The Mystery of the Missing Conservative Investor

 

shutterstock_252584134In an earlier, post I argued that fighting a defensive, reactive culture war the way conservatives have been doing for the past half-century is futile. I also suggested that, because technology is the most important driver of cultural change, our best shot at bending the arc of the culture back toward the light of sanity may be an indirect approach – i.e., focusing on finding “conservative or libertarian” technologies. All technologies empower; the question conservatives and libertarians should be asking is: what technologies empower the individual relative to the State?

There is a lot of spilled ink out there arguing that the still-unfolding information technology revolution should in theory make us more libertarian. Karl Rove has argued, unconvincingly, that computers are making the country more fiscally conservative by liberating everyone’s inner entrepreneur. And there is much concern on the left that Silicon Valley, which floats on a bottomless ocean of cash, is becoming a libertarian stronghold, led by people like Peter Thiel, Marc Andreessen and Michael Arrington. Here, for example, is one breathless Salon article on the subject.

Much of this is obviously wishful thinking or unfounded panic, depending on your point of view. Silicon Valley is largely left-leaning. Steve Jobs was a major Obama supporter, as is Google’s Eric Schmidt. Yahoo CEO Marissa Mayer is an Obama bundler. Facebook COO Sheryl Sandberg is a prominent Democratic Party cheerleader. When an industry titan like Andreessen supports a Republican, it’s big news.

Also, in practice, there is a strongly positive correlation between the advent of the microchip and the growth of the Leviathan State. When Intel began work on the world’s first microprocessor in 1969, federal government spending was roughly $4,500 per capita in 2014 dollars – in a year when we were fighting a major air and ground war in Southeast Asia and putting men on the moon. Last year spending was nearly $12,000 per capita. Clearly, the promise of a small government renaissance midwifed by the information revolution remains unfulfilled.

Still, it’s an appealing theory. The Second Industrial Revolution, with its economies of scale and massive inputs of coal, pig iron and unionized labor toiling at enormous assembly lines and blast furnaces, was generally amenable to centralized, top-down direction and management. By the mid-20th century it had brought us an alliance of Big Business, Big Government and Big Labor, held together by a pseudo-scientific ideology of Managerialism. The information technology revolution has been chipping away at this alliance for 40 years. There is every reason to expect that 21st century technology will continue to break down the old concentrations of power and favor the decentralization of control, dispersion of knowledge, more individual consumer choice, and continued fragmentation of the old government, media, labor and corporate oligopolies. 3D printing and other distributed manufacturing technologies may do for traditional large-scale manufacturing what the Internet did for the media, entertainment and publishing industries, with the additional benefit of confounding conventional government regulations. Even industries that are seemingly inherently large-scale, such as energy generation, may give way to micro-scale distributed production. The hope is that our regulatory-administrative state, which is built around mid-20th century technology, will not be able to withstand these trends toward the breakdown of concentrated power.

But it’s one thing to notice large societal trends; it’s quite another to pick specific technologies that may advance conservative or libertarian values. The engineers and venture capitalists who brought us advanced medical imaging probably did not imagine that their technology would result in a significant shift in public attitudes about abortion. The backers of 3D printing probably did not intend for their technology to empower radical second amendment advocates. Picking “conservative” emerging technologies is as difficult as picking financially winning ones because doing so successfully requires complex speculative guesswork about the future. But the same is true of venture capital in general. There’s no reason why a smart hedge fund manager focused on the societal impact of his investments could not pick libertarian winners as well as financial ones. But my Wall Street friends tell me that they have never heard of a private equity fund that has a specifically “conservative” investment angle, which is a bit of a mystery.

So what are the options for a conservative retail investor who wants to put her investment dollars where her values are? To ask this question is to stumble into an even more baffling mystery. In the early 1990s, liberals invented an entirely new industry known as SRI – Sustainable, Responsible and Impact investing (also known as “socially responsible investing”), whose goal is to make money while promoting “social justice”. According to the Forum on Sustainable and Responsible Investment, SRI in the United States totaled $6.57 trillion in 2014, representing nearly 18 percent of the $36.8 trillion in total assets under management. Since 1995, the SRI industry has grown tenfold, with an annual growth rate of 13.1 percent. This means that a liberal who wants to fight global warming, divest from tobacco companies, boycott Israel and support community abortion clinics in the Amazon rainforest can choose from hundreds of investment vehicles that cater specifically to his political preferences.

What about our conservative investor? She is basically on her own. I am not an investment industry professional, but my wife is. Là Oblomova tells me that she has never heard of a mutual fund whose investment strategy takes into account politically or socially conservative values. “Conservative” in her industry means investing in T-bills. True, there are some funds that invest consistent with Christian principles, but these are a tiny proportion of the U.S. market. If you want to put together an investment portfolio that specifically: includes Israeli tech firms (to counter the morally imbecile Boycott-Divest-Sanctions movement); invests in countries that adopt free market reforms; targets conventional energy firms, for-profit education companies or firearms manufacturers; and avoids firms that receive government subsidies, invest in Iran or whose management are major Democratic Party donors; then you have to do your own legwork.

