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Starbucks CEO Issues Open Letter, Calls For Job Creation

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Howard Schultz
Howard Schultz

Not often does a billionaire chief executive of a prominent American brand assert that our system is effectively broken. Yet this is what Howard Schultz, chief executive officer of Starbucks, essentially told me this week when we sat down to discuss the open letter he was about to address to the nation.

A few weeks earlier, he had been absorbing a dispiriting run of news -- the prospect of another round of perilous brinkmanship over lifting the nation's debt ceiling, and a presidential campaign that seems disconnected from the crisis of joblessness -- when it occurred to him that Independence Day was approaching. He imagined the traditional fireworks and celebratory banter. It seemed wrong.

"It's a false celebration," Schultz told me. "I question the promise of America today."

This is the genesis of the letter he plans to serve up in coming days via full-page advertisements in national publications, including the Wall Street Journal and The New York Times. In strikingly direct terms, the man who added frappuccino to the American lexicon decries what has been happening -- or not happening -- within these nominally United States. He assails the political dysfunction that invariably suffocates attempts at improving national fortunes. He calls on Americans to take matters into our own hands, fashioning local solutions to problems left unaddressed by a leadership void in Washington.

"Millions of Americans are out of work," Schultz declares in his letter. "Many more are working tirelessly yet still unable to adequately care for their families. Our veterans are not being welcomed home with the level of support they deserve. Meanwhile, in our nation's capital, our elected leaders are continuing to put ideology over real solutions. I love America, but we all know there is something wrong, and that we are better than this. The deficits this country must reconcile are much more than financial. Our inability to solve our own problems is sapping our national spirit."

Schultz invites Americans to send in personal stories about what has been working to address problems in their own communities, along with ideas to spur job creation. He pledges to use Starbucks as a megaphone to amplify this dialogue in pursuit of effective initiatives that can be copied.

Is this about generating good publicity for Starbucks? Of course it is, at least in part. Schultz oversees one of the more ubiquitous consumer brands on the planet. Stamping that brand on the broad discontent of our times seems unlikely to dampen the appetite for tall, skinny lattes. The presidential campaign dominates nearly every form of mass media, eclipsing even the obsession over Jessica Simpson's post-baby figure. For at least one news cycle, Schultz has managed to insinuate his company into the conversation.

But when I met with Schultz, he left me convinced that his letter reflects genuine apprehension about the state of the nation.

"We all sense one thing in common: something is wrong," he told me. "The country is drifting and we're not addressing significant issues. This is not about marketing. This is about conscience. I'm concerned about the state of the country."

Schultz frequently talks about how he grew up in a low-income housing project in the Canarsie section of Brooklyn, how his father drove a truck and worked in factories and never made more than $20,000 a year, and how his own wealth reflects the upward mobility that characterized the America of his youth -- one with decent public schools and a multitude of career options. His action now, he says, is motivated by a pained sense that this former potential is today defunct.

"This is personal for me," he said.

Whatever the inspiration, there is something refreshing about a corporate chieftain castigating those who wield power for failing the nation. There is something promising about the CEO of a publicly traded corporation worth $40 billion urging the public to demand that big business balance profit motives against attention to the public good.

"Let's ask our business leaders to create more job opportunities for the American economy," he writes, implicitly rebuking business leaders for having so far failed to do so.

American companies have proven remarkably adept at delivering swelling profits to investors while handing out scraps to ordinary working people. Indeed, those profits have been derived in large part by shedding workers during the worst of the Great Recession, and then keeping payrolls lean even as growth opportunities have emerged. At least one CEO is now saying that's a problem. Yet one of the mysteries of the enduringly lean economy is why more executives have not chimed in likewise. Warren Buffett has noted that our tax system is rife with injustice, while calling for increased burdens to fall on wealthy Americans -- a step that should generate greater spending power for the middle class. But why aren't more business leaders demanding a sustained quest for job creation?

Heads of major financial institutions often demonize financial regulation as a supposed destroyer of jobs (while conveniently neglecting to mention how their gambling on exotic securities destroyed enough jobs to employ three Michigans). But these same chieftains are silent when it comes to policies that might actually boost employment, such as large-scale infrastructure building. This is a disservice to the country, and also to the long-term interests of their own shareholders. Doesn't JPMorgan Chase make more money in the long run if the economy is growing and people are working, necessitating more financial services? Has the bank's fascination with derivatives speculation blinded its overseers to this reality?

Schultz is clearly pursuing the interests of Starbucks in calling for job creation: If more people are employed, that means more people who feel flush enough to drop $4 on a caffeinated beverage. But the interests of his company also align with the nation's, because more paychecks translate into more demand for everything the American economy produces. This spells more business for accountants and lawyers and filmmakers and house painters. It means more tax revenues for states and cities, helping pay the salaries of policemen and teachers and firefighters (who, contrary to Mitt Romney's unfortunate words, are needed and valued).

Whether Schultz is sincere or merely has a nose for good public relations is largely irrelevant. He has injected into the conversation an important note of warning while spurring talk about solutions to deep-seated problems.

The real question is what will come of this? He holds back on apportioning blame for the Washington gridlock he decries, and his call to action is generic: "Let's come together and amplify our voices. Let's tell our government leaders to put partisanship aside, and to speak truthfully about the challenges we face."

Once our voices start talking, what should they ask for?

The problem with appeals to set aside partisanship is that they manage to make the Washington political class sound better than it is, as if the decent people in the two major parties wake up every morning itching to fix the country while disagreeing over the means. In truth, only one party has even been trying -- a hard fact to steer around in seeking collective solutions.

President Barack Obama has been weak and ineffectual, but he has attempted to better the economy, even as he has moved too tentatively, and put too much faith in the self-healing powers of the market. Congressional Republicans, on the other hand, have sabotaged national fortunes by opposing efforts at generating job growth in the crass hope that misery will get blamed on Obama. Given this, appeals to collective interest feel less than pregnant with benefit.

But the most promising dimension of the Schultz campaign is his calling for solutions that do not pass through Capitol Hill. "We can't wait for Washington," he writes, and that gets truer by the day. It gets truer as another family loses its home to foreclosure because of unemployment. It gets truer as people accustomed to supporting families with paychecks now grow accustomed to visiting food banks. It gets truer as municipal leaders confront impossible choices, like whether to gut the police department or shut down the library.

Two hundred and thirty-six years after the creation of these United States, we have lost our way, even as we retain many of our most promising features -- a willingness to work hard, world-class engineering prowess, creativity and audacity. We are beset by a sense of decline, and consumed with petty arguments. Now, one guy who will enjoy a swell place to live whatever happens is entreating us to put aside cynicism and despair and try to make the country better by focusing on what works. This can't hurt.

"I do believe that if people were maniacally focused on fixing our problems as opposed to partisanship and ideology and getting elected, the problems would be a lot easier to solve," he said. "We all want something better."