Trumpist protectionists and advocates for the woke view of corporations' role look pretty much identical
They start from the same collectivist premise
One of the main issues that made Trump’s unprecedented rise possible was the shrinking of industrial employment in the United States and the resultant hollowing-out of some smaller communities that had relied on one principal employer for their economic health.
It’s the kind of phenomenon that lends itself to visceral images and heart-rending anecdotes. It spurs cries for something to be done.
Leftists had been painting the us-versus-them picture of “greedy corporations” putting profits over “workers” for some time. The focus was economic, on the comparatively empty pockets of the workers vis-a-vis boardroom fat cats.
Trumpists took a different tack. Their visceral image - a family huddled around the kitchen table with a stack of bills and a calculator - was similar to what leftists had been offering, but the appeal was one that certain conservatives found compelling. Given the conservative emphasis on strong communities and fostering of local-level bonds, it made sense to craft a message that corporations not taking into account the impact of their decisions on heartland towns was eroding our national fabric. It was, according to this narrative, time to make America great again.
Even given the ample evidence that tariffs are not bringing jobs back so much as relocating them from the countries such as China on which the tariffs have been imposed to other Pacific Rim nations, this Trumpist notion persists. Former Manhattan Institute Scholar and 2012 Mitt Romney policy advisor Oren Cass has started a new project called American Compass, which mockingly refers to the unregulated - that is to say, natural - economic behavior of America’s millions of buyers and sellers as “free-market fundamentalism.”
Senator Marco Rubio has been drifting in this direction lately as well, coining as he has the term “common good capitalism.”
It’s all predicated on some kind of idea that “markets,” whatever they are, exist to serve some kind of societal purpose. It’s much simpler than that. As I said above, the free market is nothing more than the way buyers and sellers interact in the absence of some kind of “ism.”
Explanations based on Schumpeter’s concept of creative destruction, on citing the ever-shortening lifespan of the average American corporation, and on the intricacy of global supply chains, seemed heartless to those who had come of age in the thirty years after World War II, a period in which one could count on not only on one’s function within a company remaining relatively unchanged, but on the stability of one’s local economy and therefore civic life.
But a couple of aphorisms about facts apply here: they don’t care about your feelings, and they’re stubborn things.
The consternation from both the Left and protectionist-Right regarding companies outsourcing jobs has a touch of caricature to it as well. The reality is that the corporate sector strives pretty much as exhaustively as the nonprofit sector and big government to show how much it cares.
In fact, the challenge to Milton Friedman’s assertion that a business’s sole responsibility is to show its investors a return began decades ago:
The idea that businesses have societal responsibilities that transcend running a profitable enterprise has been debated by management experts since the early 1950s when economist Howard R. Bowen coined the phrase “corporate social responsibility.” He defined this principle as “the obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values of our society.”
Pushback came from traditionalists such as famed University of Chicago economist Milton Friedman. “Only people can have responsibilities,” he wrote. Executives can certainly expend their own resources for any manner of perceived social good, he added, but they have no right to apply the resources of their companies’ stockholders to such causes. That was tantamount to spending other people’s money.
Over time, Friedman lost this argument. For one thing, management guru Peter Drucker noodled around with a competing concept. Even if one accepted the logic that a corporation’s duty was to “maximize profits,” this begged a question. Maximize them for how long? A logging company that cut down all the trees in the forest, for instance, would put itself out of business. So the old question gave way to a new one popularized by Drucker: “Is our business model sustainable?”
“The first responsibility of business is to make enough profit to cover the costs for the future,” Drucker added. “If this social responsibility is not met, no other social responsibility can be met.” Initially, sustainability was entwined with environmental concerns. But corporate social responsibility naturally migrated to other issues. What if the educational system is so poor that a business can’t count on the workforce of the future? What if a product is so dangerous – and here Drucker invoked Ralph Nader’s crusade for consumer rights – the public turns against the company and forces the government to regulate the business more heavily? Don’t these relate, ultimately, to the bottom line?
