The Last Frontier Strikes Back

Last week, the state of Alaska struck back. Specifically, it struck back against Goldman Sachs and the green ideology that is galloping through America’s boardrooms and now, apparently, its investment banks.

Goldman Sachs had announced that it would no longer underwrite Arctic drilling operations. “We will decline any financing transaction that directly supports new upstream Arctic oil exploration or development,” the firm said in a statement. “This includes but is not limited to the Arctic National Wildlife Refuge.”

In return, Alaska’s Republican governor, Mike Dunleavy, announced the state had removed Goldman from one contract to pay oil and gas drillers, and that he would re-examine the state’s willingness to do business with the investment bank at all.

In his letter to Goldman, acting revenue commissioner Michael Barnhill was explicit:

This [Goldman’s] policy is in direct conflict with the goals of the State of Alaska and threatens Alaska’s oil and gas industry, one of the State’s primary revenue sources and economic drivers. In response to Goldman’s pledge the Governor’s Office has directed the review and where possible without financial or project progress impairments, the removal of Goldman from business relations with the State.

Bully for Alaska, bully for Dunleavy and Barnhill.

Increasingly, New York has been abusing its position as the country’s financial center, using it to promote left-wing causes and more recently to punish the political opposition. Obviously, there is Goldman’s decision to stop funding Arctic drilling, and that’s in line with the firm’s increased hostility toward fossil fuels overall. It’s also in line with the recent trend toward woke capitalism, born both of true conviction and the desire to virtue signal to their elite cohorts. (Interestingly, while Goldman applies enhanced due diligence to both Albertan tar sand and Arctic oil, it only chooses to abstain from financing the latter.)

More menacing has been the state government in New York. Perhaps the highest-profile example has been the treatment of the National Rifle Association and other Second Amendment advocacy groups. In April 2018, the governor’s office not-so-subtly threatened to use the Department of Financial Services against insurers and other financial companies doing business with the NRA.

After the NRA filed suit against the state for that action, New York Attorney General Letitia James opened an investigation into the group’s finances, fulfilling a campaign promise to do so.

It isn’t just gun rights groups that have been hit. The previous attorney general, Eric Schneiderman, frivolously sued ExxonMobil for securities fraud for disputing carbon dioxide’s role in climate change. As part of that process, he had his coalition of attorneys general subpoena internal and external communications of the Competitive Enterprise Institute (CEI) concerning climate change, naming a wide variety of outside think tanks, organizations, and individuals in the dragnet.

Fortunately, the Virgin Islands attorney general withdrew his subpoena of CEI and the prosecution against ExxonMobil failed. But if the governor of New York hates oil and gas so much he’s willing to damage his state’s economy with a fracking ban, don’t count on this being the last word. Perhaps he might direct the DFS to caution about the reputational risk of doing business with oil companies?

New York is hardly alone in this. California has long used its position as the nation’s largest market to foist expensive green policies favored by the Silicon Valley elite onto the rest of the country. And California Attorney General Kamala Harris’s intervention to protect Planned Parenthood from independent scrutiny should be a national scandal. But New York is in a unique position to regulate the lion’s share of the country’s banks, insurers, and other financial institutions. Even if one isn’t based in New York City, one is doing business on a regular basis with those who are.

Fortunately, Alaska has decided that turnabout is fair play. If you’re not in the business of supporting the state’s No. 1 business, then you’re not doing business with the state.

And so Goldman Sachs has been unceremoniously removed from other state underwriting contracts, replaced with those whose agendas do not include bankrupting their client. Of course, Goldman is free to continue doing private business in Alaska (it’s not California, after all), but for the time being, they’re decidedly not good enough for government work.

Ideally, other states will join in, not only for their own industries. Governors could take this action at the state level; legislatures could probably lock Goldman out of local and municipal offerings. After all, residents everywhere benefit from cheap energy and would suffer mightily from green mandates, something that Governor Cuomo knows but won’t admit. Even competitor states like Texas and North Dakota should go to bat for Alaska’s oil business; because they’re next.

In general, I’m opposed to political boycotts of individual businesses. The Left has led the overall politicization of every last square inch of our lives, a process that can only end in grief, sooner rather than later. But this isn’t just using business for reverse social engineering, it is business. The board and officers of Goldman Sachs know they’ll never bear the costs they’re happy to impose on the rest of us. So they need to be made to bear the cost.

The well-founded notion that there is one set of rules for the coastal elites and their friends, and another set of rules for the rest of us, was probably the single biggest driving force behind Trump’s election in 2016. The behavior of New York’s private and public institutions here isn’t doing much to dispel that.

Fortunately, Alaska has hinted at a way the rest of the country can fight back.

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About Joshua Sharf

Joshua Sharf has headed the Independence Institute’s PERA Project for three years. In that time he has authored a number of Backgrounders and Issue papers on Colorado’s Public Pensions, contributed to the Institute’s weekly newspaper column, and spoken to political and civic groups across the state on the subject. He routinely testifies before the state legislature on proposed pension reform bills. He is Vice Chairman of the Denver Republican Party and has also done original reporting on PERA for Watchdog.org and I2I’s Complete Colorado news site and is a regular guest on local talk radio, discussing this and other state and national political issues. He has an MBA and an MS in Finance from the University of Denver’s Daniels School of Business, and has also worked as a sell-side equities research analyst.

Photo: Bonnie Jo Mount/The Washington Post via Getty Images

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