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Strong democracy lies in corporate self-interest, writes Richard Haas.
Stephanie Reynolds/Bloomberg
About the author: Richard Haas Chairman of the Council on Foreign Relations, Bill of Duty: 10 Habits of Good Citizens.
We have come a long way since Milton Friedman convincingly argued that the sole responsibility of a corporation is to maximize profits and reward shareholders. Today, many shareholders, employees, and customers judge companies by a variety of metrics that are not directly related to profit. Companies are evaluated on their environmental, social and governance practices, recruitment practices, and commitment to corporate social responsibility. Senior managers are regularly pressured to reduce the climate change impact of their operations, promote an inclusive and more equal working environment, and take a public stand on social issues.
Impact inevitably comes down to details of direction and degree, but these are all potentially worthwhile pursuits. Friedman may be guilty of exaggeration, but profitability is central. I was not wrong in suggesting that it must be the motivation. .
Unsurprisingly, some people oppose this new business culture, causing companies to lose sight of profitability, or unaccountable executives throwing investor money into the political arena or into the hands of elected officials. It claims to be used for the best purposes left to officials.
Let me make another critique. Changing corporate priorities, whether called CSR, ESG, or otherwise, is not enough, at least not in the area where business has the greatest impact: preserving American democracy. Until recently, it was believed that a functioning and stable democracy would last in this country. more than this. As a result, what is urgently needed is nothing less than CCAD: Corporate Commitment to American Democracy.
The reason is simple: self-interest. American corporations depend on American democracy more than many people realize. Let’s start with the rule of law. Whether workers can come to work and focus on their work, customers can shop, businesses can ship products and resolve disputes, all of this depends on being able and safe. We’ve seen how sickness and bad weather affect businesses. But what if, during her thirty-year troubles, which ended a quarter-century ago, the United States began to resemble Northern Ireland? Consider him 1/6 with some frequency against multiple targets. Every measure of productivity and profitability will plummet.
Businesses have a great interest in ensuring that government power is not abused. A politically motivated Department of Justice that approves or blocks mergers based on a desire to reward a friend of the President or punish an enemy of the President rather than legitimate antitrust concerns. No companies want it. Much the same goes for the Internal Revenue Service, which will begin auditing officials who have criticized government policy or contributed to other political parties. Or of a regulatory body that pursues and decides on a political agenda rather than on relevant standards. Checks and balances, oversight and transparency at the heart of democracy, are essential for business to plan. Invest and get a fair chance to succeed.
Businesses also benefit from governments that operate at all levels: federal, state, and local. This may include a willingness to work together (often bipartisan) to finance government bonds, introduce immigration systems to provide needed labor, or provide basic infrastructure. I have.
So what can and should businesses do to promote political systems that serve interests more important than the corporate tax rate, and how capital gains and carry interest are treated?
First, it makes it easier for workers to vote. Currently, only about half of those eligible to vote vote. Partly for its own reasons, partly because it’s too difficult and time consuming. More involved citizens are more likely to hold governments accountable. Companies should give employees paid time off to vote. Businesses can also help with measures ranging from mail-in ballots and weekend polls to keeping more polling places open longer.
Second, no company should use company funds to support anti-democratic candidates, candidates who refuse to accept election results that have been proven free and fair. it won’t work. Similarly, businesses should not donate to candidates or incumbents who endorse violence in pursuit of political ends.
Third, businesses should refuse to advertise on platforms that give a voice to those who advocate violence or deny the outcome of legitimate elections.
Fourth, businesses should support and reward public service. This has ranged from giving time off to those who help supervise polling places, to hiring veterans, to introducing arrangements to allow workers to join the military reserves, to adopting arrangements that allow workers to join the military reserves, as most universities do. It can take many forms, from offering leave of absence so that employees can enter government. 2 years and back.
Undoubtedly, there are other steps companies can and should take to strengthen the democracies that enable business success. The point is that American corporations are doing more to strengthen American democracy. Former General Motors president Charlie Wilson famously said that what is good for GM is good for the country. It’s time for the corporate world to act on the principle that what’s good for the country is good for GM.
These guest commentaries are written by authors outside of Barron’s and the MarketWatch newsroom. They reflect the author’s point of view and opinion.Suggest comments and other feedback idea@barrons.com.
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