Apple’s Pro-Merit Activist
Apple’s new activist
Apple (AAPL) has an activist. Woke shareholders are nothing new, but today, the battle was joined by Vivek Ramaswamy of the new Strive 500 ETF (STRV). He comes with a clear, actionable message that could both strengthen Apple and highlight the necessity of this new ETF.
Merit v. discrimination
Strive’s letter forcefully advocates for merit-based hiring. Instead of focusing on the philosophy or politics of merit over the alternative of hiring on the basis of race, sex, or politics, it argues that merit is both better for Apple and more representative of shareholders’ values and their value. Bigger picture, Strive makes the case that these factors should drive Apple’s corporate decisions while highlighting some ways in which Apple has gone far astray from what most of their investors want and what benefits them.
Merit hiring benefits shareholders
As a shareholder, Strive wants Apple to get the best people. Non-merit hiring could lead to material economic, reputational, and legal problems. It could cost Apple money, hurt the brand, and land them in court. That view puts Strive at odds with fellow shareholders such as BlackRock (BLK), which has pushed for non-merit hiring and has proved effective at moving Apple in a woke direction.
Racial equity audits
Specifically, Strive opposes Apple’s capitulation to conducting a “racial equity audit” pushed by BlackRock and others. It is a weird phrase for a weird idea. It is “racial,” but both “equity” and “audit” require a bit of unpacking. Equity is a rhetorical sleight of hand, designed to slide by as if it is a synonym for equality, but used as an antonym. It means discriminating between people to force preferred outcomes. And “audit” is just marketing, but with the same innuendo that the external group gets to judge and that the judgment could have a big impact on the company. So they want the typical woke stuff but with a bigger agenda of slipping in the “stakeholders” as the audience, not just the poor saps who own the place.
Non-merit policies don’t enrich shareholders
Color of Change, one of the activists pushing Apple’s racial audit, wants to use shareholder’s money for Color of Change’s politics. Presumably, shareholders have a range of political views and may agree or disagree with Color of Change. But activist groups can advocate for what they want; Apple works for their shareholders. No one has done better than Milton Friedman in The Social Responsibility of Business is to Increase its Profits at explaining how each role has its place but should be distinct. Apple shareholders interested in race-based left-wing advocacy can support them here, but should also respect the fact that others have different favorite charities.
A protection racket that doesn’t buy protection
Profit-seeking shareholders are bullied into silence. But the racial auditors themselves are not immune from the charm of money, charging up to $2,295 per hour (a bargain alternative offers their services for $1,443/hour). Shareholders won’t even get the silence they pay for: the audit report publication is just the beginning – often the beginning of a new news cycle, attacks, boycotts, and offers of appeasement at an ever higher price.
Non-merit policies are not popular
Apple’s board stood firm against this bullying… for a while. They opposed the proxy proposal and didn’t initially sign off on a nonbinding resolution approved by a majority of shareholders. But they flipped as soon as Color of Change and other groups applied additional pressure. In capitulating, Apple offered engagement with “a range of stakeholders” without any clear explanation for how any of this helps shareholders. Sure BlackRock likes this kind of thing, but BlackRock is not the end owner of Apple shares, its clients are. And it is not at all clear that capitulation to pressure groups is what those clients would want. According to Pew Research Center, a majority believes that when it comes to decisions about hiring and promotions, companies should only take qualifications into account.
Because there is no data suggesting that using corporate resources to advance outside political agendas enhances shareholder value, the effort to do so is closely tied to expanding the goal to serve stakeholders including those who never bought any shares.
Non-merit policies are not legal
Legally, Strive’s letter could be extremely valuable to Apple. They remind the company that Title VII forbids racial discrimination in hiring unless there are strong reasons to believe that the current workforce is due to Apple’s prior racial discrimination. There is no evidence that is true, and it is not a stance that Apple’s board is likely to want to take.
Will Apple listen? They seemed happy to focus on their own business until enough pressure was exerted. But all of the outside pressure was from their left and at some point, they surrendered. Today is a new day. Vivek Ramaswamy is pushing back for what he sees as right – right for shareholders and right for Apple. In doing so, he takes a big step in restoring balance to corporate America. Some leaders will agree with him but others will be happy enough to just get out of politics and back to work. If Ramaswamy succeeds, it will not only be good for Apple, but also carve out a whole new role for Strive 500 ETF and investors that don’t want to fund their political opponents or any other political causes with their investment dollars. In their mission statement,
If enough Americans agree, BlackRock could get a lot smaller, Strive could get a lot bigger, and Apple could re-focus on excellence.
Buy AAPL. If you prefer merit over racialism, equality over its Orwellian antithesis, and excellence over politics, then move your money from Blackrock (BLK) and other woke asset managers to Strive 500 ETF. And if you’re on Apple’s board, there are now two sides to this conversation with a new voice making a clear call to stop racial audits and hire on merit.