“We are living in an age unlike any other we have experienced in the United States, and we can’t feel secure about the long term outcome”.

 

That’s how Robert J. Shiller, Sterling Professor of economics at Yale and a Nobel laureate in economics, assesses the dire consequences of the “alternative truths” that have inundated America and  many parts of the world. In his New York Times “Economic View” column, “How Lying and Mistrust Could Hurt the American Economy” , he unpacks his view that the effects on business — and the society – may well be negative and long term:

 

“There’s substantial evidence that if an atmosphere filled with lies or presumed lies spreads throughout a society, the effect might reduce economic growth rates. Years of incremental damage would result in a substantially lower level of economic well being than would otherwise existed.

 

“The central reason is basic: An atmosphere generated by a steady flow and variety of lies is like a dark cloud over the facts. Businesses can’t plan effectively when they don’t know who can be trusted.

 

“A critical question for the United States is the extent to which lying and mistrust have already permeated the entire culture.”

 

Professor Shiller’s analysis comes at a time when mistrust appears to be taking root in many parts of society. 

 

The 2019 Edelman  Trust Barometer: “Traditional power elite figures, such as CEOs and heads of state, have been discredited. The growth of social media platforms fully shifted people’s trust from a top-down orientation to a horizontal one in favor of peers or experts. Now we are seeing a further reordering of trust to more local sources, with ‘My Employer’ emerging as the most trusted entity, because the relationships that are closest to us feel more comfortable.”   [Emphasis added]

 

The bottom line: Sooner or later, lies can be very costly.

 

“Tell me with whom you associate, and I will tell you who you are.” – Johann Wolfgang Goethe

 

Apparently it’s not that simple when personal values and economic realities collide — as they appear to be for some business executives attending this week’s Saudi Arabia Future Investment Initiative in Riyadh.

 

As noted in the New York Times, “for Washington and Wall Street, It’s Back to Business With the Saudis a year after Slaying of Jamal Khashoggi   “Wall Street and Washington to Return to Saudi Investment Meeting” . The slaying, of course, is the brutal murder allegedly conducted by Saudi agents controlled by Saudi Crown Prince Mohammed bin Salman.

 

Some of the business leaders attending decided not to attend last year. Other invitees have demurred twice.  Of course, U.S. government officials such as Secretary of Treasury Steven Mnuchin, are attending., consistent with the Trump Administration’s fine-line responses to Saudi human rights issues.

 

The Times may have captured a prevailing business attitude with this quote from Steven Cook of the Council on Foreign Relations: “People in the business community want to do business with Saudi Arabia. They never stopped; they just kept a low profile. The crown prince clearly remains toxic for some people, but my sense is that  business leaders want to move on.”

 

Not all leaders “want to move on.” For example, earlier this year,

 

For context on the business ethics aspect,  this from a year ago: The Business Times “Saudi crisis: Wall Street struggle between ethics and cash”

 

All in, this nuanced examination (“no permanent friends, no permanent enemies”) for business, from a CNBC roundtable, “Squawk Box Saudi Investment Initiative Who Will Be Attending?”

 

(Five minute video but well worth it):

 

 

Is that the bottom line?

 

  “Company towns: 1880s – 1935”

 

Societies evolve. Business can – and must – adapt.

 

 

All the well-intentioned corporate responsibility bromides aside (think, “doing well by doing good”, etc.) it often just comes down to this:

 

“What’s the right thing to do?”

 

 It gets personal, individual, tapping into:

 

Conscience. Ethics. Empathy. Character. Culture. Family values. Soul.

 

Any one of these can be a tie-beaker when the choices are tough. When “shareowner and stakeholder primacies” collide. When a business leader must take a possibly controversial stand on a social issue.

 

Now comes some help: The new  Financial Times “Moral Money” weekly newsletter, reporting and analyzing “the fast-expanding world of socially responsible, sustainable finance, impact investing, environmental, social and governance ESG …” (Yes, The Financial Times).

