The corporate leadership of both parties won’t break the grip of the financial-fossil fuel complex over energy policy.

As geopolitical tensions rise and the D.C. political circus continues, focus on the climate crisis recedes even further into the background.

In broad strokes what needs to be done about climate is clear. The world must urgently bring carbon emissions down to zero as soon as possible, but at latest by 2050. This is the issue that should preoccupy politics and the media. But it’s far from the case.

For example, economist Robert Pollin estimates that it would cost around 18 trillion dollars over thirty years to transform the energy system to achieve a reduction of 50% carbon emissions by 2030 and 0% emissions by 2050. This would hit the IPCC targets for the United States.

This cost is approximately half the Pentagon budget over the same time frame.

Pollin says that while reducing military spending is of critical importance, the economy is big enough to pay for the transition to a green sustainable energy system without winning that battle over the military budget. Pollin says:

“you’re looking at about a target of about 2 percent per year of Gross Domestic Product (GDP) invested in renewables and energy efficiency improvements. You can get there even with current technologies, assuming that the US economy grows at 2.4 percent per year—which is the average growth rate of the previous 30 years.”^[24]

He estimates a global program to hit IPCC targets would require an investment of 120 trillion dollars or 2.5% of global GDP.

While Pollin’s numbers can be debated, why isn’t this conversation dominating the media? Why isn’t settling on an effective plan for solving the climate crisis and simultaneously reducing the threat of destroying human civilization, a central theme of the news media?

The answer is, it wouldn’t play well on the quarterly earnings call where corporate media CEOs report to Blackrock and Vanguard. You must have heard, “people aren’t interested in climate change.”

Blackrock’s assets under management are more than Japan’s GDP. Along with its media holdings, the Guardian reports that it’s in the top three shareholders of every oil “supermajor” in the world (except for French Total). It’s among the top 10 shareholders in seven of the 10 biggest coal producers, according to Guardian analysis of data from financial information firm S&P. BlackRock effectively owns 2.1bn tons of thermal coal reserves, based on the size of its stakes in major mining companies.^[25]

In 2018 Blackrock and Vanguard voted against 80% shareholder initiatives to make industries more accountable for their effect on the environment and climate change.^[26]

The finance sector is laser-focused on a maximum return on investment. This means they are far more concerned with lower taxes and deregulation than transforming the economy away from fossil fuels towards green sustainability. Any media executive that thinks otherwise will not hit profit targets established by powerful institutional shareholders and would quickly be out the door.

Larry Fink, CEO of Blackrock said it best in his 2018 annual report: “The money that BlackRock manages is not BlackRock’s money. Our firm is built to protect and grow the value of our clients’ assets. We often get approached by special interest groups who advocate for BlackRock to vote with them on a cause. In many cases, I or other senior managers might agree with that same cause – or we might strongly disagree – but our personal views on environmental or social issues don’t matter here. Our decisions are driven solely by our fiduciary duty to our clients.”^[27]

After receiving criticism for the statement, Fink in 2019 began to talk about social responsibility. Blackrock joined Climate Action 100+, an investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change”.^[28]

It sounded good, but in 2019 BlackRock and Vanguard voted against all of the U.S. shareholder proposals backed by Climate Action 100+.^[29]

In 2020 Blackrock went further with their “long term” strategy in a declaration addressed to shareholders:

“We believe that sustainability should be our new standard for investing.” And addressing sustainability factors that could affect portfolios, “The most significant of these factors today relates to climate change, not only in terms of the physical risk associated with rising global temperatures, but also transition risk – namely, how the global transition to a low-carbon economy could affect a company’s long-term profitability. As Larry Fink writes in his 2020 letter to CEOs, the investment risks presented by climate change are set to accelerate a significant reallocation of capital, which will in turn have a profound impact on the pricing of risk and assets around the world”.^[30]

With a climate denier president, I guess it’s something that Blackrock’s CEO says he accepts climate science. Blackrock says it will demand climate policy transparency and accountability from its companies and:

“This should include the company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized.”

The problem is, there is nothing in Blackrock’s promises that will achieve the objectives of the Paris agreement.

Take the much-ballyhooed pledge that Blackrock will no longer invest in thermal coal. A headline in the Guardian reads:

“World’s Biggest Fund Manager Vows to Divest from Thermal Coal.”

In fact, in the letter to shareholders, the pledge isn’t to divest from coal (or other fossil fuels by the way), it says

“We are in the process of removing from our discretionary active investment portfolios the public securities (both debt and equity) of companies that generate more than 25% of their revenues from thermal coal production, which we aim to accomplish by the middle of 2020.”

