We’ve come a long way since Milton Friedman could argue convincingly that a company’s sole responsibility is to maximize profits and reward shareholders. Today, many shareholders, employees and customers judge companies across a range of measures that are not directly related to profit. Companies are judged on their environmental, social and governance practices, their method of hiring and their commitment to corporate social responsibility. Senior executives are regularly pressured to reduce the impact of their activities on climate change, foster an inclusive and more equal work environment, and take a public stand on social issues.
These are all potentially worthwhile activities, although impact inevitably comes down to details of direction and degree. Friedman may be exaggerating, but he was right to suggest that profitability should be a central motivation. Otherwise, the business risks ceasing to exist and therefore would not be able to advance other goals, however meritorious.
Unsurprisingly, some have pushed back against this new corporate culture, arguing that it causes companies to lose sight of profitability or that irresponsible executives use investors’ money for purposes best left to the political arena. and elected officials.
Let me make a different review. Whether it’s CSR, ESG or something else entirely, the change in business priorities does not go far enough, at least in the area that has the most impact on business, namely the preservation of American democracy. Until recently, one could assume the permanence of a stable and functional democracy in this country. Not anymore. Therefore, what we urgently need is nothing less than CCAD: Corporate Commitment to American Democracy.
The reasoning is simple and stems from self-interest. American business depends on American democracy more than many seem to believe. Start with the rule of law. The ability of workers to come to work and focus on their jobs, of customers to shop, and of a business to ship products and resolve disputes, all of this and more relies on the ability and safety of the make. We have seen the effects of disease and bad weather on businesses. But imagine if the United States came to resemble Northern Ireland during the three decades of The Troubles that ended a quarter of a century ago. Think Jan 6 with some frequency against multiple targets. Any measure of productivity and profitability would drop.
Companies have a real interest in ensuring that government powers are not abused. No company wants a politically motivated Justice Department that approves or blocks mergers based not on legitimate antitrust concerns, but on a desire to reward the president’s friends or punish his enemies. The same could be said of an internal revenue service that would launch audits of leaders who have criticized administration policies or contributed to the other political party. Or regulatory agencies that ruled not on relevant criteria but in pursuit of political agendas. The checks and balances, oversight and transparency at the heart of democracy are essential for a business to plan. Invest and have a fair chance to succeed.
Businesses also benefit from functioning government at all levels: federal, state and local. This may include a willingness to work together (often across party lines) to fund the national debt, establish an immigration system that provides needed manpower, or provide basic infrastructure.
So what can and should corporations do to promote a political system that serves greater interests than corporate tax rates or how capital gains and deferred interest are treated?
First, make it easier for workers to vote. Currently, only about half of voters do so, some for their own reasons, others because it’s too hard and takes too long. A more engaged population would be more likely to hold the government to account. Companies should give their employees paid time off to vote. Businesses could also support measures ranging from mail-in and weekend voting to opening more polling stations for longer hours.
Second, no company should use company funds to support a candidate who is undemocratic, that is, who refuses to accept the results of an election that has been found to be free and fair. Similarly, companies should not give money to a candidate or incumbent who supports violence for political purposes.
Third, companies should refuse to advertise on any platform that gives voice to those who advocate violence or deny the results of legitimate elections.
Fourth, businesses must support and reward public service. This can take many forms, from granting furloughs to those who help oversee polling stations, to hiring veterans, to introducing arrangements for workers to join military reserves. and granting furloughs as most universities do so employees can enter government for one or more years. two years and back.
There are undoubtedly other steps that companies could and should take to strengthen the democracy that enables their success. What matters is that corporate America does more to strengthen American democracy. Charlie Wilson, the former head of General Motors, said what’s good for GM is good for the country. Now is the time for business to act on the principle that what’s good for the country is good for GM.
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