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Volume XIX Number 3 - February 15, 2020     RSS Feed   

A Periodic Newsletter for Committed Texas Conservatives

In This Issue

California Here We Come...Not

GOP Optimism Growing In Texas For 2020 Cycle

Medicare For All A Terrible Idea

The Craven Corporation, Now They Want To Virtue Signal With Your Money By Neland D. Nobel, Contributing Editor

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California Here We Come...Not

We have all read about the significant number of California residents leaving for Arizona, Nevada and Texas to get away from the high costs of living, high taxes, crazy home prices and a runaway problem with the homeless and rapid growth of illegal immigration.

So, as Texans, we welcome refugees from California seeking a better and more affordable life for their families. However, we don't want you bringing with you the failed political ideas of California.

It is important that we are teaching our new citizens about why California is failing its middle class and how these discredited political views will be no more successful in Texas than they were in California.

For conservatives, this task is critical or we will condemn Texas to the same insurmountable problems California is suffering from. The failures of California are not to be emulated from, but to learn from.

GOP Optimism Growing In Texas For 2020 Cycle

GOP voter enthusiasm is on the rise. Over the past few weeks, Republicans have been getting better news. President Trump's approval ratings are on the rise as the Democrat's impeachment slog continued. The acquittal may not spell the end of Democrat harassment, but at this point, it is only helping Trump.

Next bit of good news: Gary Gates' victory for State Representative in Fort Bend County by 16 points demonstrates the decline in the value of the Beto brand who had moved into the district full-time to help the leftist Democratic candidate who, by the way, had huge money in the race.

Next in the Texas CD7 race - so called "moderate" Lizzie Fletcher's race for re-election is getting more problematic. The non-partisan Cook Political Report now rates the race lean Democrat down from solid Democrat due to the spirited race for the GOP nomination.

Finally, Senator John Cornyn, his race is rated solid Republican by the non-partisan Cook Political Report. The myriad of virtually unknown candidates statewide could result in a runoff with each candidate under 20% in the first round. He is not going anywhere.

Medicare For All A Terrible Idea

TCR Comment: Rush Limbaugh this week explained why Medicare For All is bad for us. Share this with your uninformed friends.

"They've got this thing called Medicare for All, which is designed to make you think that what they want to do is expand Medicare for 65 and older and just include everybody on it. It's not what they mean. It's what they want you to think."

"Medicare for All is something entirely different. Medicare for All is what Obama really wanted with Obamacare. It's what he wanted it to eventually become, and that is single payer. You have no choice. If you have private insurance, it's gonna be taken away from you. If you have insurance at your employer, it's gonna be taken away from you - and over 150 million Americans get their health insurance at work.

"It's gonna be taken away from you with Medicare for All. But remember; Medicare for All is not the current Medicare program just applied to everybody. It's entirely new, single payer. It takes away from you every aspect of your health care today that you might like and puts the government in total control of health insurance, health coverage, and health treatment. But they're not telling you that.

"They want you to think that Medicare for All is simply the expansion of existing Medicare to everybody, and it isn't. In the U.K., you can go to government providers or you can spend and go to a private, nongovernment provider. You will not have that choice under Medicare for All. They are not gonna allow any private health care. Sanders and Warren and any other Democrats will not allow any private health care under Medicare for All. Don't doubt me."

The Craven Corporation
Now They Want To Virtue Signal With Your Money

By Neland D. Nobel, Contributing Editor

The use of economic muscle to accomplish some political goal seems to be accelerating. Perhaps that is because it is often quite effective. One of the earliest manifestations was the mobilization of the "civil rights" movement in the US to pass sanctions against apartheid South Africa in the late 1980s. Many US corporations, churches, and municipalities joined in this effort at regime change of a foreign nation. Ironically, much of this pressure came after the white government had already decided to do something truly historic, to wit, peacefully yield power through a new constitution. The sanctions simply made many citizens of all races miserable but did little to alter the outcome.

Notice such efforts were never undertaken against multiple African dictators that treated their people not only worse than South Africa, but actually were complicit in genocide.

Merrill Lynch, at the time the nation's largest brokerage house, even went so far as to deny trading to its clients ASA, a closed end mutual fund of South African mines listed on the New York Stock Exchange. It was questionable whether a broker, whose function it is to facilitate voluntary exchange between a willing buyer and a willing seller, should deny access to an exchange in which they were a prominent member. The company clearly asserted its will over that of the clients it served.

