Meet the “New Koch Brothers” – the Hedge Fund Activists Wrecking America’s Green New Deal

By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website

Think the government should do more to deal with climate change? You’re not alone – so do most Americans, according to a 2020 Pew poll.

With Biden in the White House and Democrats controlling Congress, plans to get moving on some form of a Green New Deal could finally emerge. The Texas blackout heightened the sense of urgency, and everybody’s talking about upgrading the power grid, renewable energy, and what it will take to have a greener, cleaner future. Meanwhile, the climate change-denying political right is determined to crush any proposals before they have a chance.

Here’s what you might not know: Players on Wall Street have been torpedoing our chances of averting environmental catastrophe for years. A group of billionaire financiers has made sure the companies the government must partner with to fight climate change are focused on one thing only – making these men (they all seem to be men) even richer. Instead of leading the world in climate change technology, firms like Apple, GE, and Intel have been pressured to become the personal piggy banks of powerful moneymen—known as hedge fund activists—who can’t see beyond the next quarterly report.

These guys are blocking their fellow Americans from the chance to leave their kids a safe, sustainable world. That world will never materialize unless we understand what they are doing and stop them. Let’s dive in.

Games hedge funds play

You may have heard the term “activist shareholders.” These are people, usually hedge fund managers, who buy shares of a public company’s stock and then demand that the company do whatever it takes to jack up their stock price. The hedge fund then quickly sells out—a move called “pump and dump.”

People who did this used to be called “corporate raiders.” They took over companies, fired people, played stock market games to swell the stock price, made a quick buck, and then split. Remember Gordon Gekko from Oliver Stone’s movie, “Wall Street”? The main difference between the Lizard of Wall Street and today’s hedge fund activist is that Gekko wasn’t shy about his motives: “Greed is good.” What has changed is that today’s raiders don’t typically gain control over target companies before they put the squeeze on. Instead, they make company execs do the squeezing or, when that doesn’t work, fire them and replace them with ones that will.

The playbook of today’s hedge fund activists looks like this: Buy a wad of shares of a company on the stock market. Then, line up the proxy votes of the managers of funds who have hedgies manage pieces of their portfolio. Next, send a letter to the CEO of a target company demanding that he or she get busy pumping up the stock price. Hedge funds with deep pockets will spend millions making this happen – remember, their money comes from rich people or institutional investors like pensions and mutual funds who are seeking high yields. Occasionally hedgies will use their own money – those whose “war chests” have come from previous raids.

Activists will also fight proxy battles, launch publicity campaigns, or litigate to get a company to do their bidding. Some shout about what they’re up to, others whisper behind the scenes. A lot of them talk about making the company more honest and accountable and so on, but this is mostly a smokescreen. Their influence always ends up pushing companies to gin up short-term profits by any means necessary – like laying off workers or diverting money from research and development in order to – you guessed it! – jack up the stock price and make them richer.

Carl Icahn, the infamous corporate raider of the ‘80s, pioneered this aggressive approach to “unlocking shareholder value” from companies he targeted. In plain English, this means figuring out how to rip money out of a company so that you can buy a superyacht.

Today, the number of activist campaigns has exploded: In 2019, they set a record in the number of companies targeted. As the Harvard Law School Forum on Corporate Governance put it, “No company is too large, too popular, too new or too successful” to fall prey to these predatory financiers.

What does this have to do with fighting climate change? A lot, it turns out.

The government can’t just snap its fingers and make batteries for electric cars, renewable energy storage, and advanced computer chips (needed for everything). It has to partner with companies that have the deep know-how and the substantial resources to develop these complicated and cutting-edge technologies. The government looks to collaborate with companies that are the very best at what they do and will even subsidize them for the long-term goal of saving us from climate disaster. Economist Matt Hopkins, who studies business corporations, stresses that as a taxpayer, you are asked to support such companies not only in the form of direct subsidies, but also indirectly through government-supported research. Not to mention all sorts of tax credits that drive nascent markets for clean technologies.

“The government supports all the industries in the clean tech space, one way or another, to the tune of billions,” Hopkins notes.

The problem is, activists usually aren’t interested in companies being the best at what they do, or doing anything, really, except handing over money to shareholders. A favorite tactic is to force companies to use their cash, or even borrow it, to buy back outstanding shares of their own stock. This neat Wall Street trick reduces the total number of shares available, so it boosts the value of the shares that remain. Presto! The hedgies holding the shares have just made easy money because their shares are now worth more and can be sold at a hefty gain.

Economist William Lazonick, who has written extensively on how businesses do business, explains that this becomes a big problem when we need innovative companies to make stuff we all need. “Companies grow and do things like create new technology, not because of stock market games,” he explains, “but because they develop their capabilities and invest in their people. And they can’t do this when hedge fund managers are calling all the shots and telling them to direct all the profits to shareholders.”

Unfortunately, in the U.S., there is a widespread and very stupid idea — no less a person than Jack Welch, the former head of GE, called it “the dumbest idea in the world” — that it’s ok for people who do nothing but buy and sell shares of a company’s stock to boss it around and pocket all its profits. It really makes no sense, but it permeates American business schools.

As you will see, the shareholder value ideology is wreaking havoc on our climate future.

