3 ms·

Shouldn't you welcome the changes? Unless it's mandated, everyone going for those things should be seeing worse outcomes, e.g. banks discounting fundamentals a

Shouldn't you welcome the changes? Unless it's mandated, everyone going for those things should be seeing worse outcomes, e.g. banks discounting fundamentals and including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? You'd just need to invest into companies that are explicitly not focusing on ESG. Of course, there's probably some concern that it'll be normalized and the government goes "well, now that half of companies are doing it voluntarily, we can just force the other half to also do it so it's fair", but that aside it sounds like it should provide a good signal for you where not to invest.

OrangeMonkey 4y ago
I generally do not welcome things which make the investing landscape worst for the suburban investor. If I saw half the companies start a new youtube series called 'We snort half of our investors cash every monday!' I wouldnt laugh, I would be calling the sec.
chii 4y ago
> banks ... including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? if a bank is including a racial markup, it may be because they believe there's more risk with that loan (which must be made up via said mark up). If it's actually true that such a loan is riskier, then the bank acted correctly. if it was actually wrong - that a racial mark up was unjustified financially - then a competitor bank that correctly makes this conclusion would offer the lower, correct rate, thus capturing said racial group as customer away from the more discriminating bank!
- OrangeMonkey 4y ago
  > If it's actually true that such a loan is riskier, then the bank acted correctly. Oh my god. We are not going to speed run racial discrimination in lending products again. Once is enough for me. This is actually specifically illegal. > "What are the U.S. fair lending laws? Fair lending laws in the United States prohibit lenders from discriminating based on specific protected classes (such as race, color, national origin, and religion) during any aspect of a credit transaction." [1] [1] - https://www.investopedia.com/the-history-of-lending-discrimination-5076948 https://www.investopedia.com/the-history-of-lending-discrimi...
  - zarathustreal 4y ago
    I wonder if that law has had any impact on the issue? Have there been any followup studies to verify that the targeted groups did indeed become more creditworthy?
    - OrangeMonkey 4y ago
      You know I never checked. I mean it seems obvious it would but I don’t recall seeing a study. Honestly though a study like that may be banned from most research houses as it can fall into a bad spot. What happens if the study found it didn’t help. :/ I feel like the regulations here are good regardless. I don’t Want someone to be penalized specifically because of their race.
- matthewmacleod 4y ago
  I admit I'm really struggling to get on board with "it's fine for companies to be racist so long as they make more profit, actually".
- astrange 4y ago
  Companies are not actually 100% soulless profit-making machines and are very capable of choosing other priorities over making what seems to be free money. Sometimes these other priorities are "being racist" or "letting John Lasseter harass all the women at Pixar". But it's obvious just because of how many companies stay in their industry. GameStop still tries to sell you games even if that's not so profitable anymore. They don't just switch to selling heroin.
makomk 4y ago
In a way it already has lead to worse outcomes. For example, ESG campaigning has successfully discouraged investment in oil and gas production especially in democratic Western countries. The result of this is that there's now insufficient production capacity and prices and profits have gone sky-high for the companies that do have any, whilst companies in the rest of the economy have seen costs go through the roof. (Russia's actions didn't help, but the energy supply was looking pretty dicey even before that.) The political result of this is that campaigners and journalists have accused the companies that are producing fossil fuels of profiteering, blamed them for the fact that energy and everything produced using it is so unaffordable (rather than blaming those who refused to invest in more production), and called for windfall taxes to take away and redistribute those supposedly-undeserved profits. Most of Europe is actually carrying out those windfall taxes too. If it wasn't for that political intervention, those who excluded fossil fuel production from their investments would be losing out and those who didn't gaining, as they arguably deserved, but governments are putting their hand on the scale and tilting returhns towards what ESG campaigners say they should be rather than what the markets give.
- luckylion 4y ago
  But that's then working as designed, isn't it? You're not limited to investing in Western countries that have deprioritized power production. If that'll lead to worse outcomes, investing in a country that doesn't follow their ideology should get you better returns. > Most of Europe is actually carrying out those windfall taxes too. Sure. Don't get me wrong, I think it's stupid. But, and that's a pretty important but, the population has elected the politicians suggesting these things (and the ones before them who made the decisions not to invest in oil and gas and nuclear power), and the population has empowered the journalists (or their companies) running those campaigns. It seems to be what people really, truly want. You'll just need to set your indicators one level further up. A country that is fundamentally wrong in capital allocation and prefers to bail out citizens and industry via tax money instead of investing into infrastructure will have worse outcomes. Taxes will have to rise at some point, industry will leave etc, so you'd invest in a different country where they're not following the same ideology. Sure, it would be easier if people didn't do stupid things, but I doubt you'll be able to convince them.
- 4y ago

