By Robert Holst
For a long time, right about up into the 1970’s, business was run with the good of all stakeholders in mind. Shareholders, customers, employees and the country. A corporation could still be considered an “American company.” At one time GM’s CEO didn’t see how a decision made that was good for America could be bad for GMand how a decision made to benefit GM could be bad for America. In his mind the good of both were linked.
As the terms “profit driven” and “vulture capitalist” came on line in the 80’s the idea of a corporation that works for all stakeholders disappeared. Their national identity was only left as a marketing ploy. The shareholder moved to the front of the line and a CEO’s “fiduciary responsibility” to those shareholders was the only concern. Wages, benefits and pensions were left in the dust. Things like 401k’s and “independent contractors” were born and organized labor as the only institution that offered resistance, was targeted for destruction.
Perhaps a bigger and more commonly recognized ramification of this thinking was outsourcing. Corporations, no longer worried about their workforce or national identity, moved factories out of the United States in order to lower wages and production costs. This in turn helped stock prices rise. All was good in the world of unfettered capitalism. The obscene wealth generated by these actions has gone to benefit a very small portion of our population and in many instances, that wealth was used to buy influence within our government. It was used to solidify this new reality of “shareholder first”.
This is also about the time where capitalism had stopped being an economic system and became a form of government. We were a “Capitalist country!” This new way of thinking was personified by Michael Douglas when his character Gordon Gekko told us “Greed is good!”
But in reality, greed is unsustainable. Eventually the constant drumbeat of shareholders first takes a toll on all those that are involved in producing those profits. Those that aren’t shareholders never get to move ahead in line and are expected always to sacrifice at the altar of profit. We see all this coming to a head now.
President Trump and his trade war is one example. The stock market is being used as a barometer for how effective or ineffective he is. Our corporate programming that has us accept that shareholders must profit above all else, has everyone nervous about the fluctuations in the market. Our political divisions won’t let us see a simple truth which is, that if we actually win a trade war, the stock market will drop. In order to have manufacturing jobs here shareholders will have to take a back seat and profits will drop. That’s a fact. A world where business serves the best interests of all stakeholders, isn’t compatible with it serving only the Gordon Gekkos of the world. The market will not react well to being told profits are down, even if the reason is Ford is making new trucks in Michigan.
Another recent example came last week from the “Business Roundtable”. It announced that corporations should no longer place shareholders above workers, customers and the social good. They aren’t dummies. They see the writing on the wall. It’s a little late to say they are trying to get in front of the issue, but it is certainly a noticeable admission. Now I’m sure that if profits are down and stock prices take a hit, These CEO’s will be reaching for their golden parachutes. But if you doubt anything I’ve written here that single act confirms most of it.
It isn’t easy to take an objective view of all this, I know. I am a recovering party loyalist and former political tribesman. At times I can still fall off the wagon. But none of this has happened in secret. None of it is playing out behind closed doors now. We are in a time where we can reshape how we move forward. If we don’t agree with Trump we must seize upon the opportunities his rhetoric has offered. If we don’t agree with the Bernie Sanders wing of the Dem party message we must still recognize where the commonalities in his message lie. We are at a time where the messages between two extremes have intersectionality at who the system should serve. The keys to the kingdom have been placed at our feet. All we need to do is pick them up.