Let’s look at how companies that could help us fight climate change have been attacked by activist investors.

Carl Icahn and a rotting Apple

In 2013, Carl Icahn, one of the wealthiest men in America, started buying up Apple stock. Soon, he became one of the company’s biggest individual shareholders, owning one percent of Apple’s outstanding shares. Now, one percent is a lot of money in dollar terms — Icahn paid $3.6 billion for his Apple stake. But why should he get to order Apple around just for buying and selling shares? Yet, that’s just what Icahn did. The Wall Street honcho used his public platform to convince other people to buy shares, thereby pumping up the stock price, and he pressured the company to get busy doing stock buybacks through his letters and prolific tweets.

Lazonick explains that Icahn’s goal was to pump up Apple’s stock price to double its value, and then dump it. He would force Apple to use its billions in profits to enrich shareholders through massive stock buybacks instead of using them to invest in our renewable future. Icahn hoped that Apple would make a fortune on watches — and today it does a decent business in wearables — but he wasn’t interested in other business opportunities, like, say, software to drive renewable energy smart grids or even electric vehicles.

As Lazonick put it in a letter to Apple CEO Tim Cook, “It’s a travesty for Apple to throw away tens of billions of dollars on buybacks when it has the knowledge and power to contribute to the solution of a plethora of social ills.”

On October 1, 2013, Icahn tweeted: “Had a cordial dinner with Tim last night. We pushed hard for a 150 billion buyback…”

When you’re a multibillionaire, this works: Cook did the largest buybacks in history in 2014 and 2015. Then, in 2016, Icahn took the money he had extracted— $2 billion to be precise — and ran, leaving Cook with an Apple in danger of rotting.

Lazonick points out that given Apple’s capabilities, it should be “right in the thick” of any Green New Deal that might be on the table, noting that Steve Jobs had once talked about leading the world on initiatives like electric vehicles. “Apple could be doing that right now, making electric cars, making batteries and all kinds of things critical to fighting climate change,” says Lazonick. “It has tremendous capabilities, it’s still hugely profitable, and its products are used and loved by millions of people.”

Instead, the company is sidelined in the climate challenge. Lazonick points out that since 2013, Apple has done over $400 billion in stock buybacks—a staggering sum that is unprecedented. As Icahn was bailing out of Apple in the winter of 2016, multibillionaire Warren Buffett was using Berkshire Hathaway money to eventually purchase $36 billion in Apple’s outstanding stock. Buffet has been cheerleading Apple’s record-setting buybacks ever since.

For his part, Icahn went on to buy a couple of Trump casinos, donate tons of money to the Donald, and even served as an economic advisor to the former president.

But wait, isn’t there anybody who could push the company in a better direction? Al Gore, Mr. Climate himself, joined Apple’s board in 2003, just a few years before he released his famous documentary, “An Inconvenient Truth.”

In Lazonick’s view, the man you would expect to be a champion of Apple’s forays into green technology has become part of the problem: “He has overseen the looting of Apple to the tune of $403 billion in buybacks since 2013 (on top of more than $100 billion in dividends) without a public word of dissent. He is one of only seven people on Apple’s board, but shareholders like Icahn and Buffett, who have not invested a penny in Apple’s productive capabilities, are, apparently, still telling Tim Cook what to do. Board members fear that if they object to things like stock buybacks to prop up the stock prices, then the hedge fund activists will unleash a giant proxy war and kick them out.”

So, rather than a leader on climate change, Apple is a laggard. As Greg Petro of Forbes noted, the company just isn’t innovative at its core anymore. Thanks, Carl Icahn! And you, too, Warren Buffett! (And can we hear from you, Al Gore?)

Nelson Peltz ushers in dark ages at GE

General Electric has been around since Edison set up his lab in Menlo Park, New Jersey in 1876.

Today, the long-admired company produces electric power systems, jet engines, and most of the wind turbines in the U.S. “There’s really no other company like it when it comes to the capacity and potential to produce renewable energy technology,” notes Lazonick.

It ought to be a no-brainer that this iconic firm would be a leader on climate change, and not so long ago, it appeared to be headed in that direction.

Then, Nelson Peltz came along.

The name Nelson Peltz may not be as familiar as that of Carl Icahn, but he’s a big wheel on Wall Street. Peltz is the billionaire founder of the investment firm Trian Partners, known for a lifestyle so opulent that he owns not one but two private jets and a mansion (one of several) with an indoor hockey rink. And some albino peacocks.

At Wendy’s, where Peltz owns 12.4 percent of the shares, he has profited from not only paying low wages to Wendy’s direct fast-food employees but also by screwing farmworkers out of decent wages and subjecting them to unsafe conditions. Peltz, a big fan of nepotism, is the board chair at Wendy’s and has also given his son Matthew a seat on the board. He is also a loyal supporter and lavish funder of his friend, Donald Trump.

In 2015, Trian took a $2.4 billion stock position in GE—equal to about 0.09% of GE’s outstanding stock. GE had a long history of being shareholder orientated. Besides ample dividends, it was among the largest repurchasers of its own stock in the two decades before Peltz bought his stake. Nevertheless, at the same time, longstanding CEO Jeffrey Immelt was keen on investing in technology and renewables that would pay off in the future. He had actually invited Peltz to support these and other plans for GE as a shareholder.

