Remarks at the SFOF 2023 National Meeting and Economic Summit

by Robert Bork Jr., August 30, 2023

You’ve heard over the course of this day-and-a-half about the legal pitfalls of progressive antitrust, as well as the mounting costs ESG heaps on your state funds, your taxpayers, your state retirees, and all investors. I will reiterate some of those points. But I will do so to point to a larger concern – that this controversy is about more than the right application of the law, the best returns for funds, or the responsibilities of a fiduciary.

This controversy is, at its heart, about whether or not we will continue to be a nation dedicated to freedom.

This conviction goes deep with me. As a boy, I remember my father, Robert Bork, laboring in the evenings in his cramped attic study in New Haven at a desk my mother made from an old door, scribbling with his Scripto mechanical pencil on a yellow legal tablet, a Kent cigarette always hanging from the corner of this mouth.

The product of his labor was his 1978 masterpiece, The Antitrust Paradox: A Policy at War with Itself. By “paradox,” he meant the irony of antitrust laws designed to protect consumers that somehow wound up, in the hands of the progressives, protecting everyone but consumers.  

In 1978, my father formulated a guiding principle, the consumer welfare standard to end this paradox. With economic reasoning and historical scholarship, my father and his cohorts advanced the simple idea that if a merger, acquisition, or business practice harms consumers, it should be illegal. If it doesn’t, it’s okay.

This was such a sensible idea that the U.S. Supreme Court adopted it one year after the book was published. For 45 years under that standard, the U.S. economy tripled in size and Americans’ per capita income doubled. These were decades of remarkable growth and innovation. 

But the consumer welfare standard at its heart is about more than money or how to organize an economy. It is about democracy – a democracy of the simplest kind – one in which people are free to vote with their dollars. The consumer welfare standard protects people and their dollar vote from both overbearing corporate monopolies and overbearing government power.

Today, ESG is merging both forms of power into a government/corporate combine, an entity powerful enough to coerce markets and censor speech. 

Progressives are not vague about what they oppose. President Biden harked back to my father and said “that forty years ago America went down the wrong path” by adopting Robert Bork’s consumer welfare standard. Former FTC Commissioner Christine Wilson did not shrink from saying that these people are explicitly Marxist. 

This is strong stuff. Let me second Commissioner Wilson’s view and offer my reasons why I think she is right.

President Biden and his FTC Chair, Lina Khan, have worked to transform antitrust law into a takeover of our free market and our democracy that, if it is allowed to happen, will make our society socialist. I will talk about ESG in this context as an antitrust violation. I will also touch on the flip side of this administration’s super-aggressive antitrust enforcement. They are two sides of a singular strategy to control the private sector, politics, and the nation.

My father foresaw that progressives would attempt this. Barak Orbach, Arizona University professor of law, was asked by The Washington Post about my father’s legacy. Professor Orbach said that Robert Bork as early as 1960 “was concerned the socialists would take over the country through antitrust.”

I believe that too. That is why I brought my father’s book back into print and founded the Antitrust Education Project.

The ESG movement is the vanguard of this creeping socialist takeover. No less than BlackRock CEO Larry Fink has publicly stated that (and I quote) “behaviors are going to have to change … you have to force behaviors …” 

Take that in for a moment … “You have to force behaviors.”

That phrase reveals the true face of ESG socialism. It is not about climate change. It is not about making society better, which, by the way, is not the job of a fiduciary. It is about a conspiracy by the few to control the many.

Make no mistake, this is not a battle about rules. It is a battle for our freedom.

The bedrock law in this battle is the Sherman Antitrust Act, which outlaws conspiracies in the restraint of trade. Yet while the Biden Administration twists antitrust to control the private sphere, this antitrust law itself is violated in plain sight by the ESG cartel.

How does this happen? Big fund managers like BlackRock, State Street, and Vanguard, backed by secretive activist groups, plan ESG-based proxy challenges to force companies to divest from legal businesses. 

You don’t need an X-ray machine to see the collusive nature of this cartel, or how it hurts consumers and investors. In the last five years, global ESG funds have underperformed the broader market 6.3 percent to 8.9 percent.

Meanwhile, large asset managers themselves continue to make big investments in oil and gas. What happens when you restrict a necessary commodity? You raise the price. You make huge profits. From demon oil and demon gas. This isn’t environmentalism. It is diverting money from the pockets of consumers at the pump into the pockets of financiers.

These practices not only violate antitrust law. They also violate ERISA and the requirement that fiduciaries obtain the best financial returns for their investors. But this administration doesn’t believe it must follow this law. President Biden recently issued his first veto to defy Congress and uphold a Labor Department rule weakening this investor-protection law. 

This self-dealing is most nakedly seen in the business models of the proxy advisors. Institutional Shareholder Services is the world’s largest proxy advisory firm, with contractual relationships with mutual funds controlling $26 trillion in assets.

Glass Lewis is the world’s second-largest proxy advisory firm, with contractual relationships with mutual funds controlling $23 trillion in assets.

Together, these two companies form a duopoly that controls up to 97 percent of the market for proxy advisory services. And they make the most of their duopoly. 

Glass Lewis advises activist investors in running proxy campaigns against companies. ISS rates the ESG “performance” of companies and sells consulting services to corporations to defend themselves against those very same proxy attacks. So the duopoly sells the problem and then sells the solution. Not bad work if you can get it.

Such practices went on in the dark for a long time. Now, after being called out by 21 Republican attorneys general, the ESG crowd is visibly alarmed that they’ve been so candid and so public about their antitrust violations. The ESG label itself is falling out of favor while the ESG PR machine spins.

