Jordan Peterson and Vivek Ramaswamyk

What Corporate America Doesn’t Tell You They’re Doing | Jordan Peterson and Vivek Ramaswamy on The Mikhaila Peterson Podcast Ep. 160

Check out The Mikhaila Peterson Podcast’s Episode Page and Show Notes

Takeaways

  • ESG is a movement that influences the allocation of global capital based on the factors of environment, social, and governance 
  • ESG spawned out of a larger movement called Stakeholder Capitalism, which argued that businesses should not only focus on selling goods and services for profit but should also advance other social agendas and societal interests 
  • Executives at BlackRock, State Street, and Vanguard are using other people’s money to advance social and political agendas through the market that most of the owners of the capital actually disagree with 
    • These asset managers aggregated capital and voting power in the major corporations through their index funds being majority stakeholders
  • U.S. and Western energy markets have been most damaged by the ESG movement 
  • Many of the companies held by BlackRock are forced to adopt ESG standards in their U.S. and western operations but are not forced to do the same with their operations in China 
  • The Wall Street executives want to exercise political power without the messiness of gaining it through the political and electoral process 
  • The agendas that BlackRock pushes are much different in China compared to the United States; the agendas are tailored in whichever way they will gain BlackRock more state favors 
  • BlackRock gains state favors in China by forcing companies to adopt ESG practices in the United States, without applying those same standards to Chinese companies
    • This is not by accident; it weakens the U.S. and it strengthens China
  • The biggest opponents to the usage of fossil fuels are also the biggest opponents to nuclear energy, which is the most carbon-neutral form of energy production known to mankind   
  • Simultaneously opposing fossil fuel consumption and the utilization of nuclear energy reveals the true motives of the ESG Industrial Complex: this isn’t about climate change, it’s an attack on human flourishing, specifically human flourishing in the West relative to other parts of the world 
  • Nuclear energy might actually solve the energy crisis too effectively; once you solve “the problem” then you lose the trojan horse to pack in all of the other social agendas  
  • This is not a left-wing or a right-wing debate; this is a 1776 issue of whether you believe in distributed political and economic power, or in the old European model where a small group of enlightened elites decides how society should be organized 

Introduction 

  • Vivek Ramaswamy (@VivekGRamaswamy) is a former technology and biotech entrepreneur turned author. His most recent venture is an asset management company called Strive. He has authored the books Woke Inc. and Nation of Victims
  • Jordan Peterson (@jordanpeterson) is a clinical psychologist, podcaster, and best-selling author of 12 Rules For Life and Beyond Order. His newsletter, podcast, tour dates, and all other relevant information can be found on Jordan Peterson’s website.  
  • In this conversation, Vivek Ramaswamy, Jordan Peterson, and Mikhaila Peterson discuss the ESG Industrial Complex, why it was created, Woke Capitalism, how China uses ESG to hurt the United States, the energy crisis in Europe, nuclear energy, centralized control, and the things we can do as individuals to improve our society 
  • Host – Mikhaila Peterson (@MikhailaFuller

ESG and Social Movements

  • ESG is a movement that influences the allocation of global capital based on the factors of environment, social, and governance 
  • ESG spawned out of a larger movement called Stakeholder Capitalism, which argued that businesses should not only focus on selling goods and services for profit but should also advance other social agendas and societal interests 
  • Stakeholder Capitalism was created in the 1970s in opposition to the famous economist Milton Friedman, who believed the sole purpose of a business was to sell goods and services for profit to maximize value for shareholders 
  • Vivek Ramaswamy is not only concerned that ESG and Stakeholder Capitalism threaten capitalism and the effectiveness of organizations, but that it threatens democracy 
  • The ESG movement removes debates from the public square of democracy and puts them into boardrooms where they are unilaterally addressed with capital force 
  • Important questions to consider about ESG:
    • What exactly are these social agendas and societal interests?
    • Who gets to determine what social agendas are of interest? 