Nor are there ready resources available to help the socially responsible conservative investor. The SRI industry has spawned an entire complex of allied publications, research institutions and advisory firms specializing in socially liberal investor activism. Nothing similar exists on the conservative side. Freedom House ranks countries according to their level of freedom; why is there no similar index for public companies? I for one would like to know how freedom-friendly are the companies I invest in.

As I say, all this is a mystery. The Efficient Market Hypothesis tells us that you don’t see too many hundred dollar bills lying around on the sidewalk, and you don’t see smart finance professionals leaving vast untapped market opportunities just lying around, either. Yet, if there is $6.57 trillion in liberal cash invested in a politically targeted way, there must be at least that much conservative money out there invested with no social or political purpose. Why has no one taken advantage of this?

There are three kinds of voting: you can vote with your ballot, with your feet, or with your money. Voting with your ballot is increasingly pointless if you are a conservative. Voting with your feet is a possibility if you live in Illinois and Texas is calling you. However, voting with your money is far more difficult for conservatives than for liberals. Why should this be so? And why have conservatives conceded the “ethical” and “socially-conscious” investment industry to the left? Either I am wrong, and conservative impact investing is already a huge segment of the finance industry, or there are good reasons why it hasn’t caught on. But I can’t think of any. Larry Kudlow, please set me straight.

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  1. Guruforhire Inactive
    Guruforhire
    @Guruforhire

    I am in

    • #1
  2. Tom Meyer Member
    Tom Meyer
    @tommeyer

    I’m very interested in the idea, but have a (rather ignorant) question: Do SRI funds actually preform well?

    • #2
  3. Tom Meyer Member
    Tom Meyer
    @tommeyer

    On a small scale — well below what Oblomov is talking about — the growth of Kickstarter, IndeGoGo, and GoFundMe sites might serve a similar purpose, so long as none of them become monopolistic.

    • #3
  4. Fake John Galt Coolidge
    Fake John Galt
    @FakeJohnJaneGalt

    One major problem that I see is that if you were to declare yourself as a conservative investor or be known as one or create something like a conservative version of SRI the combined liberal leviathan of MSM, government and liberal special interest groups would pound you into submission or non existence.  Just look at the Koch brothers as an example of what happens to anybody that strays from the liberal ideology.  Anybody trying it would end up spending many resources just defending themselves from pointless attacks designed for the sole purpose of making you unprofitable.  The smart thing would be to keep your conservative point of view to yourself, invest your money accordingly and pocket your profit on the quiet.

    • #4
  5. The King Prawn Inactive
    The King Prawn
    @TheKingPrawn

    It would have to be completely underground, word of mouth type deal. The illiberal left has mutinied the language, and liberty now only means the government enforced right to sex and the government protected right to kill the natural results of such unfettered unions. The smear campaign would be immediate and devastating. Any such investment vehicle would be painted as the antithesis of everything the SRI investments stand for. If Chik-Fil-A can be preemptively banned from college campuses because of a personally held belief of the company’s deceased owner, then finding companies willing to be conservative or libertarian enough to warrant investment is going to become impossible in the near future.

    FJG wrote pretty much the same thing while I was typing.

    • #5
  6. Oblomov Member
    Oblomov
    @Oblomov

    I take as dim a view of human nature as anyone on Ricochet. Nobody beats me on misanthropy, NOBODY! But are we really that far gone? I think that if it were marketed as a Libertarian project, it could still get a lot of traction. And what about my Freedom House-style index for companies? I think people would be interested.

    • #6
  7. Son of Spengler Member
    Son of Spengler
    @SonofSpengler

    There are a number of Catholic funds (e.g. Ave Maria fund family) that screen out companies that profit from abortion, contraception, or pornography. Some funds also screen out companies offering domestic partner benefits. Other religiously-based funds screen out alcohol and tobacco companies. But I agree that the conservative socially-responsible funds are all SoCon-type screens. I’m not aware of a free market-oriented fund family — one that might avoid, say, crony capitalist firms.

    • #7
  8. Son of Spengler Member
    Son of Spengler
    @SonofSpengler

    Or you can invest in my libertarian fund. It is invested 100% in gold, buried in a safe location.

    • #8
  9. The King Prawn Inactive
    The King Prawn
    @TheKingPrawn

    Oblomov:I take as dim a view of human nature as anyone on Ricochet. Nobody beats me on misanthropy, NOBODY! But are we really that far gone? I think that if it were marketed as a Libertarian project, it could still get a lot of traction. And what about my Freedom House-style index for companies? I think people would be interested.

    You’re substituting your conception of libertarian with that generally understood in the culture. Unless you think zero legal or cultural prohibitions on any type of sex or drug use is the height of liberty then you’re not using the word as it is understood in the wider culture.

    I work with a lot of young (sub 30 year old) sailors. A large number (at least a plurality if not a majority) paint themselves as libertarian. By that they basically adhere to the lyrics of Another Brick In The Wall.