Here’s the rub. Take the second-largest coal producer in the U.S., Arch Coal Inc. As of January 2020, Blackrock owns 7.41% of the shares. If Blackrock sells those shares, it will be rather easy for other institutional investors to pick up the slack. Thus, the move will be carbon neutral.

Furthermore, the largest investor in Arch is Investco Advisors Inc., which owns 21.79% of the shares. Blackrock is the second-largest investor in Investco (after Vanguard) with 6.03% ownership. Coal does not represent more than 25% of Investco’s revenues so no need for Blackrock to divest from that.

So, it gets the world no closer to the Paris objectives, even if it appeases some of the pressure on Blackrock.

The problem is deeper and more alarming. The 2019 UN annual emissions gap report states that if all the countries that made commitments to the Paris Agreement fulfilled those promises completely, we are still headed for 2 degrees warming by 2050 and 3 degrees by the end of the century.^[31]Say it again. If the Paris objectives are fully met, we hit almost unlivable conditions in 30 years and a catastrophic tipping point in 80. Within the lifetime of our kids.

A similar estimate has been public since at least 2016. Why is Mr. Fink still talking about living up to the Paris Agreement?

These assessments were based on all countries meeting their Paris commitments. That’s not happening. President Trump pulled the U.S. out of Paris and is undoing the modest regulations the Obama administration enacted. What happens if the Paris targets are not hit, if we continue business as usual? The IPCC says by the end of the century warming hits 4.8 degrees. The Independent reported in 2016 that the IPCC estimate may be low:

“Research by an international team of experts who looked into how the Earth’s climate has reacted over nearly 800,000 years warns this could be a major under-estimate. Because, they believe, the climate is more sensitive to greenhouse gases when it is warmer. The actual range could be between 4.78C to 7.36C by 2100, based on one set of calculations.”^[32]

Shouldn’t it be Mr. Fink’s fiduciary responsibility to speak out against Trump’s climate denial? Perhaps Blackrock’s investments in the arms industry and windfall from Trump’s tax cuts make it prudent to remain silent.

Referring to holding Blackrock’s companies accountable, Mr. Fink’s writes:

“This should include the company’s plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized.”

The IPCC says the world must avoid hitting 1.5 degrees warming because once 1.5 degrees is hit, it might be impossible to prevent further warming, and even at that level, the consequences of extreme weather will cause terrible damage. So why is Mr. Fink still talking about 2 degrees? He’s just not serious about climate change.

The Shareholder letter’s commitment to divest from coal refers to Blackrock’s active investment funds, where they pick and choose stocks. Their bigger fund is what’s called an index fund, investing in the entire S&P 500 for example. Here Blackrock says it’s can’t do anything because it’s a passive investment and the index includes coal.

But in an interview with CNBC, host Andrew Ross Sorkin asks Larry Fink an interesting question:

“What do you tell the public, so many of whom are going to look at your ownership of companies over the next several years and see fossil fuels and fossil fuel oriented companies in your portfolio, given that so much of it’s passive to begin with and say, ah, they’re hypocrites. They’re not doing more; they’re not pushing on the indexes themselves to eliminate these things.”

Good question, why doesn’t Blackrock, the biggest investor in the indexes, use its clout to throw coal off the index? Fink’s uncomfortable answer is:

“Well, the index is . . . an indexing company we’re going to be pushing to create more sustainable funds. So, our job is to create choice.”

Larry Fink says he believes in the science of climate change. If so, how can there be a choice between investing in climate catastrophe or actual sustainability?

Here’s the clip.

Mr. Fink’s letter states that many of his investors are concerned about how climate change will affect their portfolios. He also sees “opportunity” in green infrastructure and sustainable energy. And his “fiduciary duty” is to maximize return for his investors.

He talks about using a sustainability lens to look at investments, but the truth is, Mr. Fink uses an investment lens to look at sustainability.

He says as much in the CNBC interview. Sorkin asks if Mr. Fink believes in the science. Fink answers:

“I believe in the science, but I did not write it (the letter to CEOs) as an environmentalist. I wrote the letter as a capitalist, and my job is as a capitalist to help prepare our clients for the redistribution of capital. And more importantly, through that is to provide them with the investment portfolio that will outperform.”

It’s the nature of the beast; it’s the business model; it’s systemic. These financial institutions have to put maximum return on investment first or perish. In fact, when it comes to pension fund money, it’s illegal for them to do otherwise.^[33] Their clients, be it a sovereign wealth fund or a billionaire, are in the same paradigm. If a financial institution chooses a more socially responsible but less profitable strategy, most clients will likely move their money somewhere else. They think dealing with climate is government’s job, except they fight against public policy that sets out to do it.

This is why government must legislate and regulate effective solutions to reach the carbon emission targets set by IPCC (which many scientists consider too conservative).  The market can’t do it. The problem is, the finance sector hates the idea of serious government regulation that interferes with their business.