ESG and Arbitrary Power 

  • ESG is mostly related to staving off global climate change through decarbonization, and achieving global equity across race, gender, sexual orientation, and more identity-based groups 
  • Vivek believes that “he who has the gold” gets to define the social agendas and prioritize certain social interests over others 
    • He who has the gold = the people who control the largest swaths of capital 
  • Jordan Peterson: not only do they get all the gold, but they get all the moral unearned virtue of “atoning for their sins” and trying to save the world 
  • BlackRock, State Street, and Vanguard are the three largest asset managers in the world, holding an aggregate $21 trillion
    • However, it’s not their capital; it’s the capital of everyday citizens 
  • Executives at BlackRock, State Street, and Vanguard are using other people’s money to advance social and political agendas through the market that most of the owners of the capital actually disagree with 
  • BlackRock CEO Larry Fink is a billionaire in his own right, but he’s not a $21 trillionaire; he is using the capital force of other people’s money to influence social and political agendas unilaterally
    • This threatens the democratic process of our constitutional republic 

The Dominance of BlackRock and Larry Fink 

  • After the financial crash of 2008, Wall Street went from being the heroes to the villains, and things like financial inequality and systemic financial risk began to garner more attention from Main Street
  • Around the same time, emerging social movements wanted to address more than just economic injustice; they wanted to fix racial injustice, misogyny, bigotry, climate change, and the litany of other societal issues
  • Wall Street identified an opportunity: it decided to incorporate these emerging political movements into its products and services to help its public image recover, in addition to drawing attention away from systemic financial risks
  • Wall Street agrees to talk about the racially disparate effects of climate change after flying in a private jet to Davos, in exchange for the new left getting the left to look the other way and allow Wall Street’s festivities to continue 
  • Wall Street joining the new left was a cynical arranged marriage where neither side loved each other, but they birthed the hybrid of state power and corporate power that was and remains to be more powerful than either side alone 
  • Hybrid of state and corporate power = Woke Capitalism, ESG Industrial Complex
    • Jordan Peterson refers to it as fascism 
  • It takes two to tango, and the Millenial and Gen Z generations were vulnerable to go along with Woke Capitalism because these generations were starved for purpose
  • The challenge to the system became the system 
  • Vivek views the ESG Industrial Complex as the new form of fascist totalitarianism that is ironically effectuated by the trojan horse of the “free market” itself 

ESG and the Energy Crisis 

  • U.S. and western energy markets have been most damaged by the ESG movement 
  • For example, a Scope 3 emission standard makes a company like Chevron responsible for emissions across its supply chain; Chevron must account for the emissions of Amazon trucks delivering its products, the emissions of its employees commuting to and from work, etc.
    • This forces private companies who want to do business with Chevron to adopt similar practices that are probably not optimal for their business 
  • If adopting a Scope 3 standard is in the best interest of society, then its adoption should be debated through democratic processes where votes count equally, not unilaterally decided by stakeholders Capitalism 

History of the Index Fund 

  • The rise of index funds shares similarities with the rise of social media: products were given away for “free” with hidden costs that only materialize later on after network effects become entrenched 
  • Index funds replaced mutual funds by offering lower-fee exposure to the entire financial market
  • However, the asset managers not only aggregated capital, but they also aggregated voting power in the companies held in their index funds, which granted immense power to people like Larry Fink 
  • An ironic observation: it’s too hard to pick individual stocks (no one can do it!), but you can trust us to redesign the social universe of our planet in a way that solves all of our problems (that’s easy!)

Strive Asset Management: Vivek’s ESG Alternative

  • Vivek’s company Strive is trying to bring a different voice and vote to the boardroom
  • As a shareholder, Strive mandates that its companies focus on delivering excellent products and services to their customers instead of focusing on other social and political agendas 
  • Companies should do right by their customer; the aggregate consequence of all companies doing right by their customers should equate to everybody doing right in the broadest possible sense, in the absence of a centralized control system 
  • Centralized control systems cannot predict outcomes, which is exactly what the index managers said from the beginning about picking individual stocks, and yet the ESG Industrial Complex believes it can predict the societal outcomes of its agendas 
  • The CEO of Invesco privately told Vivek that he agrees with everything that Strive is saying and doing, but publicly, the CEO says everything that Larry Fink says 
    • Large clients of Invesco won’t allow him to speak openly about his views 
    • The CEO is forced to abide by these agendas if they want the business of large pension funds like Calpers and the state of New York 

