Corporate Responsibility

Lest you misconstrue, I am not cultivating a "Bern for Bernie," but what responsibility, if any, does have a corporation have beyond it shareholders? This is not as theoretical question as it might seem at first blush. Specifically, the C-virus pandemic has brought to light the disturbing fact that 97% of antibiotics used in the U.S. are produced in China, as is 80+% of our medical equipment. How in the world did this happen? 

It happened because large U.S. corporations focused solely on maximizing profits, totally disregarding such other considerations as national security, the effect on lives in this country if meds were cut off by a cranky Chinese Communist government, and a host of other important policy considerations. Should greed have ruled the day to the exclusion of everything else? A very interesting article published recent in Aviation Week says "no."

Capitalism has always been about "risk/reward" and author Kevin Michaels makes clear that he agrees with that. He traces the whole narrow focus solely on profits to Jack Welch at GE in the early 1980s. Welch spun off disciples into other industries like Harry Stonecipher who went to Boeing. When asked if the only thing he was interested in was making money, he replied, "You're right, I am." We all now know how that worked out at Boeing, where a culture of bean counters, very unlike the previous engineering culture, produced that magnificent machine, the 737 Max. 

The end result of the Welch approach becoming generally accepted throughout U.S. business was the hollowing out of American manufacturing, even in industries critical to our national interest and lives. Quarterly revenues became God as the focus was bumping up stock values. Michaels then makes the point that many executives now receive the lion's share of their compensation via stock options and concentrate on those quarterly figures with a laser-like focus. No conflict of interest there. 

There are some business contrarians out there and a few are mentioned. The bigger point he makes, though, is to ask whether this approach to corporate responsibility is really even in the best interests of the shareholders or is it just for a chosen few executives and some mega-rich players? It is definitely not in the national interest of this country and its citizens as a whole and it has to change. 

https://aviationweek.com/aerospace/manufacturing-supply-chain/opinion-rethinking-shareholders-first