The closest Mr. Fink gets to a role for government is:

“A successful low-carbon transition will require a coordinated, international response from governments aligned with the goals of the Paris Agreement including the adoption of carbon pricing globally, which we continue to endorse.”

Here we go with the Paris Agreement again. Of course, Blackrock endorses carbon pricing, anything but serious government regulation that phases out fossil fuels and enforces a whatever-it-takes policy of preventing 1.5 degrees of warming. That means a 50% reduction by 2030 and zero by 2050.

Carbon pricing is not enough to reach the necessary emission reduction.

“A new study by Imperial College London researchers shows that carbon taxes, which are the currently favoured system for reaching this target, will not be enough to avoid catastrophic climate change.”^[34]

One reason for Blackrock’s climate declarations is to create the impression that the private sector and finance can solve the climate crisis, thus forestalling more active government regulation.

But change will have to be imposed on these institutions by governments; it cannot come from within the financial sector or the market. The question is, can a mass movement develop that can elect such a government and then make sure, that instead of serving finance, it counters its power?

The financialization of the economy and the political power of Wall St. has created the greatest inequality in history. 

This massive accumulation of wealth at the top makes it very difficult for the very rich to want serious change. Day to day life for them has never been better. In spite of the scientific evidence of climate change, they continue to vote for the politics of the status quo, perhaps with some lip service to address the problem.

And life gets tougher for workers around the world.

The digital revolution expanded globalization to a scale that unremittingly weakened workers’ ability to bargain. Cheap labor was now available to produce at a high quality in a superbly well-coordinated global supply chain. There’s no Amazon or Walmart without computers.

Capital roams the globe with ease, extracting concessions from workers everywhere. The gains in productivity and wealth creation pour into the coffers of the richest stratum of society. Corporations, largely owned by these financial behemoths, pressure governments and workers across the globe, making sure labor stays cheap and environmental regulations weak.

Even in Canada, a country with universal health care, poverty is systemic. In Toronto, one in four children and one of five adults live in poverty. The cost of basic needs such as housing, food, utilities and transportation have increased substantially and are some of the highest in the country. Between 2009 and 2015, the cost of childcare rose by 30 percent, and public transit by 36 percent. Between 2010 and 2017, average market rents in Toronto increased 30 percent. Greater Toronto Area food banks have consistently had over one million visits per year, with an increase of nearly 40 percent in Toronto’s inner suburbs since 2008.^[35]

The conditions are as bad or worse in major U.S cities, and without a universal health care system.

The richest 5% of Americans own two-thirds of the country’s wealth; at the top of the American economic summit, the richest of the rich now hold as large a wealth share as they did in the 1920s.^[36]

Sixty percent of the .01 percent’s wealth, according to Forbes, is inherited. Col. Lawrence Wilkerson, says “we are building an aristocracy of wealth as surely as any despotic regime in history.”

The Trump impeachment and the growing split in the political and billionaire class is driven by many factors, but it is primarily a fight over how to respond to rising anger over this vast economic inequality.  People’s disillusionment is upsetting the status quo of both major political parties. This resentment is expressed as a demand for democracy and equality, but it is also taking the form of rising fascism.

The Republican Party, representing much of the financial and arms manufacturing elite, is all in with Trump’s unrestrained gangster capitalism and his undermining of even a pretense of constitutional government. They want to double down on more tax cuts, more military spending, deregulation, and militarization of the police to deal with the consequences of poverty. In a word, returning to pre-New Deal America.

The leadership of the corporate Democrats clings to the residual shell and rhetoric of Roosevelt’s New Deal, but since WWII, one Democratic administration after another has played their role in unraveling it. As globalization made finance even more dominant, corporate Democrats live in fear of Wall St. and believe no election is winnable without its support.

Corporate Democrats talk about restraining the excesses of capitalism and see the danger to the system in unmitigated levels of exploitation, but they are too invested in accumulating personal wealth and power and wind up cynically serving corporate interests.

Inequality grew at unprecedented rates under Obama with 95% of income gain after the 2008 recession going to less than 1% of the population. While Corporate Democrats may genuinely fear and oppose Trumpism and rising fascism, the Democratic Party’s policies while in power set the table for it.

The movement inspired by the candidacy of Bernie Sanders advocates a Green New Deal and reforms that if passed into legislation, would challenge the power and wealth of the billionaires. Medicare For All could put 20% of the GDP into the sphere of the public sector. Public banking could be a real threat to private finance. Serious taxes on assets and not only income could weaken this “aristocracy of wealth”.

If Sanders wins the nomination it will further spark a movement for a Green New Deal including economic and political democracy. But Wall St. will not easily give up their control of the Democratic Party, and as Sanders gains strength in the primaries, opposition to him will become more furious.