 

In this week’s edition, “Moral Money” covers these stories:

 

“Climate firebrand puts heat on impact investors” (Greta Thunberg).

 

“Bonds start to offer more shades of green”

 

“Insulin maker Novo Nordisk walks moral tightrope”

 

 

This week, two quite different approaches to such soul- searching:

 

 

Edward W. Stack, Dick’s Sporting Goods CEO:

 

“So many people say to me, you know, ‘If we do what you want to do, it’s not going  to stop these mass shootings. And my response is: ‘You’re probably  right. It won’t. But if we do these things and it saves one life, don’t you think it’s worth it?”

 

 Adam Silver Commits to Free Speech as Chinese Companies Cut Ties with N. B. A.

 

Mr. Silver, in his role as commissioner of the well-endowed National Basketball Association, in the ongoing free-speech controversy between an executive of the N.B.A. Houston Rockets and China explaining his decision not to penalize the executive who expressed support for Hong Kong demonstrators:

 

“I’m sympathetic to our interests here and our partners that are upset. I don’t think it’s inconsistent on one hand to be sympathetic to them and at the same time stand by our [free speech] principles.

 

 Admittedly, very different circumstances. Nevertheless,these were not easy choices for Mr. Stack or Mr. Silver. Nor were any of the many other recent social-issue decisions made business leaders.

 

But ultimately, there is this:

 

Tevey in “A Fiddler’s Roof” –

“It was the worst of times, it was the best of times.”

 

Charles Dickens would probably forgive this inversion if he, too, was examining U.S. manufacturing — and, by inference, the workplace well beyond — on this 2019 Manufacturing Day.

 

First, the well known bad news.

 

 

CNN’s Matt Egan, yesterday:

 

” America’s manufacturing industry is in contraction. Business spending is soft. And now the biggest chunk of the economy, the US service sector, is growing at its weakest pace in three years…

 

“Although the service sector is still expanding, the [Institute for Supply Management] gloomy report raises concern that America’s manufacturing troubles are spilling over into the broader economy. Slammed by the trade war, US manufacturing activity dropped deeper into contraction in September, the most sluggish month for factories since June 2009.”

 

But “Manufacturing Day” may also be a time for optimism. That comes with acknowledging two kinds of work opportunities in contemporary manufacturing — “new collar” jobs on the horizon; and white collar jobs now available but unheralded. Here’s one savvy assessment from the Gray Construction blog:

 

 

“American manufacturers already face significant skills shortages and are on the pace to have two million

 unfilled manufacturing jobs by 2025 [Emphasis added]. Many of these positions require higher-skills to operate and support advanced manufacturing equipment … Automation and robotics are also becoming embedded into manufacturing processes … Such large-scale digitalization requires workers with more advanced skills – typically one or two years of post-secondary education or training. These workers represent the “new collar” workforce…

 

“Several years ago Ginni Rometty, CEO of IBM, stated  … What matters most is that these employees have relevant skills, often obtained through vocational training.

 

“More recently she has called for government, industry and educational leaders to develop innovative ways to build the white collar workforce of the future.”

 

As if in response, yesterday Google pledged to train 250,00 people for such  jobs, joining the White House “Pledge to America’s Workers” initiative to expand such training opportunities.

 

 

And this optimism on current job openings in manufacturing that exist largely under the radar:

 

Yesterday, Stony Brook University (New York) hosted a conference to debunk “the false perception that all factory positions involve standing behind a machine for eight hours a day,” according to a report in Newsday  :

 

“While the manufacturing sector is best known for blue-collar production jobs, it also offers white-collar jobs in research and development, logistics, quality control, purchasing, sales and marketing … And manufacturing jobs come with higher salaries, on average, and better health insurance and retirement plans than other sectors of the economy.”

 

A panelist: “You can enter manufacturing at any point in your educational journey – directly after high school, associate degree, bachelor’s degree or doctorate – and there’s opportunity to work your way up.”