Consider BlackRock’s Voting Choice program, which purports to give the investor more freedom. As Andy Puzder writes, despite this apparent latitude “management remains subject to BlackRock’s behind-the-scenes ESG pressure diminishing the value of that option. More formally, BlackRock calls it ‘investment stewardship’ … But ‘stewardship’ is both more effective and more insidious than proxy voting, as it occurs in C-suite conference rooms and on Zoom calls, beyond the purview of both investors and those who protect their interests.”

So the progressives want to have it both ways – call this the new antitrust paradox. Progressives want to shelter ESG from antitrust laws to illicitly constrain and control trade. And they want to expand antitrust laws to enable government to utterly dominate the private sector. Let me now turn to that side of today’s antitrust paradox.

Alden Abbott is a former FTC general counsel and an advisory board member of our Antitrust Education Project. He reviewed the administration’s new draft merger guidelines. Listen to Alden’s critique and ask yourself – what is the real agenda here?

One proposal is that mergers “should not entrench or extend a dominant position.”  

This vague rule would use antitrust law to deny deals that have no plausible anticompetitive or anticonsumer effects. Unlike the modern body of antitrust law, it is backed up with no economic analysis. 

Another rule, Alden says, “fails to note the strong efficiency cases for a platform’s favoring its own products or services, or a business’s general right to control the terms of access to the facility it has created (a right which incentivizes the generation of a new and improved facilities, among other things).”

Alden documents that the new tenets of progressive antitrust rely on “ancient, badly reasoned and illogical case law … without reference to economic reasoning.”

The progressive approach to antitrust is indeed illogical. But logic is not the agenda here. Logic is not behind any of the policies this administration doggedly pursues, despite the harms to the American people.

Consider the broader effects of today’s progressive policies. We see desperate illegal immigrants encouraged by our government to pour across the border. We see once-glamorous cities turned by progressive prosecutors into crime-ridden public latrines. We see politicians play a game of chicken with debt and the dollar.

Count among these self-inflicted wounds this radical war on business, jobs and the consumer waged by President Biden and Lina Khan. Their legal onslaught will never be as dramatic a story as smash-and-grab gangs or a border visibly out of control. But the wounds inflicted on Americans by their ESG and antitrust policies cut deep and will leave lasting damage.

Early in his administration, President Biden kicked off his antitrust agenda by issuing 72 orders to a dozen agencies to find reasons for antitrust actions against industries ranging from agriculture to manufacturing. Biden’s antitrust agencies doubled the number of complaints filed against business transactions. The administration claims credit for discouraging 26 mergers.

Previous administrations, Republican as well as Democrat, were aggressive in stopping deals they believed would hurt consumers. But today’s policy is to stop almost any consequential deal, no matter its benefits for workers, the economy, or consumers. Even cancer patients.

Consider the administration’s illogical antitrust action against the biotech company Illumina, which set out to reacquire Grail, to create a liquid biopsy test for early detection of more than 50 types of cancer. Some 600,000 Americans die every year from cancer. Sounds like a good idea, right? 

Well, not to Lina Khan and her progressive admirers. She led the FTC to stop this merger because it would restrict competition and raise prices – for a life-saving product in a market that doesn’t yet exist. At one point, when FTC’s case faltered, the agency turned to European regulators to act against these two American companies so it could use the EU’s precedent as a basis for a motion of its own.

As of this writing, the FTC has ordered Illumina to divest Grail. I sincerely hope none of these regulators or their loved ones ever needs a cancer test.

This administration often cooperates with EU regulators to hobble American companies. It is joining with European regulators to restrict and fine many of America’s most storied companies. It is understandable why Europe might use antitrust law as a form of protectionism. Until now, no U.S. administration helped them do it.

The FTC is replacing the consumer welfare test in antitrust with policies to protect inefficient competitors, to create “better values.” The FTC cooperates with Europe to degrade U.S. innovation, harming consumers, and Americans’ health. Too bad you can’t use antitrust law to detect cancer. Now that would be a useful innovation.

These are the strategies of the progressive movement – to control the private sphere by violating antitrust law with ESG, and to deepen that control with the lawless extension of antitrust enforcement.

Make no mistake. The progressive mission is not just about controlling business. It is about controlling speech, thought, and politics. Or, in Larry Fink’s words, to control our behavior.

In November, the NGO activist group As You Sow filed a proposal with the Coca-Cola company seeking information on how laws restricting abortion would negatively impact the company. Whatever your views on abortion, I think you will agree that it is not the job of a fiduciary to dictate it to a company.

As the open letter to asset managers from 21 Republican attorneys general documented, some proposals would force companies to vet their donations through third-parties. Such proposals, in the words of the attorneys’ general, “are focused on denying donations to Republicans.”

This is not about merely controlling business. It is about one faction of one party controlling the whole country.

We should remember that this progressive movement is well over a century old, and it fell out of favor before for good reason. The great English writer C.S. Lewis wrote that: “We all want progress, but if you’re on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.”

I hope you will continue to work with each other, and with each other, and your attorneys general, to expose and reverse this illiberal and most un-American movement. 

I am usually not given to be so hot in my remarks. But our country is under siege by extremists as my father predicted. You get this. And I are heartened to see you step into the breach to defend the citizens of your state and all Americans. 

Thank you.

Remarks as delivered by Robert Bork Jr. on August 30th at the 2023 National Meeting & Economic Summit of the State Financial Officers Foundation in Dallas Texas.