economy.
"Stakeholder capitalism is the notion that instead of having obligations to investors, like pension funds and 401k plans, corporations have a broader duty to their so-called stakeholders," Puzder said. "It's interesting they call it 'stakeholder' capitalism because they have no stake in the company. They have no investment there, in your consumers, employees, suppliers, or community, there's an obligation to all of them, which really are a proxy for society. So these massive investment firms want to be able to force their social and political goals on American corporations because they buy tremendous amounts of shares in those corporations. But to do that, they needed a duty other than to their investors, they needed a duty to society."
"For example, the S&P 500 is the most popular index in the country for all of these investment managers, rather than picking 15 or 20 out of the 500 biggest companies in America, your fund manager buys interest in all 500," he explained. "It’s a great way to invest, particularly for pension funds and people looking for retirement income."
"They probably have 500 great CEOs all striving to make their companies profitable. They likely have pretty good products, which is how they got to be in the 500 best companies. They’re probably profitable and have low debt—all the things required for a business to be successful."
"You don’t want to direct them all in the same direction," he said. "You want those 500 CEOs out there striving to make each of their individual companies profitable."
"For example, Exxon shouldn’t adopt net-zero carbon emissions goals because it’s an oil and gas company. On the other hand, a solar panel company might advocate for net-zero goals because it makes solar panels."
"The problem is that these three largest investment firms, BlackRock, State Street, and Vanguard, have become an unprecedented, huge financial force -- a three-headed monster that dominates the American economy," he said. "They manage $21 to $23 trillion, which is about 80% of U.S. GDP. That’s $65,000 per person in the United States. It’s more than the GDP of every country in the world other than China and the United States."
"They exert tremendous power over America’s CEOs," he said. "I ran a publicly traded company for 17 years, 10 of which were as a New York Stock Exchange company. When your major shareholder asks you to do something, you listen very closely. Ignoring the big three puts your job at risk, as Exxon learned. This is why we see huge U.S. companies doing things that make no sense. Why would Disney and Target—family-friendly companies—adopt a transgender agenda? Why would ExxonMobil and Chevron adopt net-zero carbon emission policies when their business is oil and gas? The reason is that a small group of financial elites dictates policy for American companies. It’s very damaging to the economy and these companies."
"Stakeholder capitalism is the notion that instead of having obligations to investors, like pension funds and 401k plans, corporations have a broader duty to their so-called stakeholders," Puzder said. "It's interesting they call it 'stakeholder' capitalism because they have no stake in the company. They have no investment there, in your consumers, employees, suppliers, or community, there's an obligation to all of them, which really are a proxy for society. So these massive investment firms want to be able to force their social and political goals on American corporations because they buy tremendous amounts of shares in those corporations. But to do that, they needed a duty other than to their investors, they needed a duty to society."
"For example, the S&P 500 is the most popular index in the country for all of these investment managers, rather than picking 15 or 20 out of the 500 biggest companies in America, your fund manager buys interest in all 500," he explained. "It’s a great way to invest, particularly for pension funds and people looking for retirement income."
"They probably have 500 great CEOs all striving to make their companies profitable. They likely have pretty good products, which is how they got to be in the 500 best companies. They’re probably profitable and have low debt—all the things required for a business to be successful."
"You don’t want to direct them all in the same direction," he said. "You want those 500 CEOs out there striving to make each of their individual companies profitable."
"For example, Exxon shouldn’t adopt net-zero carbon emissions goals because it’s an oil and gas company. On the other hand, a solar panel company might advocate for net-zero goals because it makes solar panels."
"The problem is that these three largest investment firms, BlackRock, State Street, and Vanguard, have become an unprecedented, huge financial force -- a three-headed monster that dominates the American economy," he said. "They manage $21 to $23 trillion, which is about 80% of U.S. GDP. That’s $65,000 per person in the United States. It’s more than the GDP of every country in the world other than China and the United States."
"They exert tremendous power over America’s CEOs," he said. "I ran a publicly traded company for 17 years, 10 of which were as a New York Stock Exchange company. When your major shareholder asks you to do something, you listen very closely. Ignoring the big three puts your job at risk, as Exxon learned. This is why we see huge U.S. companies doing things that make no sense. Why would Disney and Target—family-friendly companies—adopt a transgender agenda? Why would ExxonMobil and Chevron adopt net-zero carbon emission policies when their business is oil and gas? The reason is that a small group of financial elites dictates policy for American companies. It’s very damaging to the economy and these companies."
Source: https://www.realclearpolitics.com/