When CEOs Preach, Is It Time To Sell?

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The reputation of business trust is below that of Congress, so the Business Roundtable decided what’s needed is a charm offensive. More than likely, it will backfire.

The bizarre outcomes are evidence of a more significant problem. For instance, in the Amazon HQ2 fiasco, a community that wants hi-tech jobs finds itself at odds with labor union thugs who sow fear and confusion at town hall meetings. And it works. The unions and their political acolytes turn Amazon into a pariah of elitism when the opposite is the case. The bashing that Warren and Sanders gave Amazon while they traipsed around the campaign trail on private jets finally sunk in. When you consider the benefits that 25,000 Amazon jobs for a city that has everything but hi-tech, this was the dumbest decision since the Lenape Indians sold Manhattan to Peter Minuit for $24.

The BRT chief executives’ fear of political tyrants is no illusion. It is straight out of Saul Alinsky, author of Rules for Radicals, rule #13:

“Pick the target, freeze it, personalize it, and polarize it.

Cut off the support network and isolate the target from sympathy.”

— Saul Alinsky, Rules for Radicals

The chief executives believe that by issuing a jeremiad against shareholders, their bosses, and the actual owners of corporate America, they might catch a break.

A Policy of Appeasement

Malcolm Forbes knew better than to bow to the anti-business left. They are virtue merchants who cry about fairness while, like Bernie Sanders, pay hourly interns half of what Amazon and Walmart do. Or Elizabeth Warren, famous for embellishing a Harvard resume with Native American credentials, but not so well known for joining the Republican Party when she promoted tax avoidance strategies for wealthy estates in Texas. Making policy at the behest of people like this may work for the moment. But over time, they are enemies of business or more accurately, willing to say or do anything that gets them votes and donations from crony activists and social justice warriors.

The BRT isn’t the first to try to use charitable impulses as a way to win political favor. No greater corporate fraudster than Enron was the most charitable Texas company during its heyday of mischief-making. According to Enron documents, Chairman Kenneth L. Lay urged President Clinton and Vice President Gore to back a “market-based” approach to the problem of global warming — a strategy that a later Enron memo makes clear would be “good for Enron stock.” Later, several senior Enron officials spent election night at Vice President Gore’s headquarters in Nashville just months before the company imploded. The company backed Charles E. Schumer (D-N.Y.) in his successful 1998 campaign to oust Republican Sen. Alfonse D’Amato. Schumer’s views on electricity deregulation dovetailed closely with Enron’s.

Shared Values

A better guideline than platitudinous bromides is available to the BRT if they want it.

It will take more than a press release, but it can be the answer to the bigger problem of a decline in business trust. Harvard professor Michael Porter has written eloquently on the subject of “shared values.” It is a very different concept than philanthropy or good deeds, according to Porter: “Strategy theory holds that a firm gains competitive advantage from how it configures the value chain. Companies have failed to grasp they can create economic value by creating societal value.” Porter believes business is the most powerful force to address pressing issues society faces. He recognizes there is a new generation of employees and customers asking business to step up to the plate. But to Porter, shared value is a process that results in an improvement for society and the company’s bottom line. He concludes that creating shared value is the best chance we have to legitimize business again.

Porter shows examples from Walmart lowering carbon emissions to Coca Cola developing waterholes in Uganda where children are not getting enough for sanitation. You may be wondering why you haven’t heard of these achievements? When a business succeeds on a societal basis, it doesn’t make for a catchy headline. It is true, and we have to work harder to tell a good story better. In the background, however, the shareholder is rarely the problem. In fact, the shareholder is cheering the good works. What is appalling about the BRT statement is that it gives the impression that only a CEO can be trusted to do the right thing.

Shareholder Legacy

By the time he died on February 24, 1990, Malcolm Forbes left behind much more than a successful business empire. In doing so, he brought socialism into the workplace, perhaps inadvertently. He created jobs by the bushel. From mechanics that tuned up his cherished motorcycles to editors that still grace the masthead of leading publications, including our own Dan Bigman of Chief Executive.

Malcolm wasn’t satisfied with merely changing the perceptions in America. He took his show on the road from “Red China” to Socialist France to inspire awareness of the power of business to improve lives. He also left millions to charities like Aids research and forgave loans to employees for home mortgages and their children’s college tuition. In a gesture so typical of Malcolm, he left bequests to his favorite maitre d’s and bartenders around town.

Malcolm Forbes understood the real purpose of wealth. At the stage where he had all the trinkets and baubles he needed, he focused his energies and wealth on building a legacy of good works because he had earned the right to do so.

Socialism never had a better ambassador.


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