 

All in, neither the worst of times nor the best of times. Simply our times.

Even as political earthquakes begin to rumble this week, it seems relevant and worth asking: Is the capital-labor power dynamic beginning to reverse and lean a bit toward workers?

 

Strikes, protests and other workplace confrontations, for old and new reasons –  with both traditional  and new types of employees –  are proliferating. The  range of the new-age labor spectrum was illustrated this week by the General Motors strike and the Amazon employee-demanded decision to become carbon neutral by 2040.

 

First, the economic propellants:

 

 

 This week the U.S. Supreme Court  may have delivered refugee asylum a knockout blow when it affirmed a new Trump Administration initiative severely limiting entry of Central American migrants.

 

The initiative, reversing decades of U.S. policy, requires that the refugees, even when fleeing violence and poverty, must first be denied asylum in another country. It is being challenged in lower courts, but it became  effective immediately.  

 

 

The new U.S. policy is the latest Administration executive order issued under its “national emergency” designation of immigration at the southern border. It seeks to achieve what the delayed, and perhaps doomed, controversial proposed border wall — which, since Mexico won’t pay for it — is being partly financed by arbitrary transfer of Department of Defense and FEMA funds for projects previously approved by Congress. 

 

The American Civil Liberties Union, challenging this week’s U.S. limit to asylum: “The current ban would eliminate virtually all asylum at the southern border, even at ports of entry …The court should not permit such a tectonic change to U.S. asylum law.”

 

Sadly, the Trump U.S. border policies, fueled by nativist populism, add to the  world’s tragic and seemingly unsolvable refugee problems. The U.S. is by no means the only country withdrawing refugee asylum opportunities.

 

For example, in “Australia’s Shame”  Nobel Laureate author J.M. Coetzee condemns that country’s current refugee policies and laments the prospects for the world’s refugees:

 

“What is more of a mystery is why so many Australians wish refugees ill … Cross-border migration is a fact of life in today’s world and numbers will only increase as the earth heats up, former pastures turn to desert, and islands are swallowed by the sea. There are messy but humane — or at least human — ways of reacting to this world historical phenomenon, just as there are neat but inhuman ways.”

 

To be fair, the scale of the refugee phenomenon is astonishing. Global migration tripled between 1960 and 2017, rising from 77 million to 258 million, according to the Migration Institute. 

 

The institute has outlined five options for addressing the extremely troubling and complex challenge at the U.S.  Mexican border — options with potential for adaptation at other international borders under duress: rethinking asylum; strengthening immigration institutions; developing a regional approach to addressing smuggling networks; creating legal pathways; and investing in development and public safety in the very troubled countries generating refugees flows.

 

The institute especially supports the “investing in development” recommendation.

 

That, of course, raises a host of other questions concerning  global “interconnectedness” in the foreseeable future.

 

 

Consider:

 

“This could be the start of something big.” *

 

Did 181 Business Roundtable CEOs “turn the corner” yesterday, upping their commitments to corporate social responsibility when they apparently elevated their stakeholders  to equality with shareholders?

 

Among the companies’ new “Statement on the Purpose of a Corporation” vows:

 

. “protect the environment by embracing sustainable practices across our businesses”.

. “foster diversity and inclusion, dignity and respect”.

 

New York Times columnist Andrew Ross Serkin is not completely convinced: “How Shareholder Democracy Failed the People“:

 

“Some will doubt the sincerity of these business leaders words, and it remains an open question whether their companies will be held accountable — and by whom … Americans mistrust companies to such an extent that the very idea of capitalism is now being debated on the political stage.”

 

Many folks will be surprised to learn that the “Purpose” statement — significant,  if followed by meaningful policy and performance changes (see below) – is actually a “turn of the wheel” in the evolution of capitalism. Shareholder primacy — profits — were not always at the core of corporate priorities.

