The Reagan Consensus - Part 3

The Reagan Consensus and the Trojan Horse -

There are several threats to the Consensus that are substantive.

The first I discussed before - the Trojan Horse. The Opposition knows that it cannot get up on its hinds and hope to gain and hold power by attacking the Consensus head-on. This was proven by the disastrous Labour-Corbyn leadership and campaign of last December. So, like Biden and to some extent Trudeau, they pretend to be "moderate". But, as pointed out before, the biggest threat comes from the unelected - whether in the form of a Black Lives Matter, a CNN or a Brookings. They all have one thing in common - they masquerade their otherwise unpalatable agenda by calling themselves "disinterested, objective non-partisans".

The worst and most dangerous example of this change to the Consensus camouflaged as "legitimate discussion of progressive change" comes from something that Davos and other of its minions and peers are promoting ever more aggressively - something called "corporate governance". It represents the dawning realization of the Opposition that the best way to undermine and at least "control" Capitalism without appearing to touch the red lines of the Consensus is from within. 

What is the meaning of "corporate governance" in this context? Well, as the Davos official suggested in referring to it recently, it means weighing "short term profits against long term". It sounds good doesn't it? How many times have the gurus of finance told us that short term investment usually results in long term disaster? But, what they really mean by this will ultimately mean no or less profits in both the short and long term. All this is done in the name of "Social Justice", Climate Change, COVID or other of the latest cause celebre of the Left. But it's all just cover for their most important objective - their controlling people and shaming capitalists into reaching that goal.

How would it work? Normally, the "stakeholders" in a company are the owners or shareholders, the executives, the workers, the customer and the corporate entity, itself.  In other words, the people and entities that actually take part in the company financially in some way. The Capitalist system assumes that these natural interested parties will thereby run the company, work for it or buy or sell to it and operate according to their interests and the interest of the company at all times. If they do not, particularly if the Directors of the company fail in this regard or workers illegally strike, the law could be used to punish the malfeasant. Good business under the Rule of Law thus creates untold benefits for all.

The Davos Corporate Governance or "Reset of Capitalism" scheme would open this up to people and institutions that don't necessarily have any skin in the game of the company - governments, interest groups, the general public who may not even buy a single thing from the company, etc. Worse, the new stakeholders would not necessarily act on the interests of the company but according to the nebulous concept of "the public interest" that could theoretically change depending on who last had the microphone at the latest "stakeholders' " meeting. The result  would be that, as the Davos flack freely admits, profit would no longer be the first consideration of the company. 

If such a system took hold - two things would happen: (1) the laws would have to be changed so that stockholders in the company would no longer be allowed to sue if the New Age Agenda enforced on the Directors of the company led to ruin and malfeasance; and (2) many companies would be less profitable and maybe even go bankrupt and many more companies would not be formed as entrepreneurs fleed the jurisdiction that adopted this approach or simply refused to incorporate (although, one has to imagine that attempts would be made to have this apply to private companies, too) creating jobless and hurting consumer choice, price and service. 

Another ironic result of this approach is that many companies that could have done some real good for their communities (as they do already) beyond "simply" investing millions and employing thousands, would be far less able to do so or not be able to do this at all as they were stifled by such a disastrous concept. But the threat is real and dangerous precisely because of how it is dressed up with touchy feely titles like "corporate citizenship" and how it goes for everyone's apparent dislike of profits (especially, those made by others not ourselves). In other words, if Smith was right that, when people act in their own interest in the market, they are being directed by an invisible hand guiding them to a public interest as well, then this scheme would once and for all kill that blessing of free enterprise and multiply the curse of the reverse happening - people purporting to act in the "public interest" being guided by an invisible (and sometimes all too visible) hand of some private interest they did not know, most likely the megalomaniacal, the rent-seeker and the corrupt.

Certainly, like with other regulatory schemes, this, too, could easily be "captured" by big business and used by them to dominate their markets and exclude up and coming competitors that could not afford to support the new system. This in turn would be to the loss of consumers in increasingly monopolistic markets. It is also reminiscent of the ironic result of so-called anti pollution laws - they gave a license to companies and individuals to pollute by abolishing the right of individuals or companies to sue if their property was polluted by someone in return for compliance with regulation and fines from the authority. Similarly, in return for effectively surrendering control over the management of their companies, directors and executives will be able to compromise the interests of the shareholders without fear of lawsuit and maybe even get a gong from an organization like Davos for doing it!

Conservatives need to be on their guard against these types of schemes and always call them out for what they are - the back door to undoing the Consensus of economics, finance and governance that has been the basis for the incredible progress, prosperity and freedom of the human race in the past 40 years. The best way of doing this is public governance. Make it clear that the biggest threat to our welfare and liberty comes not from rapacious companies but from an overweaning state. I say we conservatives put forward our own set of "governors' governance" rules that would check any intrusion into the markets such as the corporate governance scheme and check their "freedom" to intervene in the economy.

This could be achieved by statutory rules restricting spending, taxation and debt to certain levels (such as those set by the EU for "convergence" by its members albeit hardly observed) and forbidding baseline budgeting. Regulations of any sort would be closely audited for their true cost benefit by outside audit and cut at least three for every one made. The government would be expelled from the remaining areas of the economy they "manage" like dairy, poultry, telecomms, airlines and banking here in Canada. Outdated practices and procedures, waste fraud and abuse and other monopolistic and corrupt practices in government everywhere would be stamped out. 

Above all, the state would be shrunk in size gradually in proportion to the GNP. The smaller the government, the less chance of corruption, waste and the threat of megalomaniacs perpetrating insidious and calamitous ideas like "corporate governance." A Grand Bargain could be offered to Davos-wannabe business and entrepreneurs - in return for you staying away from these bossy schemes and giving up the bribery (e.g.: subsidies) that so often comes with them, we'll get rid of the corporate tax (which only consumers pay anyway) and streamline regulation. With the resultant savings, you can visit pompous but hopefully feckless gabfests like Davos all you want and donate to the causes of your choice with all the munificence you desire (and we'll let you deduct that, too! seriously, is there any better example of Rube Goldberg than Corporate Governance as a way to save the World? One big company or entrepreneur's 100% charity write-off will do far more to save the World than CG ever will for a whole nation)...

Expanding the freedom to choose of the millions while limiting the freedom of the ideologue few and the state to dominate us with their siren song causes all the while building on the Consensus - now that's a real plan for a better future for us all.

But there are other threats to the Consensus and I will deal with them tomorrow.