ESG Investing Is a Nonstarter, But We Keep Getting Pushed Into It

ESG Investing Is a Nonstarter, But We Keep Getting Pushed Into It

By Dr. Thomas Patterson |

The world of finance is turning bullish on ESG, an investment strategy directing funds to corporations with woke environmental, social, and governance policies. Trillions of dollars have already flowed into ESG funds, projected to hit $50 trillion in two years.

ESG boosters claim the funds enable investors to do well by doing good. You can make good money while simultaneously bettering the world.

Wish it were so. In fact, ESG funds do neither.

Investing goals that compete with shareholder profitability have predictable results. A recent NYU study compared investment results created by firms with high versus low ESG scores, which are generated by professional ratings agencies. Over the past five years, high ESG funds have returned 6.3% compared with 8.9% for others. Over time, that’s a chunk of change.

Thus, Kentucky AG Daniel Cameron warned his state’s pension fund managers to avoid funds that “put ancillary interests before investment returns,” which would “violate statutory and contractual fiduciary duties” to the pensioners depending on them. Seniors deserve better than to have their retirements hijacked by an ideology they might not share.

The basic tenants of ESG are radical environmental policy (primarily the elimination of fossil fuels), woke social policies promoted by the company, and corporate governance that replaces merit with preferences based on race or gender.

The driving forces behind the growth of ESG are three very powerful financial firms. BlackRock, Vanguard, and State Street are, between them, the largest shareholders in 80% of the companies in the S&P 500. Their financial heft gives them the ability to force companies to implement ESG, making them, in effect, upstream controllers of these companies.

ESG is based on the foundational principle of progressivism—the notion that the most beneficial governance comes from giving experts, the best and the brightest, control over our lives. Personal freedoms and democratic processes must yield to a governing elite that knows best.

No goal is pursued more tenaciously than the elimination of carbon-based fuels. Consumers must be pushed into using renewables, principally by regulating fossil fuels into being scarce and expensive.

Green New Dealers may be thrilled to have the backing of the ESG behemoths, but the problem is that Europe is already experiencing a full-blown energy crisis, with America not far behind. For a year now, a post-COVID demand surge, combined with nuclear plant closures worldwide, long-standing over-investment in impractical renewables, and a global drop of over 50% in oil and gas investment since 2014, have combined to put serious pressure on economies worldwide.

Aluminum smelters, glass factories, and other EU manufacturers have had to shutter plants for lack of affordable energy. In the UK, the number of people behind on their energy bills ballooned from 3 million to 11 million earlier this year. Even in relatively secure Germany, there is deep concern over looming shortages of heating oil this winter after being shut off by Russia.

The hard fact is that, in our current state of technology, fossil fuels are the mainstay economic resource, whether we like it or not. We need more oil, natural gas, and nuclear energy, not less.

The hard-core environmental left, now joined by ESG interests, has worked itself into a lather insisting we can only avoid global catastrophe by achieving zero carbon emissions by 2050. Environmental alarmists achieve about the same accuracy with their predictions as the apocalyptic preachers of yesteryear. But even in the early stages of the project, it’s becoming obvious that it simply can’t be done.

Even if eliminating all emissions of carbon would significantly reduce atmospheric temperatures, and even if humans are the main villains of global warming, and even if we could somehow convince China and India to not sabotage the effort, it doesn’t matter. It’s neither economically nor politically possible to deprive humankind of the benefits of carbon fuels.

The financial titans pushing ESG are blowing an opportunity to do some real good. We need respected leaders who can stand up to the hysteria and exaggerations to propose practical, feasible solutions that would protect humanity from the worst effects of atmospheric warming.

Instead, the self-appointed experts are using other peoples’ trillions to push us down the road to dystopian government and perpetual poverty.

Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.

Medical Education Slides into Intolerant Wokeness

Medical Education Slides into Intolerant Wokeness

By Dr. Thomas Patterson |

One of the things I appreciated most during my 30 years practicing medicine in community hospital ERs was that race just didn’t matter very much. ERs were open to all, and there was one standard of care for all races and classes.

That was then. Today a wave of intolerant wokeness is sweeping over our healthcare system, insisting that medicine is shot through with systemic racism and that research and education efforts must be diverted from medical science to “dismantling white supremacy” in medicine.

The Association of American Medical Colleges (AAMC) recently introduced their new Diversity, Equity, and Inclusion (DEI) guidelines, which require that all medical students be taught to practice “allyship” when “witnessing injustice such as ‘microaggressions.’”