But Peltz didn’t want to wait around. So, he pressured Immelt to cut expenses, hit more ambitious earnings targets, and do even bigger stock buybacks. In 2016, GE did $22 billion in buybacks, “all for the purpose of boosting the stock price so Nelson Peltz could achieve his goal of doubling his money when he was ready to sell his shares,” Lazonick observes. GE also continued to increase its dividend payouts.

Unfortunately, GE could not sustain these distributions to shareholders and invest in its businesses at the same time. “The stock price went into the toilet,” explains Lazonick. “Peltz has lost a lot of money and has helped destroy the company, or at least set it back in terms of its ability to invest in the technologies of the future.”

In 2017, Trian orchestrated the ouster of Immelt, replacing him with John Flannery, a veteran GE finance guy, in August. In October, Peltz installed a son-in-law, Ed Garden, on GE’s board. When Flannery could not engineer a stock-price recovery, he was fired, too, replaced in October 2018 by Larry Culp, who remains GE’s CEO.

Today, GE is struggling to stay alive and is selling off pieces of itself instead of investing in climate change-fighting batteries or other renewable-energy technologies.

“GE had the best researchers and the ability to hire the best employees, but has missed windows of opportunity to be a leader in fighting climate change,” says Lazonick. “All because a guy with a lot of money — in this case, money from pension funds, endowments, and wealthy investors — was allowed to tell it what to do.”

Dan Loeb chips away at Intel

The Intel corporation, situated in Santa Clara, California, designs and manufactures semiconductor chips. You need semiconductors for just about anything — especially anything connected to clean technology. A sustainable future requires more efficient computing systems to manage sophisticated clean energy grids and reduce power consumption while doing it.

The Taiwanese are the leaders in the highly capital-intensive and technologically dynamic fabrication segment of the semiconductor industry. Besides its leadership in the design of processors, Intel was the pioneer in chip fabrication and remains one of the few companies in the world that manufactures the chips that it also designs.

So far, the company has been profitable, but it costs a ton to manufacture chips, so Intel has been making capital investments of $15 billion per year and rising, trying to stay at the technological forefront of chip fabrication. But it’s no longer a leader in this area, perhaps because its senior executives have been distracted. Besides its huge investments in chip fabs, Intel also did $11 billion in buybacks in 2018 and $15 billion in 2019, trying to keep the activist predators at bay. When it determined to use a large portion of its cash to upgrade its fabrication capabilities, the hedgies complained of “waste.” They wanted more buybacks.

Enter billionaire Daniel Loeb. Loeb is the founder and chief executive of Third Point, a New York-based hedge fund. He’s quite a character, fancying himself a literary man and writing scathing letters to CEOs, presumably in between his Transcendental Meditation sessions (TM is beloved by Wall Street, perhaps because it is a very expensive way to learn to say a mantra). He’s also a big art collector, having become smitten in college upon beholding Poussin’s “Rape of the Sabine Women.” His great-aunt invented the Barbie doll and ran Mattel until she was convicted of securities fraud. Whoops!

In 2020, Dan Loeb set his sights on Intel, purchasing a bit less than half a percent of the company’s total shares through Third Point. Then he started pushing for changes at the chip giant, sending a nastygram to Intel Chairman Omar Ishrak. Loeb urged the company to split off its chip manufacturing operations from its chip design, despite the fact that Intel’s roots in making chips instead of outsourcing them had made it stand out from rivals. This move, the Wall Street Journal noted, “would end Intel’s long-held status as America’s leading integrated semiconductor maker.”

Right now there is a global chip shortage, and Intel’s chips are sorely needed in myriad products. But Loeb is also pushing Intel to do more buybacks—it did $14.2 billion in 2020 along with $5.6 billion in dividends, absorbing 92% of Intel’s net income. Intel could potentially receive subsidies from the Biden administration it had asked for in order to keep fabricating chips. But you can’t do escalating buybacks and invest in cutting-edge chip manufacturing at the same time.

So, Intel may lose its chance, all for the sake of Loeb wanting it to play Wall Street casino games and maybe buy another waterfront home.

In 2017, after Trump was elected president, Loeb cheered him for reviving activist investing.

Lazonick thinks this story could end in Intel being bought by a Taiwanese company—quite possibly the world leader TSMC. “This has huge geopolitical implications,” he warns. “Do you really want Taiwan having almost complete control of the U.S.’s computer chip supply?”

Bottom line: Whether it’s Apple, GE, or Intel, or any other number of companies, that could potentially be mobilized for a Green New Deal, they can’t do it while being held hostage by hedge fund activists looking for quick and easy money. Because they are irreplaceable in their capacities, knowledge-base, and talent, it means that the U.S. is severely hampered from being a climate change leader on the world stage.

“Predators like Carl Icahn, Nelson Peltz, and Daniel Loeb are the new Koch brothers,” says Lazonick. “By holding these companies hostage, they are scuttling the opportunity for a Green New Deal. They are playing manipulative Wall Street games with our future.”

What to do?