Critics at the time noted that no matter how passionate the cause, the precedent is troubling. From time to time, political pressure groups have objected to all kinds of companies: arms and munitions, pesticides, mining, timber, fertilizer, pharmaceuticals, alcohol, tobacco, and even junk food. If we start restricting trading in companies simply because someone has an objection to their products, or with which countries they choose to operate in, open markets in a variety of items, and trading in the shares of a variety of corporations, would grind to a halt.

Now it would seem, the pressuring of corporations by outside sources has morphed into the anti-Israel BDS movement. Once the corporation is politicized, anything can happen.

Capital markets will freeze up as investment choices will be determined by the loudest pressure group. The allocation of capital will become political instead of based on economics.

Domestic economic pressure came in the form of Operation Push, also by elements of the "civil rights" movement which resulted in bullying corporations, Government Sponsored Enterprises such as Fannie Mae, and banking groups; to change lending standards. Later they mounted pressure to pass legislation like the Community Reinvestment Act, which many experts have held responsible for the real estate lead crash of 2008. Note that many corporations forced to change their policies wound up requiring government bailouts.

In this regard, cooperation seems inevitably to lead to coercion. Corporations that initially did not respond to demands were later compelled by legislation.

Now other pressure groups see the success of the civil rights movement and wish now to copy the techniques and strategies that were perfected.

The next stage in this evolution seems to be not just outside pressure groups wishing to use public corporations for political purposes but for corporate management to inflict inside pressure on themselves. Management wants to use its power to mobilize the corporation for the political purposes of the management team. We see the rise of the "woke" corporation.

For example, Nike, chose controversial football player Colin Kaepernick as a spokesman and advisor, despite his many anti-American and anti-police outbursts. What does hating America and police officers have to do with selling shoes?

This points out another obvious problem. Corporate executives typically are experts in the narrow field of their particular company. They don't necessarily possess expertise in matters of social or political policy. They have a tendency to be ignorant on many issues and can easily be bullied by pressure groups. Groups incidentally, that loudly proclaim their opposition to bullying.

In a competitive marketplace, those that object to such perverse grandstanding can sell their stock in the company and buy shoes from a competitor. But management in many cases is willing to earn shareholders less money, by alienating a large swath of customers in order to "virtue signal." They want to be popular, even at the expense of business profits or the clients they serve that don't share their politics.

Do we really want political decisions made by a narrow crust of wealthy executives rather than have contentious issues resolved at the ballot box? It is interesting that those that often decry the influence of corporations in politics, in fact want corporations to intervene on their side of issues.

Besides the damage done to democracy, the consequence of outside or inside political pressure is that the very nature of the corporation may be changed.

In addition, it is clear that one man's political virtue is another man's vice. In most cases, it is a highly subjective Left-Wing agenda being forced on corporations.

For example, if man caused warming were true, the problem could be addressed by simple and inexpensive changes in policy as opposed to government taking over the economy? After all, we have had to deal with naturally caused climate change before.

Advocating nuclear power may indeed be more "virtuous" than supporting windmills and solar power. Reasonable men can reasonably differ on such things, despite claims that the "science is settled." Science has never been static anyway. But the Left-Wing interpretation of things is dominant.

Ironically, millions of people vote with their feet each year for climate change. Did you ever notice the most rapidly growing states are in the Sunbelt? The fastest growing county in the country is Maricopa County in the Sonoran Desert in Arizona. We are not talking about a one-degree change in temperature over a hundred years. We are talking likely twenty-degree change, almost instantly.

Mostly coming from socialist and environmental groups, it is asserted that the purpose of a corporation is no longer to make profits but to serve other "stakeholders" than bond holders, stockholders, and customers. We see the rise of the ESG movement (Environment, Social, Governance) movement. Increasingly business leaders, such as the Business Roundtable, are accepting such faulty assumptions.

Corporations are now to serve narrow and fanatic political causes, not to serve the shareholders or customers. Companies stumble all over themselves to earn high ESG ratings and investment flows are being redirected.

This expanded view of "stakeholders" is problematical. In a sense, we are all "stakeholders" in society, so where does this end? It has no limits as we are all "stakeholders" in the earth, in that we live here. That is like saying we all have an interest in human cooperation and then concluding the solution is we should all be forced into one universal religion.

Without exaggeration, environmentalism has become a fanatic secular religion. Much the same can be said about feminism.

Notice these "stakeholders" believe their interests are superior to the people who put up the money and took the risk to build a successful business. Management is no longer to maximize profits for its shareholders so much as it is to manage the corporation to fulfill the political goals of the social justice warrior. They want to use your money for their politics.

