Is Resistance to the Elites Futile?

Published July 25, 2023

A recent episode of Heartland’s In the Tank podcast discussed BlackRock, ESG, and the power of global elites to push their agendas. Several viewers chided the ITT Gang for excessive pessimism. Indeed, the next episode opened with a further discussion. I think they were spot on. [See the episodes at the links above, or embedded at the bottom of this post.] The global elites have the resources to play a long game, perhaps even abandoning the term ESG while devising a new path forward. Remaining ignorant of these threats to freedom does not protect our freedom.

Public choice economics has long examined special interest influence, and much of the analysis is bleak. Special interests have natural advantages over general interests – consumers or taxpayers – that cannot be wished away. Much of the discussion today uses the term cronyism. But public choice can be excessively pessimistic as well. The public choice theory of regulation explained the persistence of inefficient regulation of trucking, railroad, and airline industries. Yet as Sam Peltzman observed in 1989, no sooner was the ink dry on the seminal papers explaining why such regulation was here to stay, deregulation occurred.

With these preliminaries, here are some reasons the elites may not be as powerful as we might fear.

  • The ITT Gang noted how BlackRock preferred ESG flying under the radar. Perhaps elites may proceed with ESG under a new brand name. But I suspect that Larry Fink has a good read on politics. In his judgment, ESG and the woke Great Reset had a better chance of succeeding if the public did not object. This suggests that BlackRock does not view its political power as unlimited.
  • The cost of “buying” politicians is endogenous and can escalate quickly in response to a changed political landscape. Politicians do not like losing elections. Their fear may be excessive given the high rates of reelection, but the fear reveals that they do not consider themselves bulletproof. They will be highly sensitive to votes or actions with potential to catalyze opposition. Politicians will demand significant compensation for a vote guaranteed to push them out of office.
  • Vivek Ramaswamy calls Wall Street’s embrace of ESG an arranged marriage of convenience. Financial institutions deemed too big to fail needed cover to hold off the Occupy Wall Street movement. This contains an implicit message. Why did the Wall Street giants need cover, or think they needed cover, if they are irresistable?
  • Critics claim that financial institutions use ESG as cover to charge significantly higher management fees. The fees for passive index funds mimicking the S&P are low. Yet this manipulation implies that BlackRock does not possess market power over fees. If so, they could charge the higher ESG fees for index funds. Financial institutions may knowingly dupe investors with ESG, but this still means they must fool investors to get higher fees. BlackRock faces market discipline.
  • Financial institutions want to make money. Debanking almost half of Americans will miss out on lots of profit. Most students of regulation accept some version of capture theory, that the regulated businesses assert significant influence over the regulatory agency and its rules. If BlackRock sees ESG as a path to greater profits, they will not want to miss out on profits from half of America.
  • The business-government-university-NGO-foundation complex pushing the Great Reset may seem like a Leviathan. Scores – probably hundreds or thousands – of nonprofit policy groups with billions of dollars and thousands of employees push ESG, wokeness, and the Reset. Robert Bryce puts the anti-industry industry’s annual budget at over $4 billion. Assembling so many intelligent and creative progressives will produce innovative policies, legal strategies, arguments, as well as piles of fake studies. Conservatives and libertarians are outgunned, but progressives do not possess superior weaponry; this is not Polish cavalry facing German panzers. The opposition may have us outgunned perhaps ten to one, but this imbalance could potentially be addressed.
  • Progressives and liberals can skillfully play the system, thanks to liberal dominance of law schools and liberals writing the laws, regulations, and regulatory guidance. Intimate detailed knowledge helps the fashioning of legal work-arounds, an undeniable advantage. But this is ultimately procedural power, not physical power. Progressives in the justice system might manufacture legal charges to disqualify Donald Trump from the presidency. This is procedural power. A totalitarian regime can kill or jail opponents with impunity, which is physical power. Procedural power only works within the current game, and most games can be stopped; alternatively, check almost always exist on procedural power. Jury nullification is one example.  Sheriffs in California who stopped enforcing the state’s COVID edicts is another. Many forms of Federal procedural power can be checked if states do not take money from Washington.
  • Options limiting procedural power may require coordinated action by states. Fortunately, red state governors and attorneys general are recognizing the need for bold action. Republicans since Ronald Reagan have longed to abolish the U.S. Department of Education; its influence can be greatly diminished if red states stop taking K-12 education dollars from Washington and devise an alternative to Federal student loans. Thanks to folks like The Heartland Institute, states are beginning to act, offering hope for improvement is the near future.
  • The regulatory powers being using were approved – or at least accepted – by Americans. Fear of being ripped off by unscrupulous bankers led to the web of banking and finance laws now and regulations being used to advance ESG. Giving the government power to protect us has had unintended consequences and enables a much worse rip off by the elites than the most unscrupulous miscreants ever could carry out in the market. But we have chosen to play this game and we can also end the game.

There is of course one further reason to avoid pessimism. We are likely to give up if the fight seems hopeless. A lack of resistance guarantees the success of the elites’ freedom-crushing plans. BlackRock, the World Economic Forum, and the U.N. would love for people who love freedom, independence, and autonomy to think resistance is futile and resign themselves to the Great Reset. I do not wish to diminish the resources at the disposal of the elites. But there are hints that the elites are not all-powerful and which offer hope in the fight for freedom.