Corporate America’s Hypocrisy

By Jim Geraghty

Thursday, March 31, 2022

 

There’s something heartening about the way corporate America rushed to cut ties with its operations in Russia. But the quick, sweeping moves offer a strange contrast to the way corporate America has rarely if ever uttered a critical word about the government of China and its ongoing genocide of the Uyghurs, its human-rights abuses, its oppression of Hong Kong, its threats toward Taiwan, etc.

 

In fact, corporate America might be getting tough on the Russian government in hopes that people forget how much it has groveled to Beijing and obeyed the wishes of the equally autocratic, equally aggressive and abusive Chinese government.

 

The publication Axios is particularly interested in the idea of corporate CEOs becoming the new decisive political leaders in American life. “How CEOs became the fourth branch of government.” “The CEO job now includes political activism.” “CEOs seek their own State Departments.” If Axios isn’t outright supportive of the idea, it certainly doesn’t seem critical of this trend.

 

The notion of letting America’s corporate boards and CEOs have a bigger and more outspoken role in shaping government policies is a terrible idea, although fewer people are willing to come out and say so, now that many big corporations are more progressive or “woke” in their public statements.

 

These corporate leaders may be bright and driven and have a better understanding of economics and job creation than the average citizen. I’m not bashing them, and I’m not saying they shouldn’t have a voice, maybe even a loud one, in national discussions and debates.

 

But the public didn’t elect these CEOs to a darn thing. And if we strongly disagree with those leaders, we can’t get rid of them, short of buying massive amounts of stock in the company. For all the flaws of our president, Congress, governors, and state legislatures, if we don’t like them, every two, four, or six years we get to decide whether they stay in their jobs. Corporate leaders have every right to set corporate policy for their businesses and employees. But national or state policy, which affects all of us, is supposed to be set by people who can be tossed out in the next election.

 

In fact, you could argue that one of the reasons that corporate CEOs are increasingly outspoken is because they don’t have to run for office and win a majority or the largest plurality.

 

For all of the near-obsessive discussions of “diversity, inclusion and equity” in corporate America in recent years, chief executives aren’t particularly diverse; in fact, Congress is more diverse, at least when measuring race and gender.

 

But even aside from skin color, ethnicity, and gender, there are other segments of the American population that I suspect are either completely unrepresented or dramatically underrepresented at the top level of America’s big corporations. Eleven percent of Americans do not have a high-school degree; I would be surprised if any top CEOs don’t have one. Only 12 percent of Americans have an advanced degree, and I suspect the majority, probably the overwhelming majority, of CEOs do. How many CEOs are deeply religious? Back in 2014, Fortune identified seven that were. How many CEOs have served in the military? Eight percent, according to one study. How many CEOs were homeschooled, went to a community college, or have large families?

 

This isn’t even getting into the politically outspoken CEOs who are insufferably contradictory and hypocritical. Patagonia founder Yvon Chouinard, with an estimated net worth of $1.2 billion, boasted that, “I’m an avowed socialist. I’m proud of it. That was a dirty word just a few years ago until Bernie Sanders brought it up . . . we’re a billion-dollar company, and I don’t want to be a billion-dollar company. The day they announced it to me, I hung my head and said, ‘Oh God, I knew it would come to this.’” Apparently, Chouinard thinks he became a billionaire by accident.

 

Returning to the realm of corporate America and U.S. foreign policy, it is glaringly obvious that Russia is a much smaller and less important market to giant international companies than China is. That makes it much easier for corporate America to take a tough line, cut ties, and offer a full-throated denunciation of the Russian invasion of Ukraine. Disney gave the Chinese government de facto veto power over its creators for decades, but paused all business operations in Russia on March 10.

 

Starbucks announced it was suspending all operations in Russia on March 8.

 

For many years, Starbucks was one of the most outspoken and politically active corporate brands; CEO Howard Schultz saw standing up for what is right — or at least, what he saw as right — as central to the company’s identity and values. He contended that because his company could make a difference in contentious issues, it had a duty and an obligation to take a clear and loud stand, even if it wasn’t what some customers wanted to hear.

 

Until it came to China. Then he believed that the company couldn’t do anything, and there was no point in taking a political stand, as he laid out in his autobiography, From the Ground Up:

 

In countries outside the United States where Starbucks does business, I do not believe the company is in a position to proactively effect social and political change to the degree we might in the United States, where being an American company gives us the theoretical license to try. We do not have such expansive license in other countries. We can, however, exercise our values by how we conduct business, and share those values with leaders in other lands to show you can be profitable and morally centered at the same time.

 

Starbucks has opened more than 5,400 stores in China since 1999; it’s hard to see evidence that China has gotten any more “morally centered” in that time. It’s amazingly convenient that Starbucks concluded it just couldn’t make a difference when access to a huge market was at stake.

 

Vladimir Putin is giving corporate America an easy win, and one that helps it sweep its corrupting relationship with China under the rug. I’m glad corporate America is cutting ties and making the economic sanctions on Russia effective. But you notice you’ve heard a lot less about China in the past month or so — and I suspect both America’s corporate boardrooms and the government offices in Beijing are just fine with that development.