Larry Fink’s Investment into ESG

  • China is one of the largest clients of investment managers like BlackRock
  • Many of the companies held by BlackRock are forced to adopt ESG standards in their U.S. and western operations but are not forced to do the same with their operations in China 
  • This is not by accident; it weakens the United States and it strengthens China
  • PetroChina is picking up the projects that firms like Exxon and Chevron are forced to drop
    • BlackRock owns about 5.7% of PetroChina, as of early 2022 
  • Guys like Larry Fink want to exercise political power without the messiness of going through the political and electoral process 

ESG: An Attack on Human Flourishing in the West 

  • Guys like Larry Fink are also economically incentivized to behave in a manner that rewards them greater favor in the different jurisdictions where they conduct business
  • The agendas that BlackRock pushes are much different in China compared to the United States
  • It’s not a consistent agenda across jurisdictions; the agenda is tailored to how they will gain more state favor in return 
    • BlackRock gains state favors in China by forcing companies to adopt ESG practices in the United States, without applying those same standards to Chinese companies
    • BlackRock gains state favors in the U.S. by aligning with the agendas of the administration and powerful institutions 
  • However, these state favors benefit BlackRock and Larry Fink, not the everyday citizens who keep their money with BlackRock, and certainly not the industries who have been destroyed by this corruption
  • The energy crisis in Europe is a result of these corrupted agendas being implemented in practice
  • Vivek jokes that ESG in Europe stands for “export Soviet gas” 
  • Russia and China pick up all the oil production that the U.S, Canada, or Norway choose to reduce, which are three of the cleanest places on Earth to produce oil and gas 
  • The biggest opponents to the usage of fossil fuels are also the biggest opponents to nuclear energy, which is the most carbon-neutral form of energy production known to mankind   
    • Vanguard’s ESG criteria exclude nuclear energy companies 
  • Simultaneously opposing fossil fuel consumption and the utilization of nuclear energy reveals the true motives of the ESG Industrial Complex: this isn’t about climate change, it’s an attack on human flourishing, specifically human flourishing in the West relative to other parts of the world 
  • Nuclear energy might actually solve the energy crisis too effectively
  • Once you solve “the problem” then you lose the trojan horse to pack in all of the other social agendas  
  • Asymmetrically imposing fossil fuel caps on the West is one way for China to catch up to the United States 
  • The United States’ adoption of nuclear energy at scale might prevent China and other near-peer adversaries from catching up 

Negligence in Global Energy Distribution 

  • Today, eight times more people die from cold temperatures than warm temperatures
  • The best way to solve temperature-related deaths is to provide more abundant access to global energy 
  • Many people that live in “net zero” countries are starving and dying from not having access to energy 
  • The Chancellor of Germany went to Canada to ask Trudeau for natural gas but was told that Canada could not accommodate such a request because there wasn’t a business case to do so
    • This is the result of Trudeau and his administration making it impossible for energy companies to flourish in Canada, according to Jordan Peterson 
  • Consequently, Germany has become completely dependent on Russia for energy, and will likely have to resort to burning coal to prevent death in the winter 

The Catastrophes of Too Much Centralized Control 

  • The small handful of actors who have benefited politically and economically from Woke Capitalism wield the capital they’ve aggregated in ways that are in their self-interest
  • This is not a left-wing or a right-wing debate; this is a 1776 issue of whether you believe in distributed political and economic power or in the older European model where a small group of enlightened elites decides how society should be organized 
  • Too much centralized control is a catastrophe in-and-of-itself because the person with the control inevitably turns into a tyrant and becomes dissociated with the populace in which they rule

The Hazards From Opposing the ESG Industrial Complex 

  • There is bottom-up demand for Strive’s services
  • The average investment was less than $5,000 when Strive first launched, compared to other $100+ million funds that typically have multi-million dollar average investments 
  • Vivek wants competition to emerge because it means that others are working towards solving the problem of a single institution unilaterally controlling the ESG hegemony 