OrangeMonkey 4y ago

I generally do not welcome things which make the investing landscape worst for the suburban investor. If I saw half the companies start a new youtube series called 'We snort half of our investors cash every monday!' I wouldnt laugh, I would be calling the sec.

chii 4y ago

> banks ... including the racial markup of their customers in decisions would be expected to perform worse than others, wouldn't they? if a bank is including a racial markup, it may be because they believe there's more risk with that loan (which must be made up via said mark up). If it's actually true that such a loan is riskier, then the bank acted correctly. if it was actually wrong - that a racial mark up was unjustified financially - then a competitor bank that correctly makes this conclusion would offer the lower, correct rate, thus capturing said racial group as customer away from the more discriminating bank!

OrangeMonkey 4y ago
> If it's actually true that such a loan is riskier, then the bank acted correctly. Oh my god. We are not going to speed run racial discrimination in lending products again. Once is enough for me. This is actually specifically illegal. > "What are the U.S. fair lending laws? Fair lending laws in the United States prohibit lenders from discriminating based on specific protected classes (such as race, color, national origin, and religion) during any aspect of a credit transaction." [1] [1] - https://www.investopedia.com/the-history-of-lending-discrimination-5076948 https://www.investopedia.com/the-history-of-lending-discrimi...
- zarathustreal 4y ago
  I wonder if that law has had any impact on the issue? Have there been any followup studies to verify that the targeted groups did indeed become more creditworthy?
  - OrangeMonkey 4y ago
    You know I never checked. I mean it seems obvious it would but I don’t recall seeing a study. Honestly though a study like that may be banned from most research houses as it can fall into a bad spot. What happens if the study found it didn’t help. :/ I feel like the regulations here are good regardless. I don’t Want someone to be penalized specifically because of their race.
matthewmacleod 4y ago
I admit I'm really struggling to get on board with "it's fine for companies to be racist so long as they make more profit, actually".
astrange 4y ago
Companies are not actually 100% soulless profit-making machines and are very capable of choosing other priorities over making what seems to be free money. Sometimes these other priorities are "being racist" or "letting John Lasseter harass all the women at Pixar". But it's obvious just because of how many companies stay in their industry. GameStop still tries to sell you games even if that's not so profitable anymore. They don't just switch to selling heroin.

makomk 4y ago

In a way it already has lead to worse outcomes. For example, ESG campaigning has successfully discouraged investment in oil and gas production especially in democratic Western countries. The result of this is that there's now insufficient production capacity and prices and profits have gone sky-high for the companies that do have any, whilst companies in the rest of the economy have seen costs go through the roof. (Russia's actions didn't help, but the energy supply was looking pretty dicey even before that.) The political result of this is that campaigners and journalists have accused the companies that are producing fossil fuels of profiteering, blamed them for the fact that energy and everything produced using it is so unaffordable (rather than blaming those who refused to invest in more production), and called for windfall taxes to take away and redistribute those supposedly-undeserved profits. Most of Europe is actually carrying out those windfall taxes too. If it wasn't for that political intervention, those who excluded fossil fuel production from their investments would be losing out and those who didn't gaining, as they arguably deserved, but governments are putting their hand on the scale and tilting returhns towards what ESG campaigners say they should be rather than what the markets give.

luckylion 4y ago
But that's then working as designed, isn't it? You're not limited to investing in Western countries that have deprioritized power production. If that'll lead to worse outcomes, investing in a country that doesn't follow their ideology should get you better returns. > Most of Europe is actually carrying out those windfall taxes too. Sure. Don't get me wrong, I think it's stupid. But, and that's a pretty important but, the population has elected the politicians suggesting these things (and the ones before them who made the decisions not to invest in oil and gas and nuclear power), and the population has empowered the journalists (or their companies) running those campaigns. It seems to be what people really, truly want. You'll just need to set your indicators one level further up. A country that is fundamentally wrong in capital allocation and prefers to bail out citizens and industry via tax money instead of investing into infrastructure will have worse outcomes. Taxes will have to rise at some point, industry will leave etc, so you'd invest in a different country where they're not following the same ideology. Sure, it would be easier if people didn't do stupid things, but I doubt you'll be able to convince them.
4y ago