Now that we understand the activist predator problem, what is the solution? Meaningful plans to fight climate change require money – though they cost less in terms of resources and human misery than what’s coming if we don’t act. Nevertheless, as taxpayers we want our money spent wisely. If a company is going to get special status and funding in a Green New Deal, then we’d rather not see our hard-earned cash ending up funding a party for Donald Trump or exotic birds for Nelson Peltz.

Lazonick recommends that if the government wants to partner with a company to develop and produce climate change-fighting technology, the following rules should apply:

1. Ban stock buybacks: Prohibit large corporations from buying their own stock through open market repurchases. Buybacks are just a manipulation of the stock market.

2. Limit the hedge fund activists: Don’t let hedgies control proxy votes of the company that enable them to threaten top executives, even though they only hold a small fraction of the company’s shares. (For more on this, see Lazonick’s book, Predatory Value Extraction, co-authored with Jang-Sup Shin).

3. Protect U.S. taxpayers and workers: Place stakeholder representatives on corporate boards.

4. Change incentives for company insiders: Reward senior executives for building up capabilities and new technologies and training employees rather than playing stock market games.

5. Set up oversight procedures: Scrutinize companies so that you know subsidies are going into actual productive investments rather than into the pockets of corporate executives and hedge fund activists.

America can have a Green New Deal. But first we have to free corporations from the predations of hedge fund activists who are mainly interested in the kind of green that fills their pockets.

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  1. Isotope_C14

    “With Biden in the White House and Democrats controlling Congress, plans to get moving on some form of a Green New Deal could finally emerge”

    I’m glad I wasn’t drinking anything when I read the start of this article. It would have shot out my nose.

    Compassionate de-growth is what is required, and is 100% incompatible with current system. (On top of that, it won’t be allowed by the 0.001%)

    We are at the lowest arctic ice in both volume and area on this date that has ever happened while humans were alive, and that will not change due to the bacteria that are metabolizing dead materials into CO2, CH4, and NOx. The bacteria have been warmed up to a point where their metabolism is in exponential growth phase, and that is our fault.

    “As you will see, the shareholder value ideology is wreaking havoc on our climate future.”

    Not generations of colonialism, resource exploitation, and turning oil into fertilizer? I feel so good that it’s just ideology that is the problem.

    1. Felix_47

      We are racing to bring more consumers on board. All this talk about global warming and nothing about a gas tax. Neither party believes in climate change if they don’t do the one thing that is easy.

  2. tegnost

    Is it just me or is there irony in these people claiming that giving a wendy’s burger flipper a raise to 9.50 an hour is going to “overheat” the economy?

    making these men (they all seem to be men) even richer. Instead of leading the world in climate change technology, firms like Apple, GE, and Intel have been pressured to become the personal piggy banks of powerful moneymen

  3. The Rev Kev

    The worse of this article is that you realize that though outsourcing US companies overseas was a pretty disastrous development, that if they had remained in America they would only have provided more targets for these people to cannibalize. Add to this those companies that take over and break up a company until it dies for profit like a chop-shop, you realize that this will only end when the real economy has been totally gutted.

    1. The Historian

      Amen! We’ve managed to export ‘greed is good’ to the whole planet! And if you read Dardot and Laval, that was by design. And what is even sadder is that there is nothing we can do about these people short of a worldwide revolution – which unfortunately, will throw us back into a dark age. They control our economies and our governments, even though they were never elected.

      The future of humanity doesn’t look too bright right now – will we be killed off by climate change or by the revolutions that will come when inequality becomes so great that we revolt?

      1. Jason

        The Dardot-Laval book, more than any other single treatise, helped me to understand the world we’re currently living in. And as one who has “struggled” with issues of “addiction” and “mental health” for much of my life, this book was a godsend in regards to those issues as well.

        Insane systems produce and then normalize insanity. We live in symbiosis with insanity, and there’s nowhere left to go to get away from it.

    2. Whiteylockmandoubled

      Yes. Short term hedge fund pressure for buybacks is bad. Buybacks are bad for the health of the company.

      But let’s not shed too many tears for poor lil Tim Cook. I’m sure he owns 3 or 4 shares of Apple, maybe even 5! I doubt Icahn had to inflict permanent bodily harm on Cook to get him to buy shares back.

  4. TomDority

    I think the introduction of taxes – used to make profiting from stock manipulation much more dificult. Make Tax taxing.
    It is the tax code that makes it easier to make cash on the wall street, make cash by asset appreciation, make cash by increasing the cost of living, make cash off the backs of the smurfs.
    So don’t ban (lets the con-men and criminals play the freedom game, ‘don’t tread on me’ and ‘I have the right blurbs’) stock buybacks but, tax it heavy.
    Limit hedge fund activists through taxing the ways in which they earn money through capital gains and penalize companies and directors that violate their own corporate charter – Tax heavily those companies that have shareholder value as part of their business plan – etc
    Human nature, I think, will always look for the easiest way to make a living and earn income – that is the way it is and… it is not a bad thing or immoral – look at progress as a way to make life a bit easier and enjoiyable -So, in fact, making a buck and capital gains is much easier than actually making a product people or the planet needs and wants and earning the buck by doing the actual labor and planing required.
    Why you may ask? My answer would be the Tax system we have that taxes labor and real productive capital much more than ficticious capital. Change that and the planet has a chance
    Taxes as disincentives instead of the removal of taxes as insentives.

