There currently exists in America a worrying coordination of federal executive branch agencies and private companies to bypass democracy in order to push progressive, woke ideologies. Unelected bureaucrats are abusing their delegated authority from Congress. These people frequently pass through a revolving door between government and business making them adept at bending the administrative state to their ends. This has created a leftist business class that is obsessed with virtue signaling for the purpose of their own personal self-promotion. They live in their own echo chamber.
In the private sector, the rise of proxy voting by large asset managers has removed accountability from corporations in the same way that administrative agencies have removed accountability from the legislative process. This problem has grown so troublesome, that large asset managers have gone as far as to foist activists on to corporate boards to “force behaviors.”
I am not in favor of government picking winners and losers. I believe free markets allow the best ideas and inventions to thrive while lesser ideas perish. But the market becomes drastically less free as federal agencies join at the hip with select corporations to promote policies that kill other American industries and would not be supported by the populace as a whole. Suddenly, our market’s capability to promote innovation and American needs decreases in favor of the political agenda of those in charge. In Kentucky, this is especially concerning as these efforts seek to kill one of Kentucky’s signature industries—fossil fuels. Once this economic tampering begins, state leaders are left with no choice but to speak and act in defense of the economic well-being of our states.
This is why I recently championed the passage of SB 205 in Kentucky, which was signed into law earlier this year. The law directs the Commonwealth, through the guidance of the State Treasurer, to divest from companies that engage in energy company boycotts. It also prohibits governmental entities from entering into contracts with companies that engage in energy company boycotts. My message has been clear: the Commonwealth of Kentucky will not do business with those companies that seek to squelch the lifeblood of our economy. The tax dollars of Kentucky citizens should not be used to cripple our own livelihood.
Other states have passed measures similar to SB 205, and state financial officers are leading the way. My colleague West Virginia Treasurer Riley Moore released a letter signed by fifteen state treasurers addressing the Biden Administration’s efforts to privately pressure U.S. financial institutions to cease lending to or investing in coal, natural gas, and oil companies. The letter makes it clear that we “strongly oppose command-and-control economic policies that attempt to bend the free market to the political will of government officials.”
Earlier this month, I took another approach, asking Kentucky Attorney General Daniel Cameron, to render an opinion on whether “stakeholder capitalism,” a term favored by BlackRock CEO Larry Fink, and ESG investment practices connected to public pension funds are consistent with Kentucky law governing fiduciary duties. That opinion, rendered on Wednesday, makes it clear that considerations external to a fiduciary’s “single-minded purpose in their beneficiaries’ investments,” prioritize “activist goals over the interests of their public and state employee clients” and, therefore, are inconsistent with Kentucky law.
Other states have likewise taken umbrage with large asset managers imposing their progressive designs on corporate America and pushed back against firms that often manage large portions of state employee pension funds. In Florida, CFO Jimmy Patronis supported the governor’s decision to retake proxy voting from fund managers, putting power back in the hands of elected officials answerable to the people.
More recently, Utah State Treasurer Marlo Oaks, every statewide officer, and their entire federal delegation also blasted S&P Global for including Environmental, Social, and Governance credit indicators as part of its credit ratings for states. And just last week, Treasurer Julie Ellsworth and the state of Idaho followed suit.
Ultimately, as Biden’s bureaucrats advance these harmful policies to the detriment of hardworking Americans, we can see yet another example of how the administrative state in America has grown far too large and, simultaneously, diminished the voice of the American people. It is time we return this power to the people and their elected leaders.