A federal judge in Texas granted a victory Friday to American Airlines pilots suing the company for sacrificing the profitability of their 401(k) fund to pursue liberal causes.
It’s a potentially major blow in a long battle against political investing, called ESG (or environmental, social, and governance). And it paves the way for battles against BlackRock and other globe-dominating businesses that funnel trillions of Americans’ retirement and investment dollars toward left-wing causes. More, it demonstrates how the political catastrophe that has befallen corporate governance these past five years can be undone — by the same tool with which it was made.
We stumbled into this morass through risk aversion at the top. By risk aversion it must be undone.
The judge found that American Airlines violated its fiduciary duty of loyalty to the pilots. It comes on the heels of the same judge deciding that the class action can include every pilot who joined the 401(k) since 2017. That’s more than 100,000 people. The judge also found that American Airlines acted within the industry standards at the time, meaning the company did not violate its fiduciary duty of prudence.
“Industry standard” indeed. BlackRock, the firm American Airlines allowed to manage its $26 billion plan, essentially dominates the retirement plan industry, managing $11.5 trillion in assets globally. It is one of the most powerful firms on the planet, but that doesn’t mean the company is a friend of the American dream. These are the guys literally buying up every affordable starter house across the country they can, turning would-be owners into permanent renters. The company says it doesn’t buy individual family homes, which is true — it buys the companies that do. While BlackRock isn’t named as a plaintiff in the Texas case, the implications are clear.
The surest way to defeat and destroy woke corporate politics is through litigation and the threat of litigation. We stumbled into this morass through risk aversion at the top. By risk aversion it must be undone.
Attorney General Bill Barr understood this well. In the final days of the first Trump administration, his Department of Justice issued memoranda warning corporations that that weighing race in their decisions could run afoul of the Civil Rights Act. In other words, you can’t punish people for being white, no matter how popular it is at the moment.
This was a real problem. If you believe the statistics from the peak woke years, white men made up only 6% of corporate hires. That’s overt discrimination in hiring practices.
Legal routes are so much more effective than shame, because human resources departments and others completely dominated by 20- and 30-something left-wing activists are hard to manage, even for top company executives. Few things are more ominous than being accused of racism, sexism, or anti-LGBT bias in corporate America, a fear even corporate directors share. Those directors need a way to say “no” loudly and clearly the next time they’re told to stop hiring white men.
Do you know what changes their calculus? Lawyers, lawsuits, and money. Few things would turn the tide quicker than a Justice Department punishing anti-white-male bias for four-plus years, along with an anonymous tip line bringing the force of investigation down on corporations. If the directors won’t shut down the left-wing crusaders in their midst, litigation will.
That’s why the Texas decision is so noteworthy. There’s plenty of road left for the pilots’ class action (and others), but the implications are clear. ESG investing is no longer a safe space. Corporate directors and state officials looking to invest their 401(k)s will all be looking at their own vulnerability — and pushing back on companies like BlackRock that expose them to potential liability. The real battle is going to be in employment, but that’s still big news, even if it isn’t over.
Bedford, July 2021: Corporations like BlackRock are steamrolling small business, buying up homes, and crushing the dream, but we can fight back
Federalist Radio Hour: Can we rescue the American dream from bully corporations?
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THE FIRE RISES
CITY JOURNAL: Trump should abolish the federal mental health agency
People have a habit of assuming the changes all around us are naturally occurring. We grumble when there’s a sudden and clear increase in drug-addicted and mentally ill homeless menacing commuters and taking over public spaces, but we rarely wonder, “Is someone actively doing this? Is someone paying for this outcome because they want it? Am I paying for this outcome?” Sometimes it is just natural. But this one is not. Carolyn D. Gorman reports:
…The Substance Abuse and Mental Health Services Administration, the federal mental health agency … was created in 1992 to “reduce the impact of … mental illness on America’s communities” and to target services to people “most in need.” The agency has failed on both counts. People with serious mental illnesses, like schizophrenia and other psychotic disorders, remain disproportionately represented among the homeless, incarcerated, and violent criminal populations. Mental illness has been a factor in nearly all of the deadliest mass shootings, including Sandy Hook, Viriginia Tech, Parkland, Aurora, Uvalde, El Paso, Sutherland Springs, Charleston, Oregon, Navy Yard, Binghamton, Killeen, Lewiston, Austin, Edmond, Pittsburgh, Santa Fe, Boulder, Dayton, Omaha, and Indianapolis — to name only a few.
The agency has not only failed to reduce the impact of mental illness in American life but also has undermined proven solutions by derailing resources from high-quality, intensive psychiatric treatment and advocating against involuntary commitment. Consider SAMHSA’s Protection and Advocacy (PAIMI) Program. The agency claims the program “is intended to protect and advocate for the rights” for people with serious mental illness, but in practice, it often directs funds to lawyers seeking to prevent needed hospitalizations. This can have disastrous results, as it did in 2006, when a mentally ill man named William Bruce killed his mother with a hatchet after SAMHSA-funded lawyers reportedly coached him on how to avoid involuntary treatment.
The federal mental health agency is also a hub for progressive activism. Seemingly any left-wing priority can win SAMHSA support if proponents claim that addressing it would reduce “trauma” or improve “mental well-being.” Billions of taxpayer dollars have been hijacked for things like “non-traditional holistic support” for “LGBTQI+” families; “affirming, comprehensive care” for “unhoused LGBTQ+ youth”; employee trainings and agency publications on “Diversity, Equity, Inclusion, [and] Accessibility”; bulletins on the behavioral health effects of climate change; “Keep it Safe but Sexy” harm-reduction sessions for the “incarcerated and post-incarcerated socially disenfranchised”; and pop psychology-inspired social-emotional learning programs …
Opinion & analysis, Politics, Blackrock, American airlines, Woke capital