    1. The Historian

      And exactly how do you think we are going to reform the tax code? Do you think the people who control the government are going to allow that? Remember Trump’s tax ‘reform’?

      Do you think our government now responds to what its citizens want? Remind me about this when we get universal healthcare or a $15 minimum wage passed.

      1. TomDority

        I don’t disagree with you – but IMHO, without a clear direction and a clear knowledge of what precipitates these swings between the vast majority and a few favored people – Like FDR said
        “There are two ways of viewing the Government’s duty in matters affecting economic and social life. The first sees to it that a favored few are helped and hopes that some of their prosperity will leak through, sift through, to labor, to the farmer, to the small business man. That theory belongs to the party of Toryism, and I had hoped that most of the Tories left this country in 1776.”
        and further, to your point about the people who control our government – that should be it’s citizens voting, but not just voting, but voting with information – armed with knowledge – Thomas Jefferson wrote that a well-informed electorate is a prerequisite to democracy.
        “Out of every crisis, every tribulation, every disaster, mankind rises with some share of greater knowledge, of higher decency, of purer purpose. Today we shall have come through a period of loose thinking, descending morals, an era of selfishness, among individual men and women and among Nations. Blame not Governments alone for this. Blame ourselves in equal share. Let us be frank in acknowledgment of the truth that many amongst us have made obeisance to Mammon,2 that the profits of speculation, the easy road without toil, have lured us from the old barricades. To return to higher standards we must abandon the false prophets and seek new leaders of our own choosing.”
        So yes, I agree that reform is a tough road but, by the same token, if (as is my opinion) the tax code changes do represent the most powerfull mechanism and instrument for change in our country – then given the existential threat to our planet that the current tax code encourages – why would I not encourage that road to be taken -I am going to attempt that road for change and am doing all I can to aprise myself of as much knowledge possible to inform my vote.
        I do believe the current man made structure of our economy has been preverted by ficticious capitol , unjust taxation and lobbying, economic instruction at university and through the entire self promotion of finacialization in this country – being man made…it can be changed by man.

  5. Amit Chokshi

    this article is nonsense because it assumes these cos on their own were going to tackle climate change? they r ruled by npv/irr calcs and the lions share of mgmt comp is stock which benefits from short term eps targets ie the entire premise that raiders were stopping noble mgmt is a joke.

    aapl production facilities have nets around the buildings to prevent personnel from successfully committing suicide.

    raiders v mgmt is two groups of bad actors but i’d argue mgmt is generally very bad with redeploying capital so dividends and buybacks r preferred subject to valuation for the latter.

    mgmt gets paid no matter what, they crush the rest of employees on pay, and don’t deliver for investors largely.

    also article speaks to GE, ge crashes for a number of reasons but the tipping point was tripling down on fossil fuels by acquiring baker hughes which is an oilfield services co and Alstom a french nat gas tilted co. surprised at the shoddy research.

    u only need to go back to BP beyond petroleum campaign in 1999 and see about 8B of renewable energy write offs that would occur over the next 5-8 years. climate change is about legit govt not corp inktiatives.

    1. Synoia

      It is about setting prioritizes. You might want to read a few corporate charters, where they make promises of social actions. aka: Good Corporate Citizens.

      What is practiced is more like blackmail.

    2. Lee

      I don’t think the article makes the assumption you ascribe to it. The first sentence:

      “Think the government should do more to deal with climate change? You’re not alone – so do most Americans, according to a 2020 Pew poll.”

      So all we have to do is seize state power—by peaceful means, of course.

    3. RJM Consulting

      I also agree with the “article is nonsense”, at least to the extent that there is any faith placed in mgmt to deploy excess capital in areas outside of a company’s proven expertise. I’m in the camp that R&D should remain focused on the expertise already developed, and capital should be deployed organically. Asking Apple to develop electric cars because they have excess cash and have done well with phones and computing is ignoring history: conglomeration was once thought (cf 1960s) to be the path to permanent profitability. I say, if there are engineers at Apple that have some particular talent that would be usefully deployed outside of Apple’s line(s) of business, let the entrepreneurs who are backed by the profits from the hedge funds who encouraged a release of capital from Apple (by buybacks) lure those engineers away. Startups are in the DNA of Apple – presumably some of that culture is still within the employees. But if Aapl is not using its cash to acquire a start up and develop that line of business internally (for whatever reason), release the capital and allow those that believe such line to be profitable to deploy it (and absorb the risk should they be wrong). If the article is really about the failures of competitive capitalism and our regulatory and tax systems, then I would prefer the author directly face that challenge. Current ideas re shareholder value and the problems of agency (mgmt disconnected from shareholder value) can be traced to Berle in 1930s as reinforced by the Chicago school and Friedman; but we are now trying to ‘internalize” externalities and recognizing that we still don’t have a good model for ‘adjusting’ our competitive capitalistic society and the regulatory state that has grown up around it. Throw in the political power that resists change and experimentation and the task becomes monumental.

    4. Roger

      The article is half right and you are half right. Our modern corporations are managed in such a away to maximize short term executive income (buy backs and cost cutting etc. to goose the share price well above the option strike price) and shareholders at the expense of everyone else. The private equity and vulture capitalist types are just the icing on the cake. where we have come after 40 years of neoliberalism.