Residents are told to use their more advanced knowledge of intersectionality in making clinical decisions. (Just when you thought that race-based medical protocols were in our dark past.). Faculty are charged with teaching how “systems of power, privilege, and oppression inform policies and practices.”

Medical schools are enthusiastically falling in line. Examples abound. In 2021, the Anti-Racism Task Force at Columbia and the Diversity Task Force at Indiana University, joined by the University of Texas and other medical schools, endorsed the recommended AAMC “competencies.” “Health equity” concepts have become a prominent component of medical education.

The University of North Carolina is one of many schools that not only teach “social justice” and “anti-racism,” but use medical school applications to ensure compliance with principles of diversity in race, gender, and sexual orientation. Applicants who demonstrate reluctance toward the DEI agenda are weeded out in the application process. Oregon Health and Science University faculty are among those evaluated on their “DEI, anti-racism, and social justice core competencies” in performance appraisals.

The University of Arizona is on board too, with some additional twists. All faculty and staff are required to complete six hours of DEI training and complete one Implicit Association Test annually (in spite of its dubious relevance). Each of 17 clinical departments is required to hold three DEI credit-eligible events per year. All departments also have designated “diversity champions” to oversee compliance and round up laggards.

This is bad, very bad news for medical education, future doctors, and patients. Even before DEI was a thing, the quality of medical instruction had been in decline. Incoming students are less qualified and fail rates on board exams are climbing, partly because some students from groups that have been historically underserved are either allowed to skip the Medical College Admissions Test or are admitted with lower scores than those required from white and Asian applicants.

But instead of beefing up instruction in anatomy, physiology, and other disciplines that might come in handy when actually practicing medicine, medical schools are spending instructional time on such matters as white privilege and anti-racism, including Critical Race Theory (CRT).

CRT includes the notion that white people are inherently prejudiced against people of color and that there really is nothing they can do but acknowledge their defect, apologize, and grant compensating privileges to people of contrasting skin color, who by definition are incapable of bigotry. Dissenters from this new orthodoxy can be accused of “micro-aggressions” and “repressive practices” with ominous repercussions for their careers.

This intellectual intolerance also extends to those skeptical of “gender affirming care” for adolescents. This new practice provides permanent medical and surgical alterations to gender-confused school children for the rest of their lives so they can pretend to be the gender they choose when a teen. What could go wrong?

Several countries, including the U.K., Sweden, and France are now pulling back from relying on the judgments of impressionable adolescents for such drastic remediation, but dissenters in the U.S. are still punished.

Medical educators who teach students that racism and mutilation are okay when officially approved should humbly recall the history of their own profession. Modern medicine has been of immeasurable benefit to mankind. But when evidence-based science is ignored and authority replaces free inquiry, bad things happen.

Bleeding and purging, eugenics, thalidomide, lobotomies, and nonsterile wound probing are among the historical results. It is the duty of the medical profession to protect us from such horrors, not promote them.

Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.

America Is Facing a Cycle of Doom but Nobody Seems to Care

America Is Facing a Cycle of Doom but Nobody Seems to Care

By Dr. Thomas Patterson |

America’s political class can no longer put off the inevitable. They soon will have to pay for their insanely reckless fiscal practices.

It’s not going to be pretty. America’s debt has reached an appalling $31 trillion. Annual interest payments will exceed $1 trillion this year. Debt service is well on its way to crowding out other priorities, a trend which will only accelerate.

Unfortunately, a steep rise in interest rates occurred near the end of the biggest spending binge ever. Economists are warning we are nearing the dreaded “doom loop” in which interest costs can be covered only by more borrowing which further drives up interest expense, creating a vicious cycle.

There is a weird, almost preternatural calm about our dire fiscal future during this campaign season. We’ve seen much consternation about inflation, public safety, the border, and other critical issues. Yet politicians and the media hardly mentioned the debt crisis, so the public seems to assume everything is under control.

It isn’t, not by a long shot. Uncle Sam issued $7 trillion in new debt to finance the recovery from the COVID pandemic and our panicked overreaction to the disease. It’s too bad we can’t take back that $7 trillion.

Much of it was stolen by fraud and bureaucratic bumbling. Funds went to school districts, that haven’t spent them so far, to finance the indolence of those who preferred not to work and to Democrat pet projects like “climate change.” Millions of voters in no distress whatsoever got checks, as did some illegal immigrants.

Many economists predicted that injecting that much cash into the economy would cause inflation, especially since supply was limited by weakness in the labor market, fuel shortages, and supply chain problems. They were mostly ignored but turned out to be absolutely correct. After decades of relative price stability, we are now experiencing 8% inflation with no end in sight.

