About the author: Richard Haass is the president of the Council on Foreign Relations and author of The Bill of Obligations: The Ten Habits of Good Citizens.
We have come quite a ways since Milton Friedman could persuasively argue that the only responsibility of a business is to maximize profit and reward shareholders. Today, many shareholders, employees, and customers judge companies across a range of metrics that are not directly related to profit. Companies are judged on their environmental, social, and governance practices, how they hire, and their commitment to corporate social responsibility. Senior executives are regularly pressed to reduce the impact of their operations on climate change, foster an inclusive and more egalitarian work environment, and take public stands on social issues.
These are all potentially worthy pursuits, although the impact inevitably comes down to details of direction and degree. Friedman may be guilty of overstatement, but he was not wrong to suggest that profitability must be a central motivation. Else the company risks ceasing to exist and as a result would be in no position to advance other goals no matter how worthy they might be.
Not surprisingly, some have pushed back against this new business culture, arguing that it causes companies to lose sight of profitability or that unaccountable executives are using investors’ money for purposes that are best left to the political arena and elected officials.
Let me offer a different criticism. Whether it’s called CSR, ESG, or something else, the change in corporate priorities doesn’t go nearly far enough, at least in the area with the greatest impact on business, namely, the preservation of American democracy. Until recently, the permanence of a functioning, stable democracy in this country could be assumed. No longer. As a result, what is urgently needed is nothing less than CCAD: Corporate Commitment to American Democracy.
The reasoning is straightforward and stems from self-interest. American companies depend on American democracy more than many seem to realize. Begin 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 company to ship products and settle disputes, all this and more rests on it being possible and safe to do so. We have seen what disease and severe weather do to business. 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 and every measure of productivity and profitability would plummet.
Businesses have a real stake in seeing that governmental 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. Much the same could be said about an Internal Revenue Service that would launch audits of executives who criticized administration policies or contributed to the other political party. Or of regulatory agencies that ruled not on relevant criteria but in pursuit of political agendas. The checks and balances, the oversight and transparency central to democracy are essential for a business to be able to plan. Invest, and have a fair opportunity to succeed.
Business also benefits from functional government at every level: federal, state, and local. This can include a willingness to work together (often across party lines) to fund the national debt, put into place an immigration system that provides needed labor, or provide basic infrastructure.
What, then, can and should corporations do to promote a political system that serves interests more important than corporate tax rates or how capital gains and carried interest are treated?
First, make it easier for workers to vote. Right now, only about half of those eligible to vote do so, some for their own reasons, some because it is too difficult and time-consuming. A more involved citizenry would be more likely to hold government to account. Companies should give their employees paid time off to vote. Corporations could also support measures from mail-in and weekend voting to opening more polling stations for longer hours.
Second, no corporation should use company funds to support any candidate who is anti-democracy, that is, who refuses to accept the results of an election shown to be free and fair. Similarly, corporations should not donate money to any candidate or sitting official who supports violence in pursuit of political ends.
Third, corporations should refuse to advertise on any platform that gives voice to those who advocate for violence or who deny the outcomes of legitimate elections.
Fourth, companies should support and reward public service. This can take many forms, from giving time off for those who help oversee polling sites to hiring veterans, introducing arrangements that enable workers to join the military reserves, and providing leaves of absence as most universities do so that employees can enter government for one or two years and return.
There are doubtless other steps businesses could and should take to buttress 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, famously said that what’s good for GM is good for the country. The time has arrived for the corporate world to act on the principle that what’s good for the country is good for GM.
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