      Apple is a pale shadow of what it was with Jobs, simply attempting to make as much profit as possible out of his genius with no new big ideas. But lets remember that Apple always off-shored most, if not all, of its production anyway. GE, Boeing, Intel etc., end up being run by MBAs (and I have an MBA!), rather than the engineers that built them, who know everything about profit extraction and nothing about long-term product development and quality. For that you need to go to Germany, Japan, Taiwan, South Korea, and increasingly China as it moves up the value curve. The Chinese leadership tend to have STEM degrees, as Xi Xinping does, and also Angela Merkel has. They know how to build things.

    5. Odysseus

      Agreed the article is nonsense. Even though in theory and practice I’m a political ally, I’m unimpressed in every way with the actual arguments presented.

      Shareholder activism is a tool that can be used for good or evil. So use it for good.

    6. Jeremy Grimm

      This post is very troubling. Hedge funds and corporate raiders like Karl Icahn, Warren Buffet, and other lesser known players are definitely black-hat characters. But are we to believe that otherwise public spirited companies like Apple, GE, or Intel would be working hard to deal with climate change if only they were freed from the clutches of “activist shareholders” driven by the mechanations of the black-hat hedge funds and corporate raiders. That sounds like the plot for a bad movie.

      Instead of wondering “why should he [Carl Icahn] get to order Apple around” I guess I wonder how Carl Icahn was able to leverage owning one percent of Apple’s outstanding shares into the power to tell poor Tim Cook what to do. Was Tim Cook really planning to open up the Apple warchest to “invest in our renewable future” until Icahn compelled him to “enrich shareholders through massive stock buybacks”? I believe I am not the only one who thinks it strange to quote Neutron Jack Welch and cite GE as a “long-admired” producer of electric power systems, unparalled for its “capacity and potential to produce renewable energy technology”. I cannot believe GE was all set to become a “leader on climate change” until the Nelson Peltz came along with his 0.09% of GE’s outstanding stock and twisted poor Jeffrey Immelt’s tail forcing him to cut expenses, raise earnings targets, increase stock buybacks, and dividend payouts.

      “It [the government] has to partner with companies that have the deep know-how and the substantial resources to develop these complicated and cutting-edge technologies.” Has the US Government shutdown Sandia Labs and National Renewable Energy Laboratory (NREL) and lost the ability to fund university research through the National Science Foundation (NSF)? Instead of weak recommendations to stymy the predations of corporate raider black-hats “…if the government wants to partner with a company to develop and produce climate change-fighting technology” reject the “dumbest idea” of a Government partnership with Corporate Big Money and repair Government procurement policy and law. Black-hat hedge funds and corporate raiders are but one problem in an ocean of problems Neoliberal restructuring inflicts upon the US Economy, Government, and Society.

      1. Jeremy Grimm

        I am not sure what in particular makes it so obvious to you that ‘X’ did not read the post.

  6. Ian Ollmann

    The fact of the matter is that Apple is successful enough both to do record breaking stock buybacks and develop green tech at the same time. It is the rest of the market, trying to be Apple, that has this problem.

    1. Lee

      I believe the point of the article is that the financial parasites won’t allow the infected host to do both.

    2. Alex Cox

      What green tech is Apple developing? Whatever the merits of the article, Apple were never the least bit green, and over the last ten years have become much worse, making their products impossible to repair.

      Given the amount of water and energy consumed by chip making, I doubt that Intel was ever a ‘green’ company.

      Computer chips, electric cars, boxes with shiny screens may be very useful, but they ain’t green.

          1. Anthony G Stegman

            As long as total human consumption keeps increasing there can be no “Green Economy”. Nor can there be anything “sustainable”. Global population and consumption trends are a long way from sustainability.

      1. bob

        Next you’ll try to tell me that Elon’s cars, rockets, solar panels and batteries are not green.

        Do you know how much Elon and Apple pay for these images to be developed and reinforced? Obviously not. People like you can’t afford PR people, so you’ll never truly understand the genius involved in posing at this scale.


      2. Ian Ollmamm

        Well, for example consider how power efficient Apple’s devices are vs. the competition. All of that power savings can translate into smaller batteries, smaller enclosures, less waste, etc.

        It also is quite famously an early adopter of green tech, working to make its operations carbon neutral. I’m really surprised you needed to ask.

  7. Susan the other

    I wonder how accurately corporate raiders and shareholder nazis envisioned what was coming. Back in the 80s when companies decimated labor and offshored manufacturing there was more hysteria about inflation than there is today. It makes perfectly good sense, in an insane way, that stock buybacks and offshoring were tactics thought to mitigate what the rich “investors” saw as the value of their investments being eaten up by inflated dollars. Unless they are all stupid, and I do not believe they are at all stupid, they can now see what a mirage the value of “money” can be. All the shoring up of their own wealth and power which they tried to do for the last 40 years has not improved their positions because there is a bottom line here: they extracted the capacity to create value in the first place; in a timely manner. They precluded the value they sought. Value was aborted in their hysteria to maintain their own wealth. It’s all 6s. But we do now have a deep deficit from social and environmental damages which are actually real things. And we now have to do something about it. I propose we reeducate the rich raiders of planet earth. Teach them that money is basically nothing, it has no value whatsoever, until it is spent to create value. Again it’s the old Chinese proverb – you can’t see the path until you walk it. If there were some way to legislate this enlightenment it would be very efficient. Some airheads might even call it “productive” – but it would be more effective and quicker to just mobilize government sovereign spending and go for social and climate reclamation and simply bench the corporate raiders because there will be no shares for them to pirate. They would be getting more than they deserve for their 40 years of hyper greed and cowardice.

