Andrew Greenberg -- long-ago Pennsylvania secretary of commerce under Gov. Casey, now an investment banker and CEO of GF Data in West Conshohocken -- isn’t buying this Business Roundtable “Statement on Corporate Responsibility.”
The statement, signed by 181 CEOs -- including Aramark’s Eric Foss, Comcast’s Brian Roberts, SAP’s Bill McDermott, and Vanguard’s Mortimer “Tim” Buckley, locally -- pledges to please customers, employees, suppliers, and communities, and also shareholders -- instead of putting the shareholders, who own companies, first.
The CEOs are modernizing the roundtable’s principles recognizing that -- despite high employment and cheap money under President Trump -- “many Americans are struggling. Too often hard work is not rewarded, and not enough is being done for workers to adjust to the rapid pace of change in the economy.”
The CEOs are anxious about their wealth and status. Despite a self-proclaimed pro-business White House and Senate, they worry the people are getting tired of the bosses’ extreme privilege: “If companies fail to recognize that the success of our system is dependent on inclusive long-term growth, many will raise legitimate questions about the role of large employers in our society.”
How sincere are these CEOs? Aramark’s Foss, for example, is himself the target of shareholders disgusted that he paid himself millions in bonuses last year while stiffing promised payments to his own front-line managers -- even as the giant cafeteria manager’s sales were flagging. (Foss resigned the day this column was printed in The Inquirer.)
Greenberg doesn’t single out Foss, JPMorgan’s populist-sounding Jamie Dimon, or anyone else. Rather, he accuses the whole gang of reacting “artfully” to “current political impulses” -- but also warning their remedy threatens to “undercut the economic system it professes to support.”
These CEOs, Greenberg says, want it both ways, praising “the free-market system [that] is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment, and economic opportunity for all” -- while also trying to please crowds of people uncomfortable that corporate bosses and big investors are so much more prosperous than working Americans.
And why not? But "this seemingly innocuous equation of corporate ownership with other interests strikes at a core understanding of free-market capitalism – that businesses function best and contribute most when guided by a primary duty to maximize value for their owners,” Greenberg insists.
That is the law, after all, in Delaware, New York, and other corporate legal centers: Company boards’ “fiduciary duty” is, as Greenberg notes, “to maximize profit or value, for ownership.”
Greenberg is amazed to find, in 2019, that capitalists are once again on the defensive, like “the little guy in striped pants on Monopoly cards.”
To be sure, “income inequality is a profound problem,” leftist politicians are here to remind us -- even as President Trump, elected as a Republican, makes a lot of noise about forcing the Fed to cut the cost of money and otherwise intervening in the economy.
Trump even pushed Lockheed Martin CEO Marillyn Hewson to keep open its Sikorsky helicopter plant in Coatesville instead of following through on her plan to close it when it’s done building the president’s new Marine One helicopters later this year. You would think a business president would understand a CEO knows her company’s “best interests,” Greenberg said.
It’s a popular decision in formerly Republican, increasingly Democratic Chester County. But any company that keeps idle factories open to please politicians “is showing its neck to its less-constrained competitors,” Greenberg said. Even in the highly political military-supply business.
To be sure, companies should exercise what used to be called “enlightened self-interest” in acknowledging what customers say they want. That’s why U.S. automakers risked Trump’s wrath when they pledged to abide by California’s restrictive environmental standards rather than the Trump administration’s loosened national rules.
That kind of voluntary public-relations move at least leaves the private sector in charge. It’s a far cry from letting “communities” or their government reps decide which factories stay open.
“Who gets to decide, and how?” Greenberg asks. Which agency should tell Amazon to limit how many robots it uses to replace human workers in its upstate warehouses? Even dominant Amazon, when forced to compete within stricter limits, will be vulnerable to competition from more-flexible rivals. Corporate giants, however powerful, are a few steps from vanishing in changing circumstances. Who remembers Baldwin Locomotive, the Pennsylvania Railroad, or MBNA?