That is kind of a soft socialism, which historically has always led to coercive or hard socialism.

The ESG movement accepts the socialist premise that maximizing profit has immoral connotations and to be a "good" company, one must sacrifice the shareholder and bondholder for the aims of the new "stakeholders." It promotes the idea that private corporations are to be vehicles for political causes, often to the detriment of the true stakeholders, the owners, creditors, and clients of the firm.

We have a model that shows how corporations can be harnessed for the purposes of the state, and yet remain nominally in private hands. A quick study of how corporations functioned in such conditions can be found in the history of fascist Italy, Nazi Germany, and today's Communist China.

No apologies need be made for profit and loss. In a free economy, all trading is done voluntarily by those seeking their own best interests. If profit and loss no longer guides corporate behavior, the vital signals which tell companies they are serving their customers correctly will be lost. Political goals supplant the goal of serving and satisfying customers.

And now even money management firms want to put ESG goals in front of their fiduciary responsibilities. For example, some portfolio managers don't want to purchase the shares of oil and gas companies because they may not have high ESG ratings. But what if these companies are now a sound value? Does that mean clients are denied the benefit of buying less expensive companies? Evidence shows ESG money managers are piling into the narrow and expensive area of hi-tech companies.

The very nature of money management is to buy cheap and sell expensive. Seeking value is the mechanism for making markets efficient.

What will it mean for market efficiency if all the investment dollars are directed into a handful of selected ESG companies or industry sectors? Won't this overvalue some portions of the stock market and undervalue others? Is stock selection now to become an ESG beauty pageant?

It is market efficiency that sees that capital flows to the companies most successful at satisfying consumers and away from those that don't. The question is whether capital flows will be directed by economic factors or replaced by political genuflection.

It is the very efficiency of the market which allows the average investor to use index funds successfully. Without market efficiency, investing by the public will be undermined. It keeps market valuations in line and allows a rational basis for managing money. Markets can't be efficient if political choices supplant economic choices. Markets that become unbalanced are prone to crashes, destroying wealth and undermining social stability and faith in the market system.

There is in addition a basic legal question. As a money manager, are you acting as a fiduciary that is in the best interests of the client, or the shareholder; or are you putting the interest of the client behind those of other loud and opinionated "stakeholders?" Which master do you serve? Those who put up the money or those that invited themselves to the table?

Both individual companies and investment firms should act in a way to maximize profit with the least market risk. Make shareholders and clients the most money you can, of course without fraud, monopoly, or political corruption. Let the shareholders then spend their own money on the causes they deem important and proper. To do otherwise is a violation of fiduciary duties.

The craven corporation is a danger to the very essence of being a corporation, and it is a danger to the very profit and loss system which has created the great bounty that has lifted the world out of poverty. Just think. The craven corporation does all this damage, funded with your money. It then proceeds to corrode the very system which allowed for its success.

Thanks, social justice warriors.

To be fair, most corporations are not inviting ESG on themselves. They are being pressured. But they certainly are responsible for being cowards.


Neland D. Nobel is a retired money manager and Certified Financial Planner.


TCR on the Air

Red, White, and Blue featuring TCR Editor Gary Polland on Fridays at 7:30 pm on Houston Public Media TV 8, replaying Saturday at 6:30 p.m. on Channel 8, Monday at 11:30 pm on Channel 8.2 and on the web at www.houstonpublicmedia.org.

Upcoming show:
02-21-20 - Bail Bond Reform in Texas, working or failing - a report.

About Your Editor

Gary Polland is a long-time conservative and Republican spokesman, fund-raiser, and leader who completed three terms as the Harris County Republican Chairman. During his three terms, Gary was described as the most successful county Chairman in America by Human Events - The National Conservative Weekly. He is in his twenty-second year of editing a newsletter dealing with key conservative and Republican issues. The last eighteen years he has edited Texas Conservative Review. As a public service for the last 16 years, Gary has published election guides for the GOP primary, general elections and city elections, all with the purpose of assisting conservative candidates. Gary is also in his 18th year of co-hosting Red, White and Blue on Houston Public Media TV 8 PBS Houston, longest running political talk show in Texas history. Gary serves on the Board of Directors of American Values, a national pro-family, pro-faith, conservative organization supporting the unity of the American people around the vision of our founding fathers and dedicated to reminding the public of the conservative principles fundamental to the survival of our nation. Gary is a practicing attorney and strategic consultant. He can be reached at (713) 621-6335.

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