America's top business titans apparently discovered a conscience over the weekend! The Business Roundtable — a big association of CEOs including Jeff Bezos, Tim Cook, Brian Monyihan, Jamie Dimon, and many others — announced on Monday that they were rolling back the shareholder value revolution. No longer will a company's share price be the number one business priority, they said. Instead workers, suppliers, customers, and the environment are going to share pride of place at the top.
Capitalism haters like the notorious socialist Larry Summers were skeptical. "I worry the Roundtable's rhetorical embrace of stakeholders is in part a strategy for holding off necessary tax and regulatory reform," he told the Financial Times.
But I have faith — and a little advice. Here are three quick and easy tips for how America's patriotic CEOs can prove Bernie Sanders and Elizabeth Warren wrong. Business does not need drastic new regulations like Warren's plan to bust up Big Tech and regulate Wall Street, or Sanders' proposal to drastically increase taxes on corporations and the rich. These chaps truly are all about reforming U.S. business to help everyone, and not just trying to protect their gargantuan pocketbooks with a lot of cheap talk.
1) Raise taxes on themselves and their businesses. The last decade has been absolutely fantastic for corporate executives and the investor class. Corporate profits' share of GDP has been at or above historic highs since 2009. The ultra-wealthy are seeing enormous income gains while the middle class stagnates. CEO compensation has grown 980 percent since 1978, while the typical worker salary has grown only 12 percent.
Moderate, sensible businessmen (like Chester Bowles in his day) understand that such a situation is economically destabilizing and politically dangerous. An advanced, mass-consumption economy requires a broad distribution of income so the people have the money to purchase the goods and services produced by business — a nation with severe inequality is prone to economic depression. Meanwhile, a wildly unfair economy breeds authoritarian extremism and demagogues.
Lobbying to sharply raise taxes on the very rich — particularly on capital gains and hedge fund income — can ameliorate this situation, and still leave business tycoons with more than enough money to live a life of wretched, gushing excess. A slightly-smaller seventh yacht is a small price to pay to keep the good ol' U.S.A. in fighting trim. That in turn would free up some revenue, as executives would be less inclined to bargain for a bigger pay package and investors less inclined to demand payouts if Uncle Sam took more of the proceeds, so business could invest in capital, maintenance, and R&D on which they have scrimped of late. A responsible businessman invests for the future!
2) Help extirpate Big Carbon. The world dependence on fossil fuel energy is threatening the future of human society — and that includes business. What's going to happen to the Miami real estate market, for one, if it's 50 miles out to sea? Who will buy soybean futures if half the agricultural land on earth becomes a desert? Think of all the rich investors with houses in fire-prone Malibu! Not to mention that seawalls and one weather disaster cleanup after the next are going to cost lots of tax money.
The Business Roundtable membership includes the heads of oil companies ExxonMobil, BP, and Chevron. For the good of the business community (and future human civilization), they should be required to transform into clean energy companies within five years or be kicked out, and the remaining CEOs should unite behind a crash decarbonization program. This would of necessity include regulations keeping most existing fossil fuel reserves in the ground. For the good of American capitalism, the business of digging up carbon fuel and setting it on fire must be stopped forever.
3) Break their companies into pieces. One enormous factor in the above-mentioned profits bonanza is how vast swathes of the American marketplace have been rolled up into oligopolies. Retail, banking, agriculture, pharmaceuticals, hospitals — if you can name it, there's likely very much less competition than there was 40 years ago.
Business Roundtable members are ideally placed to get out ahead of new anti-trust regulation. Every major market where, say, five or fewer companies account for more than half the sales can be de-concentrated by the largest company voluntarily breaking itself into two, then the next-smallest if that doesn't do the trick, and so on. This would help suppliers by giving them more than one buyer of their products, help workers by ensuring there is more than a few companies to bid for their labor, help consumers by providing a decent menu of choices in all markets, and help new entrepreneurs by making it possible to compete again.
Besides, a good businessman thrives on competition. The very engine of capitalism is supposed to be the desire to make a profit by inventing a better widget. Surely our top CEOs are hungry to prove themselves in a rough-and-tumble market — what business school graduate wants to just sit atop a vast empire and collect giant fat profits while doing not much of anything? How would that create jobs?!
Nothing could prove Bernie Sanders and Elizabeth Warren more correct about their acerbic view of American business than by this new Business Roundtable effort turning out to be mere wind — if Jamie Dimon et al. continue to plow their profits into dividends and share buybacks, only now hidden behind some progressive rhetoric and maybe a few quarters dribbled out to the rest of society. But I have confidence. Business is the foundation of American society — and CEOs will surely prove it very soon by ceasing to devour it from the inside.