    1. topcat

      Hi Susan,
      yes indeed, however I see no chance of anything positive coming out of the USA, not ever. The population is kept stupid by a crappy education system and passive by a full-court-press propaganda system and plenty of beers, drugs and cheap industrialised food. Europe is a bit better (except the UK which is nearly as bad) but lacks the political will to change anything, as the USA owns the European political class 110%.
      The middle class (Lawyers, doctors, dentists) are still doing well enough to prevent any political change but they are getting squeezed and It will all end very badly when the poor just say fuck-it and take to the streets.

  8. Rod

    Sad assumption beause TINA??

    The government can’t just snap its fingers and make batteries for electric cars, renewable energy storage, and advanced computer chips (needed for everything). It has to partner with companies that have the deep know-how and the substantial resources to develop these complicated and cutting-edge technologies. The government looks to collaborate with companies that are the very best at what they do and will even subsidize them for the long-term goal of saving us from climate disaster.

    A Strong Central Vision Statement would help with a rigorous arm twist.

    If The Rich Were Propagandizing Us, We’d Have Heard About It In The News Caitlin Johnstone:

    That’s the only path to a healthy world: getting enough people to perceive enough truth with enough clarity. Until that happens real change is impossible. After that happens real change is inevitable.

    Say their Names, Identify their Vehicles of Plunder and Impediment, expose their Playbook.

    And let’s get those Taxes targetted directly on the behavior that impedes our common survival.

  9. William Neil

    I would love to see a comparison of the coverage of this topic on say Fox News vs CNN, my point being to see if there is any at all, and what the difference might be between the Right and the Center of political economy spectrum.

    I don’t feel on top enough of the coverage to over generalize, except to say that Rush Limbaugh was just infatuated with Apple and its products. And a very conservative in-law of mine was also.

    Also, the account of Apple’s potential green capabilities is somewhat at odds with the Chapter on it by Mariana Mazzucato, in her book “The Entrepreneurial State: Debunking Public vs Private Sector Myths.” That Chapter is entitled “The State Behind the iPhone.”

  10. Rudolf

    Hey, The role of capitalism is the accumulation of capital. In the end, it doesn’t matter how.
    All these corporate raiders are the culmination of capital theory. They simply don’t care about the consequences the rest of the world must endure as a result of their activities.
    They are either parasites, cancer or both and the world’s “immune system “ is AWOL. Both of these diseases can and do kill without intervention. To put a stop to this evil, and it is evil, will require a massive response. Sadly, there seems little interest in addressing this by people/institutions on a meaningful scale. The money is just too good.

  11. Chauncey Gardiner

    Excellent article! Besides prohibiting corporate stock buybacks and other policies Lynn Parramore outlined here, a range of other proposals have recently been made by legislators to curtail the damaging actions by a few individuals who have accumulated great personal wealth while contributing nothing constructive to our economy or society. These proposals include a modest wealth tax on accumulated personal wealth over $50 million, a small transactions tax on high frequency stock trading, and other policy changes. I suspect broad legislative support and passage will likely require overturning the Supreme Court’s Citizens United decision that has aligned the funding of many politicians and the two legacy political parties with the financial interests of Wall Street, but who knows?…

    Perhaps we will also require more instances of damaging climate change coupled with neoliberal policies for the requisite political and judicial will to develop. But with the Blob beginning to focus on the failure of the elite’s offshoring and China policies to deliver the outcomes they had assumed, the semiconductor issues mentioned in the Intel example, other corporate examples cited here, together with the Pentagon’s reported concerns about the effects of climate change, perhaps some previously unanticipated support from those constituencies for necessary policy shifts will develop. Financial capitalism has delivered only historically high wealth and political inequality, and related social and environmental damage.

    1. William Neil

      It is almost spring and the first green shoots are appearing. In several months there will be flowers.

  12. Glen

    So five months ago I would have said make America great again and make stock buy-backs illegal.

    Now I say build back better and make stock buy-backs illegal.

    Make them illegal – again.

    1. drumlin woodchuckles

      Someone should design and sell MABBBA hats.

      MABBBA. Make America Build Back Better Again. ( Pronounced Mah BuhBuh Bah).


  13. Anthony G Stegman

    It is outrageous to think than someone who owns 1% or less of a company can control it to the extent these cretins do. How did this come to be?

  14. Anthony G Stegman

    Years ago I wrote a letter to the editor of the San Jose Mercury News warning of the “fabless” model of American semiconductor companies. My first job in Silicon Valley was with Advanced Micro Devices (AMD) whose then founder and chairman Jerry Sanders famously said “real men have fabs”. He was spot on, though these days AMD has also gone the fabless route. Critical industries should never be under the control of financiers. Not ever!! Congress must act (and quickly) to protect our vital industries from Wall Street predators.