    • #9
  10. Ricochet Inactive
    Ricochet
    @WardRobles

    Great Idea! Probably the reason we do not see explicit conservative funds is that the whole blessed market ex the SRI fund portion is essentially free-enterprise oriented. Specific examples (not recommendations) include the pleasantly named RBB Free Market US Equity (FMUEX), or the incredibly popular Vanguard Total Stock (VTSMX). Carving out the public liberals could be a huge mistake for investors. Tim Cook, Warren Buffet and Bill Gates may be liberals when they appear on talk shows, but they are rock-ribbed free-marketers at the office. Paleo-cons may disagree. I hereby declare victory and pour myself another cup of coffee.

    • #10
  11. Valiuth Member
    Valiuth
    @Valiuth

    How progressive are SRI’s? I am thinking that these funds are probably just a marketing ploy to sucker people out of money, while having very lose guidelines in their investment plans. I bet these SRI’s have as much money in oil as they do in solar power. I smell a marketing scam similar to the “organic” food movement.

    • #11
  12. Oblomov Member
    Oblomov
    @Oblomov

    Maybe the liberal SRI is a scam along the lines of organic food. But the conservative version doesn’t have to be.

    • #12
  13. Guruforhire Inactive
    Guruforhire
    @Guruforhire

    You can start with the vicex fund

    add in major defense firms like Lockheed

    You will have to baseline around, “not nakedly hostile to some or all of your values.”

    Basically I would invest in anybody that consciously stands up to the SJW excesses and boycotts.

    • #13
  14. Larry3435 Inactive
    Larry3435
    @Larry3435

    Valiuth:How progressive are SRI’s? I am thinking that these funds are probably just a marketing ploy to sucker people out of money…

    Isn’t that the definition of all of modern liberalism?

    • #14
  15. Fake John Galt Coolidge
    Fake John Galt
    @FakeJohnJaneGalt

    Oblomov:I take as dim a view of human nature as anyone on Ricochet. Nobody beats me on misanthropy, NOBODY! But are we really that far gone? I think that if it were marketed as a Libertarian project, it could still get a lot of traction. And what about my Freedom House-style index for companies? I think people would be interested.

    I have no doubt that people would be interested.  I also have no doubt that the liberal side would shut it down or more precisely make it unprofitable via regulation and other things.  And nobody, liberal or conservative will invest in funds that will not be allowed to make a profit and by investing in it will make them a target for government and private harassment.

    Yes, we are really that far gone.  Conservatives are operating as a resistance movement in hostile territory.  When in such a position it is best not to let people know who / where you are.

    • #15
  16. Z in MT Member
    Z in MT
    @ZinMT

    Guruforhire:You can start with the vicex fund

    add in major defense firms like Lockheed

    You will have to baseline around, “not nakedly hostile to some or all of your values.”

    Basically I would invest in anybody that consciously stands up to the SJW excesses and boycotts.

    Lockheed is the most cronyist company there is. About 10% of the entire DoD budget is contracted to Lockheed.

    • #16
  17. Z in MT Member
    Z in MT
    @ZinMT

    Overall, I like Oblomov’s idea. I am surprised there isn’t a conservative equivalent to SRI funds. Here is my list of what a limited government types should divest from. Most of the tech firms have explicitly liberal CEO’s and Founders, but don’t generally use the government to make profits. These do:

    Top 5 Cronyist Companies

    1. Lockheed

    2. GE

    3. Boeing

    4. Archer Daniels Midland

    5. United Health

    • #17
  18. Guruforhire Inactive
    Guruforhire
    @Guruforhire

    Z in MT:

    Guruforhire:You can start with the vicex fund

    add in major defense firms like Lockheed

    You will have to baseline around, “not nakedly hostile to some or all of your values.”

    Basically I would invest in anybody that consciously stands up to the SJW excesses and boycotts.

    Lockheed is the most cronyist company there is. About 10% of the entire DoD budget is contracted to Lockheed.

    The government does in fact have to buy things.

    • #18
  19. Fricosis Guy Listener
    Fricosis Guy
    @FricosisGuy

    Z in MT:Overall, I like Oblomov’s idea. I am surprised there isn’t a conservative equivalent to SRI funds. Here is my list of what a limited government types should divest from. Most of the tech firms have explicitly liberal CEO’s and Founders, but don’t generally use the government to make profits. These do:

    Top 5 Cronyist Companies

    1. Lockheed

    2. GE

    3. Boeing

    4. Archer Daniels Midland

    5. United Health

    I’d add just about all the money center banks. J.P. Morgan may get a pass, only because Jamie Dimon seems to irritate the progressives.

    • #19
  20. Marion Evans Inactive
    Marion Evans
    @MarionEvans

    SRI is a marketing gimmick and SRI funds consistently underperform. Generally speaking, conservative investing would lead one to hard assets like mining, energy, real estate, assets that pay dividends. By contrast, intellectual property assets such as tech, media, law and finance are generally controlled by liberal interests. If you want to do well, you have to invest in both.

    • #20
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