Millions of non-economists are experiencing what that does to your standard of living. Suddenly, food, fuel, and shelter have become existential concerns to millions of Americans, and the economic future looks dim.

Inflation also increases government spending. Social Security benefits are inflation-adjusted, resulting in an 8%, $100 billion increase. Total government healthcare costs will grow from $710 billion last year to $915 billion.

Financial markets cannot ignore the cloud of government debt hanging over our economy. A serious recession will almost certainly soon be upon us. Already, declining stock and bond values over the past nine months assure a steep decline in capital gains tax revenue, another contributing factor to the deficit.

The Federal Reserve board is doing the only thing it can to address inflation, which is to raise core interest rates. That also directly adds to the national deficit, increasing the interest cost and driving up the balance, since no other source of funds is available.

So, to summarize, unnecessary COVID-related spending of $7 trillion has combined with chronic overspending, which caused inflation, which increased borrowing costs, which drove up the deficit, thus precipitating a recession which will deprive the government of revenues to pay down the surging debt load. Way to go, guys.

The principle response of the Biden administration has been denial. Our president claims the economy is thriving. A monthly .1% drop in the inflation rate was the pretext for claiming inflation was in decline. The national debt is never mentioned, nor are the untold trillions in future promises we have made to senior citizens and others.

Instead, Biden issued a probably unconstitutional executive order “canceling” unpaid college loans – i.e., transferring the liability to taxpayers. It was terrible public policy, penalizing those who had behaved responsibly and incentivizing student indebtedness in the future. It spent yet more money in a desperate attempt to bribe some votes for the midterm elections.

Yet there seems to be little taxpayer resentment. Why should they care? Their taxes aren’t going to increase. The obligation will be added to the great river of debt passed on to future generations—you know, those little people who don’t vote yet.

They will inherit an America feeble and impoverished, that will have forfeited its greatness because of our greed and selfishness. STOP THE SPENDING!

Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.

Dems Are Successfully Executing a Long-Range Strategy on the Border

Dems Are Successfully Executing a Long-Range Strategy on the Border

By Dr. Thomas Patterson |

Pundits commonly depict the ongoing calamity at our border as the result of Biden administration incompetence. As with inflation, urban crime, and the deficit, their near-complete lack of insight and management skills is leading us over a cliff.

But this analysis itself is a major error. They know exactly what they are doing, and they are doing it well. They are executing a long-range plan that is achieving great success.

The Biden administration is doing everything it can to bring as many illegal immigrants across the border as possible, braving considerable political blow-back to achieve their goals. They believe the mostly unskilled, uneducated migrants will gravitate to the party that promises more government benefits and thus ensure Democratic dominance indefinitely.

So, they alternately claim the border is actually “closed” and admit they are concerned but don’t know what to do about it. Now, admittedly some of the Washington Dems aren’t that bright, but it’s not possible to be so stupid as to not be able to see what is happening here.

Immediately after his inauguration, Biden announced the border was open and reversed the Trump policies, “Remain in Mexico” and “Title 42,” that had limited illegal border crossings. Now, illegal immigrants face no consequences if they defy the border police and make it across the line.

Instead, they are treated humanely, fed, housed and released into America, usually with a deferred asylum hearing which most don’t attend, since few have legitimate asylum claims. Yet our VP border czar pretends not to understand why five million illegal immigrants have crossed the border on her watch or what to do about it.

But open borders advocates gave away the real game. Czar Kamala, and others, said a plan to control the border might be worked out if Republicans would only “come to the table.” However, the only way to control the border would be through “comprehensive immigration reform,” which is their euphemism for amnesty.

So, there you have it. Democrats are okay with cranking up a situation so intolerable that Republicans will be forced to grant citizenship to the millions who entered America illegally.

Not long ago, Democrats Hillary Clinton and Barack Obama called for strict border enforcement to protect the wages of low-income workers. Democratic opinion changed when the offspring of 20 million or so illegal aliens began to vote as anchor babies.

California has become a one-party state, and several other western states seem poised to follow suit (although the Democrats’ grip on Latino voters may be fading as they become Americanized).

Playing-dumb Democrats aren’t the only group that benefits from open borders. Foreign governments benefit from billions of dollars of remittances, money that immigrants send back home saved from their earnings and, often, government subsidies they receive here.

The political champions of racial grievance benefit from a large community of immigrants whose relative poverty purportedly is proof that America is nativist or racist. Thus, Latino welfare organizations, academic departments, lawyers, and political organizations are required to remedy this lack of social justice.

