“Few trends could so much undermine our free society as the acceptance by corporate executives of social responsibility other than to make as much money for shareholders as possible.” That’s economist Milton Friedman speaking in 1970, quoted in The Betrayal of American Prosperity (2010) by Clyde Prestowitz.
That apotheosis of the shareholder as supreme stakeholder in a company, Prestowitz points out, ignores other stakeholders, such as workers, suppliers and “the society at large.”
Add to that the fact that many executives in multinational corporations come to care about other countries in which their company operates as much as they do about the U.S. and you see why creating jobs here isn’t item number one on corporate America’s to-do list. For decades there have been businesspeople who thought privately that corporations were more important than nations. Today that way of thinking is so common that those who espouse it hardly bother to keep it to themselves.
Executives of multinational corporations may care as much about the economy of China or Brazil as about the American economy if China or Brazil is where they are seeking markets. Prestowitz quotes Cyrill Siewert, former CFO of Colgate-Palmolive, as saying that “there is no mind-set here that puts [the U.S.] first. Our goals could be at odds with those of the nation.”
Such companies’ drive to gain share in export markets makes them less concerned than formerly about the buying power of Americans.
Henry Ford, however lamentable his pro-Nazi sympathies, had the formula for a sound economy with his plan to build good cars and pay his own workers enough to buy them. Now business undercuts its market here by laying people off, then tries to make up for the lost consumer base by seeking customers abroad—a strategy that’s proving unviable for American workers and for our balance of trade. The U. S. Business and Industry Council says, “… the most promising source of the new orders needed by U.S.-based manufacturers and their workers are home market shares that have been lost to imports.”
“The essential point,” adds economist Robert Reich, “is we can’t expect foreign consumers to fill the shortfall in demand left by American consumers who can no longer maintain their pre-recession standard of living. The only answer is to lift the standard of living of Americans.”
