Popular financial colunmist Matt Levine, who rides free market absurdities like the Fifth Dimension rides balloons, is flying high this afternoon over New Hampshire where select Republicans are trying to make it a crime for those entrusted with investing the state’s money to monitor the companies they might invest in.
Levine marvels at the proposed legislation from Rep. Mike Belcher and his colleagues, which would make it illegal for the state’s treasury, pension fund and executive branch to use investments that “consider environmental, social and governance factors.”
Not less than a year in jail — and not more than 20 years in jail — would be the price of an investment official looking into a company’s “governance” before investing.
“Investors aren’t allowed to consider governance!” Levine writes, of the bill, which is designed “to ensure that no funds or state-controlled investments are invested with firms that invest New Hampshire funds in accounts with any regard whatsoever based on environmental, social, and governance criteria.”
Using Elon Musk as an example of corporate governance that might be considered and questioned, Levine imagines a New Hampshire official questioning Musk’s governance of Tesla on behalf of the state pensioners, before buying Tesla futures on their behalf. And then as a result of asking about Musk’s governance, that official being thrown in jail!
As Levine writes: “I’m sorry, this is so stupid.”
Levine is laughing at the preposterous real world implications of what is doubtless a sincere political opposition to DEI and ESG as concepts.
Where the New Hampshire legislature aims at “Woke” initiatives that, in their view, denigrate merit, the result is nontheless pure absurdity — that the state’s coffers should be invested blindly, with “no regard whatsoever” for how the companies it invests in are run.
None other than famed investor Warren Buffett has said corporate governance is among the most important factors to consider when investing.
Here for example, is how the University of Pittsburgh Law School describes corporate governance, one of the critical factors every investor must consider:
At its core, corporate governance refers to the system of rules, practices, and processes by which a company is directed and controlled. It encompasses the relationships among various stakeholders, such as shareholders, management, employees, customers, suppliers, and the community at large. The goal of corporate governance is to manage the business to maximize long-term value while safeguarding the interests of all stakeholders.
[Gov. Chris Sununu already took the hatchet to ESG last spring, issuing an executive order to prohibit state money from being invested “solely” on ESG criteria — but without willful blindness about governance or big jail time.]