Witness the New York Times editorial board calls him over-promising and divisive (let’s remember who owns the Times, 93% by Blackrock and other institutional investors). Hillary Clinton launches ad hominin attacks (remember, Larry Fink was going to be her Secretary of the Treasury).

But millions of people, particularly youth, are in motion in a progressive direction and the conflict within the party is bound to intensify.

The 2020 U.S. elections are a pivotal moment in human history. Four more years of climate denial or halfhearted policy that won’t confront the fossil fuel companies and the financial giants that own them will undoubtedly mean we will cross the critical 2-degree threshold by 2050.

I’ve been told by those who know members of the billionaire class, that many believe they can escape the ravages of climate crisis. Some even think they can escape nuclear war, running to New Zealand or in some kind of protected bubble.

It’s a horrifying state of denial, but they are in such an unprecedented orgy of profit-making, they choose to believe fairy tales rather than accept a profound restructuring of society.

If Blackrock and Vanguard control AI, get ready for robot dystopia

The digital revolution gave us Big Tech, whose largest shareholders are again Blackrock, Vanguard and other asset managers.

With facial recognition technology and massive data collection, Facebook and Google are helping create repressive surveillance states around the world.^[37] Artificial intelligence, the greatest achievement of Silicon Valley, could lead to smarter robots and mass unemployment. There is little serious planning or even discussion about the economic dislocation that’s coming for millions of people.

If the Blackrocks of this world are allowed to impose a maximum profit imperative, we can look forward to a dystopian future predicted in science fiction. Stephen Hawking has warned, a world where “Humans, who are limited by slow biological evolution, couldn’t compete, and would be superseded . . . The development of full artificial intelligence could spell the end of the human race”.^[38]

It’s not that executives who run these financial institutions don’t see what’s coming; they have more access to information than we do. They just can’t defy the logic of the market. For example, by 1961 it was clear that smoking was linked to cancer, yet the executives of tobacco companies smoked and marketed cigarettes to children.^[39] Denial for the sake of short-term self-interest is a powerful force.

Instead of this nightmarish scenario, AI could be a great liberator, freeing people from the drudgery of mindless work. AI could play a critical role guiding a transformation to a sustainable green economy. In an open 2014 letter, leading AI scientists including Physicist Stephen Hawking wrote:

“We cannot predict what we might achieve when this (human) intelligence is magnified by the tools AI may provide, but the eradication of disease and poverty are not unfathomable”. ^[36]

This only comes about if AI is socially owned and democratically controlled.

Climate change, nuclear war, Big Brother surveillance states, and artificial intelligence; we humans are at an existential crossroads.

Either we radically transform ownership so the commanding heights of the economy are socially owned and democratize how government power is wielded . . . or not many of us will be around to see the end of this century.

Alarmist? No doubt, but it’s way past time for being alarmed. Feel overwhelming? Yes, how can it not be? I look at my seven-year-old twins and wonder if we should be calling them ‘generation last’. When they are in their eighties, what will be left of human civilization? We have no choice but to act now.

Is a mass mobilization to save the planet and against war, on a scale not seen before, possible? Given what’s at stake, what’s holding it back?

Can this global concentration of ownership and political power be countered with diversified social ownership and democratization?

Could large scale publicly-owned banking weaken the hold of finance on the politics of the country?

Can a demilitarized green new deal at a global scale bring all the threads of the solution together?  What are the realistic steps that must be taken and what can be accomplished given the existing political conditions?

Daniel Ellsberg says we need a new political economy; we must convert military to green production or perish. Are we humans up to the challenge?

On theAnalysis.news, these are questions we will examine with some of the best minds on the planet. We hope you will join us when we start regular weekly programming early in 2020.

Please watch my interview with Daniel Ellsberg. According to Henry Kissinger, Ellsberg was the “most dangerous man in America” after releasing the Pentagon Papers and because of his insider knowledge of the American nuclear war strategy. Ellsberg’s most recent book is “Doomsday Machine, Confessions of a Nuclear War Planner”.

Paul Jay is a journalist and filmmaker. He’s the founder and publisher of theAnalysis.news https://www.theanalysis.news/ and President of Counterspin Films http://www.counterspinfilms.com/. His films have won numerous awards at major festivals around the world. He is past chair of the Documentary Organization of Canada, the main organization of documentary filmmakers in Canada. Jay is the founding chair of the Hot Docs Canadian International Documentary Festival and chaired the Hot Docs! board for its first five years.  Jay was the co-creator and co-executive producer of Face Off and counterSpin, nightly prime time debate programs that ran for ten years on CBC Newsworld. Jay is the founder and former CEO of The Real News Network.