I went over the Center for American Progess today to watch a "debate" about the future of corporations in America in the 21st Century -- a topic I find vastly important.
The two participants were:
Leo Hindery, former CEO of the Yes Network (a sports channel), and media equity firm manager on the left.
vs.
Fred Smith of the Competitive Enterprise Institute, on the right.
The moderator was the Wall Street Journal's Alan Murray, who set the entire thing up with a dubious premise: That there is a "major power shift" going on at corporations, evidenced by the growth in shareholder activism in recent years, and the fact that "little known groups" like the Rainforest Action Network, are having an extraordinary influence over companies like JP Morgan, Citi, and Home Depot.
"These are people who believe we ought not have extractive industries," Murray asserted to the CAP audience.
I thought that was quite a way to "moderate" a debate at the nation's leading progressive think tank: tar one of the leading environmental groups in the country in absentia, and thereby constrict the spectrum of what's permissible to an advocate of Corporate Social Responsibilty and an opponent who says all corporations should do is make money.
Heaven forbid that a group that sees CSR as a milquetoast approach, a bogus public relations ploy -- be granted any real legitimacy in a debate sponsored by the nation's leading progressive think tank!
It's no wonder that people are starting to criticize CAP as Hillary's "cabinet in waiting," with no real connection to the grassroots. (During the Q/A, someone noted that John Podesta supports nuclear power, which I guess is no surprise. Next week Podesta will be discussing Energy Security in the 21st Century with Carol Browner and Madeleine Albright. How much do you want to bet that they won't be talking about the potential consequences of a terrorist attack on the Indian Point nuke plant?)
Well, you can guess the rest. The debate centered around whether or not corporations have any real purpose beyond making money. I.e. the proposition Milton Freedman made back in 1970 -- that "the social responsibility of business is to increase its profits."
In some ways, the debate hasn't really progressed at all. Stakeholder statutes passed during the Mergers & Acquisitions wave seemed to just give powerful CEOs more power to ignore shareholders by claiming to be acting in the enlightened interest of the company. In fact, some of those who've been in this debate since it began seem to have taken a much less progressive view. Back in 1981, for example, when the Business Roundtable was led by GE CEO Reginald Jones, it staked out the position that shareholder returns should be balanced against the concerns of employees and customers -- i.e. the long-term health of the company. Today's Business Roundtable, led by Pfizer CEO Hank McKinnell, is relentless in defending the rule of the "imperial CEOs" from even modest reforms, such as an SEC proposal to give shareholders the right to nominate their own candidates to the board.
So much for "major shifts in power," Alan. BTW, how many Fortune 500 companies still have CEOs who are chairs of the board?
According to Fortune, McKinnell scoffs at shareholder activists who point to his $83 million lump-sum pension, his $16 million in total compensation last year, and how out of sync that is with his stock's 42% decline since he took charge in 2001.
When it came to his turn, Fred Smith retorted that Corporate Social Responsibility is a "confused response to a real challenge."
And in some ways, he makes a good point: All of us want "responsible" companies. But when you add "social" -- a term that has no consistent metric -- the term becomes meaningless. Especially when it has to be balanced against the interests of shareholders, let alone the environment, communities, etc.
At one point, Hindery pointed out that debates like these are often marred by the use of extreme examples. Again beating up on Rainforest Action Network, whose tactics are not to be countenanced in a debate where "we need common ground."
It's funny, isn't it, that in a debate over corporate social responsibility, it never even occurrs to anyone -- Murray or even Hindery -- to suggest that if NGOs can be criticized for being "extreme" -- then how "responsible" is it for companies like ExxonMobil to give their money --i.e. their shareholders' money -- to corporate front groups like the Competitive Enterprise Institute, who in turn use it to promote extreme positions, like those recent commercials that said "CO2: They Call it Pollution, We Call it Life."