    1. responseTwo

      I worked at a company that made semiconductor testers and I remember a quarterly meeting where we were told just about all of the testers where in China where the semiconductors are made. If I go to google and search on where semiconductors are made it says about 50% are made in the US. I’m confused about how much fabrication is not done in the US.

      Anyway, when the ruling class war promoters ramble on about China, how do they expect China to react if the US continues to get nastier in regards to military confrontation? Couldn’t china decide to make things miserable for the US by cutting back on semiconductors to the US and the western allies? I wonder if the hedge funders etc. have any concept about what their hyper-ambitious greed can end up doing. Promoting constant deregulation or no regulation in the stock market seems to be a lot like ignoring global warming.

      1. Anthony G Stegman

        Historically, the majority of semiconductor assembly and test has been done in Asia. This was true even when wafer fabrication was done in the US. The primary reason given was that Asian women (Filipino, Vietnamese, and Chinese) are more dexterous and detail-oriented than non-Asian workers and so do a better job attaching fine wires to chips. Especially with respect to assembly the job is labor intensive so I’m sure lower labor costs in Asia also played a major role in assembly and test work being outsourced from the get go.

  15. Paul Kleinman

    Yes, predatory hedge funds will always squirm and slither to keep hidden the role the dominant role they play in pressurizing stock price increases and running off with huge profits. While they of course favor the Republican Party, some also donate to leading Democrats to make sure they torpedo grass root Democratic moves to limit corporate raiding. Yet at least we’ve moved away from Bill Clinton’s revolting praises of neoliberalism, as its disastrous consequences can’t be denied by anyone with an ounce of integrity. We may just have a moment in American history where economic and social progressives can take more Congressional seats to force the Democratic Party dinosaurs (aka the DNC) to allow honest voting on bills that would codify democratic government dominance in seriously restraining all forms of predatory capitalism.

  16. drumlin woodchuckles

    This article may be mistaken in its assumption that Apple, GE, and etc. would have ever cared about doing any green anything regardless. But this article is still useful in explaining the mechanics of how well money-endowed hustlers can engineer the value-stripping of companies. Perhaps understanding how those various mechanisms were legislated into existence, and how the tax-favoredness of such value stripping was legislated into existence may help in crafting laws and rules to help engineer it back out of existence.

    But since the earth-surface may go into runaway-heatup before such legal restraint and then abolition of money-hustler value-stripping of companies can be engineered back out of existence, perhaps we should also at-the-same-time start thinking about little green mini-deals and tiny green micro-deals which could lower fossil fuel use and maybe even raise plant-driven sky-carbon recapture in the meantime.

    Part of it will involve a lot less cars and a lot less driving. Perhaps deep-blue deep-green jurisdiction-loads of people can force little green minideals and tiny green microdeals into existence in their own areas.

  17. James Simpson

    torpedoing our chances of averting environmental catastrophe

    As numerous other commenters have stated, mitigating the coming climate disasters has nothing to do with developing new technologies, all of which rely on extractive, polluting, life-destroying industries. The solutions rely on solidarity, socialism and drastically reducing the energy consumption of the wealthy in the world and in each society. The richer we are compared to the poorer, the more we must change.

    1. rjs

      people torpedo our chances of averting environmental catastrophe by the choices they make every morning….then, to avoid feeling guilty, they blame it on the Kochs or some hedgies…

      1. drumlin woodchuckles

        You can’t take the train where no trains go. You can’t ride a trolley which doesn’t exist anymore.

        The Koch brothers ( and lately some hedgies) have spent billions of dollars and tens of years carefully taking choice-options off the table and imposing their choice of choices on us all. And major pre-Koch corporate leaderships did the same thing before Kochs.

        Here is a little wiki about the General Motors/ Firestone Tire and Rubber/ Standard Oil of New Jersey conspiracy to destroy trolley and streetcar systems all over America.
        You probably live in a town or city which had a trolley and/or streetcar system before the Big Three conspiracy destroyed it. Are you going to feel guilty for not taking the trolley if there is not trolley to take?

        All that said, it would be good if those members of the Lower Class Majority who still have some small zone-of-choice realized the small minor choices they still have to do one thing versus another every morning. The cumulative power of 200 million such individually small choices could add up.

        But lectures about guilt won’t interest any one in learning about such choices. Whereas appeals to weaponisable viralizable disseminable properly-targeted Hate might well inspire millions of people to make such choices.

        Every dollar is a bullet on the field of economic combat. With a head full of plans and a heart full of hate, we can make things happen. We need a thousand hate based initiatives and a thousand points of hate to Keep Hate Alive and drive meaningful micro-actions by meaningfull macro-masses of micro-individual people.

  18. polecat

    What green new dealing is this? The ‘$green$ new $teal is a conjurers trick! The only true ‘deal’ is to fold, and grow only to what will sustain us AND the Biome at large.. without the ‘benefit’ of “Progress for Progresse’s sake! That there will be the doom of us all, Musk, Gates et al, included!
    So, hypercapitalism has to be jettisoned, for humanity to survive in a rational manner on this tiny blue speck.

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