Moneybeat: Right where the left is

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MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and advisor David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He’s here now. Good morning, David.

DAVID BAHNSEN: Well, good morning, Nick. Good to be with you.

EICHER: David, the challenge to free enterprise now seems to come from two directions: democratic socialists on the left and a populist right increasingly skeptical of markets.

Vice President J.D. Vance says Republicans shouldn’t answer young people’s economic frustration by sloganeering about the free market, but by crafting policies that make their lives better. Here he is on Fox’s The Will Cain Show.

JD VANCE: I guess I would say to that young person that you, as an American citizen, deserve to have a good life in this country, and you deserve to have a government that is making it easier for you to start a family, for you to afford to get a good education, for you to have a good job, for you to afford a home. … And my warning to my fellow Republicans, Will, would be: If we don’t get this right, don’t blame young people for being sympathetic to socialism. We’ve got to blame ourselves. … You don’t stop socialism by throwing slogans at people about the free market. As much as I love the free market, you stop socialism by making people’s lives better—and that’s what we’re trying to do every single day.

I think there’s something politically right about insisting that public policy produce results. But that can quickly become a mandate for government to engineer those results. Where do you say conservatives ought to draw the line?

BAHNSEN: Well, I think first of all, you want to start with this issue of limiting principles. Why could a socialist not say this exact same sentence? We don’t need free market slogans. We need the government to make people’s lives better. That is what socialists say. So just merely parroting and echoing the exact same line is unhelpful.

But I would throw it back at the critics of free markets and ask a question: Don’t we need more than slogans about making people’s lives better? In other words, what is it you’re referring to?

If you’re referring to protecting the free market in a way that it will enable the conditions for human flourishing, then why do you have to pit it against free markets? And if what you mean is, no, I need the government to transcend, supersede, put its thumb on the scale, do something against a free market, where is that appropriate line?

I’m not sure I agree with the general language that I want a government that will make my life better, but I know what a lot of people might mean by it in the sense that we want them to promote the general welfare, the common defense, and that is done in constitutional ways by removing impediments, so protecting rule of law, protecting us from foreign invaders, settling civil disputes, things of that nature.

But that is not, of course, what anyone, right or left, in this populist moment that is anti-market is talking about. They are all talking about some version of price controls, of wage controls, or of subsidies, of some form of governmental intervention, what we refer to as central planning of the economy, and I’m here to say it doesn’t make anybody’s life better, and it never has.

EICHER: After the Dobbs decision overturned Roe vs. Wade and returned abortion law to the states, abortion providers began mailing DIY abortion kits into states that protect unborn life.

Our mutual friend Jerry Bowyer argues that the Comstock Act may already prohibit those shipments ... and that Attorney General Todd Blanche’s commitment to enforcing the law creates real risk for the companies carrying them. Bowyer praised Walmart, Amazon, and Costco for declining to sell or ship the drugs.

What does that result tell us about the power of sustained shareholder engagement, compared with boycotts or government mandates?

BAHNSEN: Well, you may have noticed that years and years of boycotting companies that were doing things we didn’t like didn’t help very much. And, of course, the issue of boycotts, to the extent that you’re trying to make an impact on activity, it cuts both ways.

Hopefully, those that advocate boycotts understand from a market impact standpoint that there are more pro-choice people than pro-life people. So I would hate for companies to respond to the market incentive the other way.

What you want is to do exactly what Jerry did, which is point out that there is risk for the company because of the various nature, either in explicit or ambiguous law, and the companies voluntarily saying we don’t want to take this particular risk on.

However, that legislative clarity isn’t there, and so it leaves judicial ambiguity, which leaves companies exposed, and Jerry is wisely going after that.

But Nick, to your point, engagement is the way to move that process along in a way that is favorable to shareholders and to the type of society we want to have. A boycott is just simply an impotent way of dealing with it.

EICHER: Jerry also coauthored a report finding that participation by major banks and asset managers in net-zero alliances has fallen nearly 90 percent in four years.

JPMorgan Chase, Bank of America, Goldman Sachs, Citigroup, Morgan Stanley, and Wells Fargo have all left the UN-backed Net-Zero Banking Alliance. But leaving an alliance doesn’t necessarily mean their lending and investment practices have changed.

How can we tell whether this is a durable return to fiduciary responsibility rather than a temporary response to today’s politics?

BAHNSEN: You have to take it case by case because each company’s motivation is going to be different.

I would start not with why did they leave net zero, but why did they first go into it, and there were some who were true believers that now got away because of the political winds blowing. But there were some J.P. Morgans in this camp that only went into it because they were being forced into it, and they were gladly taking the out to get out of it.

So I think I’m less concerned about where J.P. Morgan would go in the future, more concerned with where there are some that are true believers. But this has been my position for a long time. That’s a very small minority in much of the ESG, environmental extremism, and some of the cultural wokeism issues.

There are some out there in media, in Hollywood, but when you’re talking about the financial institutions where I have intimate connections with many of the C-suites of some of these companies, it’s extremely rare that I ever found anyone that was a real believer in a lot of this stuff.

And so the cultural winds moving are a good thing because the companies get the out they need to go back to market-oriented signals and activity.

The winners are the stakeholders of these companies that have the companies returning to fiduciary thinking and making decisions that are best for their customers, for their business models, for the stakeholders.

I agree with you entirely that I do not believe all of the cultural insanity that existed five and 10 years ago is totally gone. I do not agree that the election removed it. I think the election was a byproduct of the cultural shifts, not the vice versa. There’s a chicken or egg issue there.

But for Christians who care about these things, Nick, if you want durable change, it’s in evangelism and reformation. Those are the things that bring durable change.

If all we want to do is go election to election and press release to press release and vibe to vibe on social media, then yes, we’re going to get blown around a lot more.

EICHER: Finally, David, we got a new CPI report last week ... the Consumer Price Index for July ... and we see core consumer prices rising two-tenths of a percent in July and 2.5 percent from a year earlier. What do you see in the inflation data?

BAHNSEN: I think it’s unfortunate to see the CPI still higher than it was when Biden left office. It’s good to focus on core because even headline is a lot higher, and people can decide if that’s a good thing or bad thing around the oil price situation with Iran.

But to see goods prices come up the way they have and stay up the way they have as a result of tariffs is really disappointing.

But the housing issues are coming down a little bit, and that’ll put some downward pressure on the total inflation number, and we’ll see that bake in in the months to come.

EICHER: All right, David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. He writes at DividendCafe.com each week and at WORLD Opinions. David, have a terrific week. We’ll see you next time.

BAHNSEN: Thanks so much, Nick.

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