Employers clearly benefit from a pool of young compliant workers who work for wages and conditions unacceptable to growing numbers of Americans. Caring progressives not only get a cause to pontificate for, but nannies, gardeners, and housekeepers to make their lives easier.

Of course, illegal immigrants benefit too, although they successfully competed against a legal applicant who waited and played by the rules. But unlike legal immigrants, illegals don’t come because they love America and want to become loyal Americans.

Their illegal entrance shows their disdain for the Rule of Law. Many cheered wildly when socialists like Hugo Chavez of Venezuela promised to confiscate land and assets from “the rich” and give it to “the people,” ultimately resulting in the economic devastation they are now fleeing.

Americans are bound together as a nation not by blood or soil, but by the values and ideals which brought us freedom and prosperity. Our future depends on an immigration policy which selects for immigrants, of any color or ethnicity, who understand this and want to share with us not only the privileges, but also the responsibilities, of being an American.

Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.

The American Work Tradition Is Under Siege

The American Work Tradition Is Under Siege

By Dr. Thomas Patterson |

Suddenly America is facing a severe structural labor shortage. We all feel it, whether we’re trying for reservations at a restaurant that has reduced hours, seeking handyman help, or just trying to get somebody to answer the dang phone.

Nurses and teachers are in short supply. Employers report at least two job openings for each job seeker. Beyond personal inconvenience, when workers produce fewer services and goods for dollars to chase, prices go up and inflation results.

You can partly blame it on COVID. Politicians shut down much of the economy, then shoved trillions of dollars in “COVID relief funds” to those forced not to work.

Unfortunately, the spigot was never fully closed, and many Americans found that sleeping in agreed with them. Europe, Canada, and Japan all rebounded while the U.S. was left with about one million fewer workers.

Adding to the problem, the youth anti-work movement continues to grow. Work is for suckers and victims. Social media outlets praise workers for quitting their jobs. Others are lionized for being “quiet quitters,” idlers who do the least work possible while still collecting a paycheck.

The inspiration for the anti-work cult traces back to the Marxist anti-capitalist movement, a long-time foe of the American work tradition. Their thesis is that capitalist employment is exploitive and therefore, not working is virtuous.

It coincidentally turns out that, for many Americans, government policy has significantly disincentivized work. And for these people, working harder is no longer the way to get ahead.

Writing in the Wall Street Journal, Phil Gramm and John Early explain how this effect is commonly underestimated because of the way income is reported by the federal government. The Census Bureau, inexplicably, does not treat most transfer payments as income.

That’s important because government transfer payments to the bottom 20% of households, income-wise, ballooned by 269% between 1967 and 2017 while the middle 20% realized only a 154% increase in their after tax income.

The results were staggering. In 2017, the bottom 20% of households had $6,941 in “income” and only 36% of working age people actually worked. However, after the transfer payments and taxes are included, as they should be, their total income was $48,806.

The second to the bottom quintile had 85% employment and an average total income of $50,492, actually less than a $2,000 difference from the lowest group. The middle quintile was 92% employed and earned $66,453, but after taxes and transfers that shrank to $61,350, merely 26% more than the bottom quintile.

But wait, there’s more. Family units are smaller in the lowest quintile than the others. Per capita, the adjusted net income was actually $33,653 in the lowest quintile, $29,497 in the next lowest, and $32,754 in the middle.

Sorry for all the numbers, but they tell an important story. For 60% of Americans, working much harder and even earning more money produced a negligible net benefit. Means-tested government programs were just as lucrative. It’s not hard to understand why the percentage of working age people in the lowest quintile who were employed fell from 68% in 1967 to 36% in 2017.

Policymakers seem to believe that incentives don’t matter, but they do. People who choose not to work and live off the labor of others earn some understandable resentment, but they’re not acting irrationally under the circumstance. The heart of the problem is their enablers in Big Government who, for their own political purposes, created this perverse system.

It’s often forgotten that in the 1990s, governments established work requirements for many means-tested benefits. “Workfare” was a generational policy success. In spite of hysterical warnings that “children would starve in the streets,” poverty rates dropped as employment increased.

Unfortunately, the advocates for workfare declared victory and moved on. But welfare bureaucrats stayed put, patiently reestablishing their vision of welfare without requirements. So now poverty is supported rather than reduced. And Arizona was among the states that quietly removed the work requirements for Medicaid and other welfare programs.

But government handouts that replace labor don’t work. They erode self-reliance, worker pride, and self-sufficiency. They threaten our shared prosperity. And most of all, they undermine American values.

Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.