Like all good Catholics, I begin this essay with a confession: I am not neutral about Larry Fink. We were colleagues for over a decade, and we remain friends to this day. Larry Fink is not and has never been the boogeyman many make him out to be. He is neither a rapacious capitalist nor a green-obsessed socialist. Rather, he is a smart, driven, highly empathetic financier who has dedicated his life to his clients, colleagues and freedom-loving, hardworking people all around the globe. In practice, this has meant defending free markets, solving for optimal, long term growth, and siding with the oppressed. Larry is not faultless, nor would he claim to be. He was an early adopter of the “Net Zero by 2050” creed, and regrettably endorsed a number of bad policies. This was not a malicious, calculated mistake, however. Larry genuinely believed Net Zero would somehow optimize long term, global growth. We all now know differently. Humanity’s best future requires abundant, affordable and reliable energy which is simultaneously as clean as possible. This includes the continued use of fossil fuels for as far as the eye can see. Sacrificing energy abundance, affordability and reliability for cleanliness is both immoral and strategically dangerous, something Putin demonstrates daily.
With Net Zero behind him, what does Larry now think needs to be done to secure humanity’s best financial future? In an article published this week in the Financial Times, Larry claims the rules of globalization need to be rewritten, with less focus on fattening corporate bottom lines and more focus on supporting local communities. “In a more nationally-attuned model,” he writes, “markets channel citizen’s savings into local businesses and infrastructure. The gains flow back to people, helping them afford homes, education, and retirement.”
While his critics will doubtless claim Larry’s innate, communitarian impulse is rearing its dangerous head again, he is not saying an overdue, local investment revolution should be solely government-led. “The same factory worker left behind by globalization can be an investor, too,” he writes, citing changes in the Japanese retirement market as well as the wise inclusion of “baby bonds” in the most recent House reconciliation bill. If every citizen can invest something, he reasons, they can all have a positive stake in their country’s economic success.
Larry may not know it, but his instincts and policy prescriptions follow in a long line of recommendations embraced by Catholic Social Teaching. In CST, human dignity is prioritized, and markets are embraced only in so far as they serve the common good. There is no doubt markets allocate capital and promote growth with unparalleled efficiency – but left to themselves, they can also strain social contracts and spoil our land, air and water. Globalization has benefitted many, improving living standards and raising billions out of poverty. But it has also exposed many nation states to strategic vulnerabilities and stripped whole communities of their industrial base and livelihoods.
Unfettered globalization has ended. Given how China manipulates investments to dominate whole industries as well strategic supply chains like rare earth minerals, good riddance. Whatever replaces it should be more responsive to people and planet. Ideally, improved mindfulness will make sense on national as well as communal levels.
Ultimately, a small but growing component of the capital we invest should be dedicated to economic inclusivity and sustainability – things like low income housing, industrial circularity and economic mobility. While some of this investment may take place on concessionary terms, many opportunities will generate market- or even above market-rate returns.
“What’s emerging now,” Larry Fink writes, “is a re-globalization not just to generate prosperity, but one aimed towards the people and places left behind.”
May all men and women of goodwill freely and cheerfully participate in this timely, noble, new chapter of shared abundance and localized renewal.
Terrence Keeley is the Chief Executive Officer of the Impact Evaluation Lab and author of Sustainable: Moving Beyond ESG to Impact Investing.