 

Ross Serkin: “For nearly 50 years [from 1932 onward] corporations, for the most part, were run for all stakeholders. It was a time defined by organized labor, corporate pension program, gold-watch retirements and charitable gifts from companies that invested in their communities and the kind of research that promised future growth.”

 

That began to change, Ross Serkin says, in the 1970s with the rise of what he calls “shareholder democracy” – actually, shareholder interests being dominant – and has prevailed since then.

 

The genius of the current corporate social responsibility (nee “sustainable development”, “purpose” etc.) movement is company recognition that it is now “good business” to marry traditional business objectives (think, primarily profit) with contemporary social-progress objectives. And many of these companies now recognize that this coalescence can often actually enhance profits as they pursue their legal, moral and ethical obligation to deliver return on investment. Moreover, younger “publics” — employees, customers and, yes, investors — have shown significant support for this integration.

 

Arguably, the watershed event for this business model occurred in 2001 with the establishment of the United Nations Global Compact in which companies pledge to operate in accord with ten basic principles relating to human rights. labor, environment and anti-corruption. Now, UNGC, with its 9800 company signatories (and 4,000 affiliated organizations — governments, non-government organizations, academic institutions and civic groups) in 170 countries, is championing the achievement of the U.N. Sustainable  Development Goals 2030. Re-doubling SDG operations would be consistent with the “Purpose” document.

 

Still, some question the Business Roundtable companies’ “Purpose” commitment. A number of big companies didn’t sign up. And the “Purpose” motivation has been questioned – although reputation management is a viable basis for such decisions. But the ultimate evaluation will take place in the months and years ahead as the companies evolve strategies and tactics to bring the commitments to life.

 

One of the of the major disconnects they must face is the perceived inconsistency that exists between  CSR and sustainable development commitments  —  substantial as they may be — and the vast business lobbying at the local, state and national levels.

 

Sorkin: “For whatever progress may have been made Monday, it is hardly clear the debate is over. In fact, the fight for corporate identity is just beginning.”  

 

 

___________________________________________

* Popular romantic song, 1950s (trust me)

Walmart has been thrust to the epicenter of the roiling U.S. gun violence debate.

In keeping with the old adage, “to whom much is given, much will be required” (Luke 12:48), the company is being challenged to champion a business-wide initiative to take a significant stand in this epic national debate.

The Gods of Capitalism have blessed the company as it has become one of the greatest retail behemoths in history. Along the way, not incidentally, Walmart has earned an enviable reputation in corporate social responsibility.

Now, with Congress unlikely to re-convene soon, it falls to the private sector to weigh a new dimension of the “Brands-Taking-Stands” aspect of the CSR evolution.

It’s not as if C.E.O. s and companies have been inactive on the guns control issue. Famously, Ed Stack, Dick’s Sporting Goods C.E.O. ,was an early mover last year when he decided to stop gun sales at the company stores. And Walmart itself has taken steps in that direction.

But this is different. This would be Walmart applying its economic leverage systemically with business partners, not only with gun manufactures but also with the banks, credit card companies and big tech companies with which it interacts.

That is the challenge presented by New York Times business columnist Andrew Ross Sorkin in,

“Dear Walmart C.E.O.: You have Power To Curb Gun violence. Do It.” :

“You, singularly, have a greater chance to use your role as the chief executive of the country’s largest retailer and largest seller of guns – with greater sway over the entire ecosystem that controls gun sales in the United States than any other individual in corporate America …

“Over the past decade, Walmart has spent tens of millions on lobbying efforts in Washington, much of it to push for lower corporate taxes, which have juiced your profits. You’ve also lobbied to combat the opioid epidemic and to support veterans.

It would be easy for you, and other chief executives, to argue that controlling the gun violence epidemic is Washington’s responsibility, not yours. But in an era of epic political dysfunction, corporate executives have a chance to fill that leadership vacuum.”

 Mr. Sorkin concluded  with this plaintive plea:

 “The 22 people who died in your store this past weekend deserve more than words of consolation to their families. They deserve a leader who is going to work to make sure it never happens again.”