The Freedom to Pursue Excellence

  • The ability to pursue excellence in an unrestricted and unapologetic way is part of what it means to be an American 
  • Jordan responds to this claim by making a distinction between freedom and constrained freedom, something he elaborates further on in his Exodus analysis   

The Revival of Civic Duty 

  • Virtue is a precondition for capitalism to deliver on its promise
  • Each of us hunger to be part of something that is greater than ourselves
  • It’s not only about letting free markets be free markets; civic duty must return to society   

Civic Duty Number One: Have a Relationship  

  • The conservative movement neglects the theory of duty 
  • You must act in the present in a manner that doesn’t sacrifice your medium to long-term viability and well-being
  • “When your conscience calls you on your misbehavior it’s because you’re subordinating your long-term sustainability and growth to the hedonistic and impulsive demands of the present.” – Jordan Peterson 
  • Jordan Peterson believes that people can solve their feelings of nihilism and meaningless by taking on more responsibility in their lives

Mandatory Military Service 

  • Vivek is open to the idea of mandatory military service 
  • He understands how this is contradictory to much of the government overreach he has criticized for the last hour, but it gets to the heart of citizens earning their citizenship
  • Jordan would rather make military service an invitation than a necessity 
  • “You have to pick something above yourself to serve, or you’ll be miserable and unhappy.” – Jordan Peterson 
  • Voluntary participation plays a vital psychological role
  • “An optimized social accord is predicated on a voluntary agreement.” – Jordan Peterson  
  • It’s optimal to remove the compulsory component of the ESG movement 

Optimal Resistance

  • “Children don’t want absolute freedom; they want the freedom to choose a game, and then abide by the rules of the game. Tradition offers them a variety of time-tested and sustainable games.” – Jordan Peterson 
  • Generally, it takes someone quite a long time to recover from going through something that was extremely difficult
    • They might be better off afterward, but they still pay a price for it
  • If the challenge or relationship has optimal resistance, then it is “play”, according to Jordan

An Invitation to Play, and Its Absence 

  • Play is the antithesis of the spirit of power and compulsion 
  • The rules of the game are not the optimal resistance; the rules provide the precondition for the joint engagement in optimal resistance
  • A very large percentage of career criminals are kids who did not learn to play properly between the ages of two and four 

The Dangers of Needing a Common Enemy 

  • The Judeo-Christian presumption encourages you to identify that enemy in your own heart and you try to constrain it there 
  • It is motivating to work against what is terrible just like it’s motivating to work towards what is good
    • If you locate the “terrible” inside of you, then you don’t end up with torches in the street

Strive Encourages People to Change the Norms

  • Strive is providing a vehicle for people to be able to speak, but without having to take the same risks as speaking up in their workplace, for example 
  • You can speak up with your dollars 
  • Strive’s exchange-traded funds are accessible to everyone 

The Revival of Courage 

  • Vivek challenges the listener to speak up when they think they’re the only person in the room thinking what they are thinking; odds are there are others in the room with the same thoughts 
  • In the same way that fear has been infectious in our culture over the last ten years, courage can become infectious as well 
  • Jordan says that people who don’t speak up aren’t necessarily cowards; they often have competing priorities and aren’t willing to sacrifice one set of their virtues for another 
    • One way to resolve this is to get on firmer ground financially in the medium to long-term so you’re in a better position to speak your mind without sacrificing your responsibility to the people that depend on their income 

Closing Thoughts 

  • Jordan believes that Vivek’s funds are a partial solution to the chaos in the world
  • Ideally, society needs a plethora of optimal, partial solutions, and Strive is working to become one of those partial solutions
The Mikhaila Peterson Podcast : , , , , , , , , ,
Notes By Stan Rizzo

More Notes on these topics

Top Insights and Tactics From

31 Best Podcasts of All Time

FREE when you join over 35,000 subscribers to the
Podcast Notes newsletter

No Thanks