Friday, September 13, 2019

Why Are Big Businesses' Executives So Awful Except When They're Not?

by Neil H. Buchanan

When I linked to The Washington Post's website moments ago, a bright red CNN-like banner above the name of the newspaper announced:


The linked article's sub-headline reads: "Faced with pressure to curtail suspicious opioid shipments, an alliance fought back with every weapon at its disposal."

Another day, another example of grotesque corporate greed and soullessness.  There is a reason that Big Pharma has joined Big Banks, Big Airlines and the more general Big Business as bogeymen for any American with even a mild dollop of populist sentiments.

And all of those Big institutions, in turn, have been responsible for some truly awful things, most especially including a sustained and highly successful political attack on labor unions, which led to companies underpaying workers and backing (and largely writing) laws that enable various strategies to deny benefits and so on.  Epic inequality did not come out of nowhere.

I say all of this to make clear that I do not have a soft spot in my heart for large corporations.  I am, however, interested today in the phenomenon of big businesses occasionally doing surprisingly positive and even progressive things, the most recent example having to do with guns.

Earlier this week, a group of about 150 heads of large businesses sent a letter to the Senate demanding passage of a bill to require background checks on all gun sales as well as a "strong Red Flag law that would allow courts to issue live-saving extreme risk protection orders."

Given that this will go nowhere politically, what is going on?  Is it merely a matter of companies reading public opinion polls and deciding that more than 90 percent of their customers might be right -- or at least that 90+ percent of their customers will reward the companies for seeming to agree with them about gun violence (even as the companies know that they can get away with continuing to send money to the very politicians who will block gun control measures)?

Perhaps, but there is a tiny bit of a track record of large businesses occasionally surprising the world with progressive political moves that actually have consequences.  In the twin 2003 Supreme Court affirmative action cases from Michigan (Gratz and Grutter), for example, large companies submitted a high-profile brief strongly defending affirmative action plans.  (So did various high-profile military leaders.)

Currently, four large auto companies (BMW, Ford, Honda, and VW) are defying the White House by working with California to keep strict greenhouse gas rules in place.  This is notable because the Republicans' rule had finally nationalized the degradation of auto pollution standards, as opposed to the former system in which automakers had an incentive to adopt California's tougher standard as a necessary cost to avoid the need to comply with multiple standards in different places.  Under the plan that those four companies are rejecting, it appears that it would be possible to be uniformly dirty on a national scale, removing the immediate cost incentive to go with the cleaner rules.

To be clear, the political salience of Big Everything in the business context should not lead anyone to mistakenly believe that not-Big Business is the non-evil alternative to the politically powerful behemoths.  Politicians of all stripes sing songs about the beauty of small businesses, wrongly claiming that those businesses create all the new jobs in the world and blah blah blah, but it is all hype.

The reality is that small business groups are even more likely to be politically regressive than larger groups.  The named plaintiff in the first big case against the Affordable Care Act was the National Federation of Independent Business (NFIB), which is a lobbying group that is essentially the rabidly unhinged little brother of the the U.S. Chamber of Commerce.  Both of those influence-peddling groups are, in fact, to some degree like the National Rifle Association, which is to say that they are political operations that have been taken over by extremist ideologues who often go beyond what their members actually want.  The Chamber is bad, and the NFIB is worse.  Even so, neither small businesses nor large have been worried enough about this misrepresentation actually to do something about it.

At the very least, it is interesting that some of the people who back Republicans most strongly are willing to defy Donald Trump (to take the auto pollution rule as an example) even when virtually no Republican politicians (and none in the U.S. Senate) dare to do so.

In any case, we are left with a small mystery.  Occasionally, big businesses -- which spend so much time electing Republicans who will reduce corporate taxes and free companies to harm customers, workers, and the environment -- surprise us by doing something, dare I say, responsible.  They prove that acting in one's enlightened self-interest rather than grabbing for everything all at once is still possible.

Sadly, the sample size is so small that there is no way to sort out the most plausible general explanation (if there is one, rather than a series of one-offs).  Until and unless businesses start acting more responsibly more frequently, these political equivalents of full solar eclipses will continue to be fascinating curiosities and nothing more.

1 comment:

Michael C. Dorf said...

In some industries, a small number of leaders have some exclusive technology or economy of scale that enables them to comply with a regulatory regime at lower cost than their competitors. Thus, these leading companies will favor regulation because it imposes smaller costs on them than on their competitors. That explains the phenomenon in monopolistic or oligopolistic markets but not in competitive ones. So there is something of a remaining mystery.