LTP News Sharing:
In a Newsweek commentary, Stephen Soukup provides an intriguing look at what led to the failure of the Silicon Valley Bank (SVB). Surprisingly, according to Stephen, it actually wasn’t the ESG agenda which he and the National Center hate so much:
While there is little doubt that Silicon Valley Bank was up to its proverbial eyeballs in ESG, lending to risky “sustainable” environmental startups and backing “woke” business practices, none of this was directly related to the bank’s immediate troubles…. SVB had a number of problems that directly affected its viability. They were not ESG-related….
ESG is what one might call a “first-world problem.” It is an indulgence, something that occurs on a mass scale only when times are good and money is plentiful for such extraneous, non-functional business expenditures…. [I]n the short term, ESG is nothing more than a distraction, a shiny bauble that keeps corporate executives from doing what they’re supposed to be doing….
ESG is part of a wild and distressing pattern of misallocation of capital for non-pecuniary purposes that constitutes a genuine culture of corruption throughout American business today. And that culture of corruption—the updated version of Galbraith’s bezzle—is almost entirely a Federal Reserve-created phenomenon….
At Silicon Valley’s much-ballyhooed tech firms—many of which were SVB customers—innovation and creativity have been compromised because practically free money made them less critical to a business’s survival than has historically been the case. Countless alternative energy projects were funded over the last decade, despite the high likelihood that they would fail, wasting capital and effectively decapitalizing more proven energy investments because of their assumed political risks. Banks lent foolishly. Corporations in all sectors focused on non-business-related social and political matters, donating hundreds of millions of dollars of borrowed money to social justice causes and campaigns, putting shareholders on the hook for executives’ activism. The bezzle grew and grew because the Fed enabled it to.
Stephen Soukup is the publisher of The Political Forum and the Director of The Political Forum Institute, which is a project of the National Center for Public Policy Research. He is the author of The Dictatorship of Woke Capital (2021) and the co-author (with Andy Puzder) of the upcoming Other People’s Money (Fall 2023).
Read his entire column here.
Author: Jennifer Biddison