What the Left ought to take heed of is the fact that it was its activism on this score that spurred corporate America’s acquiescence to this ever-expanding view of responsibility.
The Business Roundtable formalized the way it had been leaning for some time last August with a statement specifying the expanded array of stakeholders beyond investors to which the Roundtable says a company is responsible. The segment really redefines the term “corporation.” Nearly all corporations have functions that focus on diversity and sustainability. Human Rights Watch, with its annual ranking of firms based on such criteria as how accommodating they are to the LBGTQ “community,” sees to that.
The irony is that the matter of “bringing the jobs back to America” has become the rallying cry of the populist right, while the managements of the corporations are focused on the saving-the-planet-and-making-sure-every-conceivable-demographic-is-included-on-our-team agenda, but making no assurances that global supply chains will be disrupted just to reopen the shuttered storefronts on Main Street USA. These folks went to business school; they understand that a profit must be made to engage in “woke” undertakings.
In any event, both kinds of pressure on corporations to be more than makers of products and profits start from the same premise, whether they care to admit it or not.
It’s the age-old compulsion to band together to address perceived society-wide “needs.” In a word, it’s collectivism.
The problem boils down to what so many public-policy debates of our time boil down to: the question of what is and isn’t a right.
There are at least three things that by definition cannot be a right: health care, clean air and water, and a job. The last two are particularly relevant here (although if any reader’s hackles are raised by the first and bring their objections to my attention in sufficient numbers, perhaps a future Precipe newsletter can be dedicated to such a discussion).
It can be a bit tricky to kick around the question of whether American business would have gone to the exhaustive lengths that it has to implement zero-waste programs, ever-tighter emissions controls, and reliance on diffuse and intermittent energy forms wherever possible without government prodding. There’s a chicken-or-egg quality to the question. Did the “woke” sensibility begin to permeate business schools before or after the EPA became such a heavy-handed agency? It is safe to say that, when public attention was brought to the matter of pollution, corporations saw that public perception was going to affect their bottom line, and they took action.
In any event, we all know the stats. The US is near the top of nations that produce what they produce cleanly, and China and India continue to pump filth into their atmospheres.
Now, with regard to the leftist complaint about wage disparity and the populist-right complaint about disappearing jobs, a return to basics is in order. A job is nothing more than a function that an organization needs to have performed. It’s a hypothetical scenario, granted, but if no organizations needed any functions performed, there would be no jobs.
The Left and the populist Right ponder such a question and react by saying, “In that case, we’d have to find something for the millions of people in our midst to do.”
Bingo, wrong premise. There is no “we” to take on that task - that is, unless you want to assign it to government.
“We” is a term that - well, we - ought to use with extreme caution. Employing it in a sloppy fashion will wind up disrespecting the sovereignty of the individuals that constitute those “millions of people.” They are beings of agency and ingenuity. That’s how the the corporation came into being in the first place. Ditto the inventions that became their products and bestowed upon us the last two centuries of astounding material advancement.
No, Bernie Sanders and Elizabeth Warren - and the Business Roundtable - on the left side, and Tucker Carlson and American Compass and Marco Rubio on the (populist) right side start from the same flawed premise. People - and the organizations they form - are going to act in accordance with what they perceive as being most beneficial to their interests.
And here we touch on a level beyond the political or even economic. History shows, and most people have been convinced by its evidence, that there’s no long-term profitability in being a jerk. Your company cannot pollute waterways and skies and expect to find customers, employees or suppliers in sufficient numbers to sustain your operation. Ditto passing up qualified applicants for positions just because of their demographic. When people are free, the marketplace tends to reward decency.
I just wonder if anyone on either side has considered that they proceed from the same starting point. It would be pretty embarrassing to have to admit.
Meanwhile, actual freedom is standing in the wings, waiting to be tried.