Last week’s announcement by the Business Roundtable, a Washington-based organization of some 200 corporate CEOs, that it was changing its Principles of Corporate Governance to reflect more than just shareholder interest was met with more than a little skepticism.
The group has been pushing shareholder primacy for decades, advocating the worst of predatory capitalism as standard operating procedure. Its sudden turn smacks of a public relations move in the face of increasing pushback against the worse offences – from repressing workers and routine ethics violations to raping the environment – that have been the norm in the corporate world.
That Roundtable’s statement was more of a wink and a nod than an actual policy shift is reflected in its position that the new official policy of fairer wages and benefits to workers, environmental consciousness and community goodwill simply puts in words what these large corporations – the likes of Amazon, General Motors and Apple – are already doing, a claim that really doesn’t stand up to scrutiny.
Had these CEOs really had a change of heart, they would have called for higher minimum wages, greater unionization and an end to precarious “gig economy” work, just for a start.
Its glibness can be seen in the group’s current efforts to undermine greater controls by the Securities and Exchange Commission, for instance, argues rights advocacy group Demand Progress Education Fund.
“The Roundtable letter smacks of thin rhetorical cover for continued predation by the world’s biggest corporations. If the Roundtable wants us to believe that it and its members are anything better than brazen hypocrites, the Roundtable will immediately reverse its encouragement of SEC efforts to undermine shareholder petitioning and proxy voting,” says the group’s executive director, David Segal, in response to the CEOs’ announcement.
“Rather, the Roundtable will urge the SEC to ensure that investors are allowed to continue to hold corporations accountable — to good internal governance and to what is best for their workers, consumers, and the communities and broader world in which they operate.”
Still, one could argue even empty rhetoric is an improvement.
Saying things like investing in employees “starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect” is a departure from the hardline position adopted from the likes of Milton Friedman.
The ascendancy of neoliberal policies since the 1980s has caused falling and stagnant wages, regressive taxation policies and other measures designed to strangle workers’ rights and disempower the bulk of the population. That the greatest economic advances for the working and middle classes came in a postwar era of high taxes on corporation and the wealthy, more stringent regulations on corporations – particularly the predatory financial industry – and higher unionization rates for workers is no coincidence.
In the vein of workers’ rights – we are heading into Labour Day, after all – the fact is you can thank the labour movement, and unions in particular, for many of the employee benefits we enjoy today, including a five-day workweek, holidays, vacation time, benefits, pension, and safety measures. Much of what was gained by long struggle is being clawed back now, with nary a whimper for a large segment of the population that stands to lose. Increasingly, the light bulb is going on associating attacks on labour with the crowing income inequality that even some of the modern-day robber barons have noticed, as evidenced by the Business Roundtable announcement.
A decline in middle class fortunes, particularly in the U.S., is reflected in falling union numbers and anti-worker legislation, from eroding New Deal-era protections to the invocation of right-to-work laws.
In this country, a Statistics Canada report compiled last year shows that from 1981 to 2014, the overall unionization rate declined, to 29 per cent from 38, with most of the decline taking place during the 1980s and 1990s. The decline was observed among men, but not among women. These numbers correlate with the decline in typically male jobs in manufacturing and the rise in lower-paying, often more precarious service work.
Perhaps not coincidently, the countries commonly found among the highest in quality of life indices often have much higher levels of unionization. That list includes the likes of Denmark (80%), Norway (70%), Switzerland (51%), Netherlands (81%) and Sweden (88%).
An increasing amount of research showing the massive harm done by corporate and paid-for governance policies of the past few decades comes in middle of the jockeying among presidential hopefuls in the U.S., where there’s been some movement towards the positions adopted by Bernie Sanders in 2016, when he dared speak the truth about the attack on workers. Here, too, there is talk of supporting the middle class in the run-up to a fall election, continuing a strategy adopted by Justin Trudeau the last time around. More than lip service is required, however.
Tracking the decline into a service economy and crappy jobs, experts note the prescription is redirecting capital from short-term speculation to long-term investment, along with sharing the returns of rising productivity more broadly, as was the case in the post-war boom years.
Such findings jibe well with a historical perspective that showed what we now take for granted as the middle class emerged following the Second World War, as the economy expanded, union membership was at its highest levels (mostly in the private sector) and tax rates were in the range – as much as 80 and 90 per cent – that are simply beyond worst nightmares of today’s fervent corporate-tax-cut believers. Trickle-down economics certainly did not die with Ronald Reagan.
Nor with some public relations statement from the Business Roundtable, which really needs to put its money where its mouth is, suggests Michael Spence, a Nobel laureate in economics, and professor of economics at New York University’s Stern School of Business, while taking a more optimistic tone than many other critics.
“[T]he group’s statement this month is a clear signal of American CEOs’ intention to change not just corporate governance, but also the role of business enterprises in society. It establishes new boundaries for the pursuit of returns on capital – boundaries that are meant to protect constituencies (employees, poorly informed customers, suppliers, future generations) that often lack the market power to protect themselves. Most important, the move comes at a time when wealth inequality is rising, and when the ownership of financial assets is becoming increasingly concentrated,” he writes in Project Syndicate.
“But a word of caution is in order. Although the transition to a multi-stakeholder model is necessary to make progress toward other social goals, it is not sufficient. Corporations alone cannot solve our most pressing global problems. They will need the support of governments, which have a responsibility to create the space and provide the tools for multi-stakeholder businesses to maximize their positive social impact.”