By Matthew Continetti
Saturday, September 07, 2019
Time was, CEOs of mighty enterprises shied away from
politics, especially hot-button social and cultural issues. They focused
instead on the bottom line. They maximized shareholder value by delivering
goods and services to customers. Some businessmen still operate by this
principle. In doing so they provide not only for their employees and CEOs and
board members but also for the institutions — pensions, individual retirement
plans, index funds, hospitals, philanthropies — that have invested in their
companies.
That is no longer enough for many of America’s richest
and most powerful. Suddenly, corporate America has a conscience. Every week
brings new examples of CEOs intervening in political, cultural, and social
debate. In every instance, the prominent spokesmen for American business situate
themselves comfortably on the left side of the political spectrum. Shareholder
capitalism finds itself under attack. Not just from socialism but also from
woke capitalism.
These outbursts are not just virtue signaling. Nor is the
left-wing tilt of corporate America merely a response to the “rising American
electorate” of Millennial, Gen Z, and minority consumers. What is taking place
is not a business story but a political one. What is known as “stakeholder
capitalism” is another means by which elites circumvent democratic
accountability.
Corporate managers find themselves at odds with at least
46 percent of the electorate. The divergence is not over jobs or products. It
is over values. The global economy generates social inequalities as much as
economic ones. Many of the winners of the global economy justify their gains by
adopting the rhetoric, tastes, ideas, and affiliations of their cultural
milieu. Their environment is inescapably center-left.
Even so, the social-justice agenda of corporate America
is not only meant to appease voters, or even to placate Elizabeth Warren. Some
of these businessmen really believe what they are saying. And they are
beginning to understand that they have another way — through social position
and market share — to impose their cultural priorities on a disagreeable
public.
The trend began as a response to the Tea Party. In 2010
the “Patriotic Millionaires” began advocating for higher marginal tax rates. A
few years later, when state legislatures passed laws opposed by pro-choice and
LGBT groups, corporations threatened or waged economic boycotts. Large
individual donations made up more than half of Hillary Clinton’s fundraising;
for Donald Trump the number was 14 percent.
CEOs protested the implementation of President Trump’s
travel ban in 2017. The following year, after two black men were arrested at a
Philadelphia Starbucks, Howard Schultz closed stores nationwide so his more
than 175,000 employees could be trained in diversity, equity, and inclusion.
Earlier this summer, Nike pulled shoes featuring the Betsy Ross flag after
Colin Kaepernick raised objections. Recently four major auto companies struck a
deal with the state of California to preserve fuel-economy standards the Trump
administration opposes.
Business has provided ideological justification for its
activities. In mid-August, a group of 181 members of the Business Roundtable,
including the CEOs of Morgan Stanley, GM, Apple, and Amazon, issued a statement
redefining the purpose of a corporation. “Generating long-term value for
shareholders” is necessary but insufficient. In the words of Jamie Dimon,
business must “push for an economy that serves all Americans.” A few weeks
later, one of the Business Roundtable signatories, Walmart CEO Doug McMillon,
announced that America’s largest retailer would end sales of ammunition for
handguns and for some rifles. Once its current inventory is exhausted, of
course.
“We encourage our nation’s leaders to move forward and
strengthen background checks and to remove weapons from those who have been
determined to pose an imminent danger,” McMillon wrote. “We do not sell
military-style rifles, and we believe the reauthorization of the Assault
Weapons ban should be debated to determine its effectiveness.” Note the use of
the first-person plural. Of Walmart’s 1.5 million employees, more than a few,
one assumes, do not believe it is necessary to “strengthen background checks”
or debate “the Assault Weapons ban.”
To whom does the “we” in McMillon’s statement refer? To
everyone who thinks like he does.
“You have a business acting in a more enlightened and
more agile way than government,” is how one MSNBC contributor enthusiastically
described Walmart’s directive. Left unsaid is why government has not, in this
case, been “enlightened” or “agile.” The reason is constitutional democracy.
The electorate, like it or not, continues to put into office representatives
opposed to gun registration and to a renewal of the assault-weapons ban. And
these representatives, in turn, have confirmed judges who believe the Second
Amendment is just as important to self-government as the First and the 14th.
Much of Western politics for the last decade has involved
elites figuring out new ways to ignore or thwart the voting public. Barack
Obama was following in the EU’s footsteps when he went ahead with Obamacare
despite Scott Brown’s victory in Massachusetts in January 2010, and when he
expanded his DACA program to the parents of illegal immigrants brought here as
children despite Republican gains in the 2014 election and despite his own admission
that he lacked authority.
James Comey’s towering ego and self-regard compelled him
to interfere in the 2016 election with consequences we can only begin to
reckon. Over the last two and a half years, district judges and anonymous
bureaucrats have impeded and obstructed the agenda of a duly elected chief
executive. A few weeks ago a former governor of the Federal Reserve suggested
in Bloomberg that the central bank
should thwart Trump’s reelection. And in England, elite resistance to the
results of the 2016 Brexit referendum and to the 2017 parliamentary invocation
of Article 50 has brought the government into a crisis from which there seems
no escape.
In such an environment, one begins to see the appeal of
nongovernmental instruments of power. What might be rejected at the ballot box
can be achieved through “nudging” in the market and in the third sector. If you
can’t enact national gun control through Congress, why not leverage the
economic and cultural weight of America’s largest corporations? The market, we
are told, is not a democracy.
Oh, but it is. The market may be the ultimate democracy.
“The picture of the prettiest girl that ever lived,” wrote Joseph Schumpeter,
“will in the long run prove powerless to maintain the sales of a bad
cigarette.” Woke capitalists remain accountable to consumers and to
shareholders. The audiences of ESPN and of the NFL cratered when those
institutions elevated politics over consumer demand. Hollywood’s anti-American
offerings routinely flop. Public opinion, in the form of popular taste, rules.
Shareholders of publicly traded companies are a type of electorate. The
companies that do not satisfy customers will disappear. Or shareholders will
demand changes to management to prevent such an outcome.
The politicization of firms is a double-edged sword. The
responsible stakeholder CEOs may have the best of intentions. They might assume
they are doing the right things not only by their companies but also by their
societies. What they fail to understand is that corporations acting as
surrogates of one element of society, or of one political party, will not be
treated as neutral by other elements, or by the other party. By believing their
superior attitudes will save capitalism, our right-thinking elites are
undermining its very legitimacy, and increasing the severity of the ongoing
populist revolt.
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