Tuesday, August 22, 2017

The Political Limitations of the Private Sector

 Kenneth Frazier, CEO, Merck; Brian Krzanich, CEO, Intel; Kevin Plank, CEO, Under Armour
resigned from Pres. Trump's Manufacturing Council in protest.

Recent news reports about Silicon Valley mega-corporations such as Pay Pal, Google, Facebook and Twitter banning conservatives from their services should give pause to GOP "thought leaders" who have argued that privatization is a panacea.

In fact, in the Trump Era, the time has come for a change of course by those fighting Political Correctness, to recognize that "a government of the people, by the people, and for the people" cannot be permitted to fall under the control of one political party indefinitely--and that GOP policies which enabled Democratic hegemony over the "permanent government" may have contributed to the current crisis of legitimacy.

If 50% of the population is not represented in the government workforce, then it cannot be said to be a representative government. Indeed, it is by definition unrepresentative--no matter that the elected officials sitting on top of the pyramid may differ. When Democratic Party civil servants openly announce their intention to "resist," then a constitutional crisis is inevitable.

Quite simply, no country can afford to have a political party which has been defeated at the ballot box in a position to determine the allocation of government goods and services to its opponents. It is not only undemocratic, it is a recipe for political corruption, chaos and abuses of the highest order.

However, in order to effectively combat this dangerous situation, the GOP must abandon its fetishistic commitment to "privatization" as the sole tool in their toolkit to deal with government issues.

It is quite clear that the Democratic party has corrupted a willing private sector to the point where American businesses now are more than happy to sacrifice markets, customers, and profits for Political Correctness--whether Merck, Intel, UnderArmour, Target, Apple, Google, Facebook, or Camping World, or dozens of others. 

This represents a fundamental and problematic change in prior business norms.

In the recent past--I taught in a business school for some 15 years--it was axiomatic that businesses should steer clear of politics to the maximum extent possible.

While individual business people were free to be political in their private lives, companies should try avoid political controversy--on the understanding that large numbers of customers disagreed about politics, so why risk losing sales?

However, this prior consensus obviously no longer applies.

Today, companies seemingly go out of their way to adopt controversial positions which alienate and even insult considerable segments of their customer base, with ostentatious "grandstanding" such as Merck's resignation from the President's Manufacturing Council, or Apple's $1 million donation to the SPLC. 

One should note that Steve Jobs did not believe in making any charitable donations, so Tim Cook's action is in direct contradiction to the business legacy of the company's founder, which I discussed in Corporate Social Responsibility and Its Discontents: Contradictions in ISO 26000: 2010 (August 15, 2014).

 1.   Steve Jobs & Apple—an anti-­‐CSR CEO of an anti-­‐CSR company. 

Walter Isaacson’s magisterial biography of Steve Jobs (2011) does not contain a single entry in the index under “Charity,” “CSR,” “Corporate Social Responsibility,” “Social,” or “Responsibility.” This is not surprising. Jobs did not believe in spending company money on charity. He was so Scrooge-­like that he did not pay dividends to stockholders. Job’s control-­freak style of management at Apple, and what Isaacson characterizes as his “nasty” and “mean” personality, enabled him take the company from one-­twentieth the value of Microsoft in 2000, to parity in 2010, to being worth 70% more than Microsoft in 2011—a year in which Mac’s market share grew by 28% as Microsoft’s shrank 1%. Yet no one can deny that Apple products have in fact added value to society.

Their user-­friendly, easy-­to-­use, and simple design made computing accessible to a wide range of people alienated by Microsoft’s difficult interface…and helped move computing from the corporate office to the individual home and pocket. This, in turn revived an endangered American electronics industry through the iPod, iPhone, iPad, and MacBook computers. Indeed, Isaacson called Jobs “the greatest business executive of our era, the one most certain to be remembered a century from now." 

One reason for Jobs’ success at Apple, is that rather than diverting attention and resources to CSR initiatives, Apple remained focused on its core business, and in Jobs’ own words, put “humanity into innovation.” Isaacson concluded Jobs’ focus was “to a create a company to last, not just to make money.” 

In putting his company first—above employees, customers, or society—Jobs exemplified [Milton] Friedman’s theory of the responsibility of the business executive. Did it lead to a successful business? Yes.

In other words, as Steve Jobs knew but Tim Cook does not, the proper business of business...is business.

That said, it would be remarkable if one could rely upon business to counter a determined political movement, especially as many of America's CEOs currently seem to follow the Chinese model, with the Democratic Party as the Communist Party, as explained in Bruce Dickson's Wealth into Power: The Communist Party's Embrace of China's Private Sector.

This would indicate that the traditional model that the GOP represents the private sector while the Democratic Party the public sector is in need of revision.

Indeed, with the government sector (federal, state & local) accounting for more than half of all jobs in the USA--more if one includes contracts and grants--the time has come for the Trump Administration to force pushback in the public sector.

Quite simply, the principle of representation and diversity must be expanded to promote inclusion of Republicans and Independents on the public payroll in proportion to the American population. What would that mean?

It would mean that the government workforce profile should be adjusted through goals, timetables and affirmative action programs to match Gallup survey results on political affiliation of the American public, the latest presented below:

In politics, as of today, do you consider yourself a Republican, a Democrat or an independent?

2017 Aug 2-6284128

Some things to note: (1) survey results do not match Congressional or Senate ratios, due to the systematic exclusion of independents from the political process; (2) Independents are the largest political group in the United States; (3) Pres. Trump owes his victory to Independents, many of them former Democrats; (4) the GOP does not have sufficient public support to govern without Independents--however, for the past 16 years they have been in a coalition with the Democrats instead, marginalizing the largest voting block in the country.

The explanation for this is probably simple greed. Making deals with Democrats--political opposites--allows for a roughly 50-50 split of the spoils, and permits a "coalition of the extremes against the middle" with a maximum return of investment. Were the GOP to ally with the middle-class ordinary American Independents, they would be a minority partner in the business.

This dynamic may explain establishment GOP politicians like Cong. Ryan's and Sen. McConnell's strange support for Antifa and other Democratic interests. One can assume that Pres. Trump is aware of his middle-class backing, but to share the wealth with Trump supporters, the GOP would have to become a junior partner to the more numerous Americans who support the President.

In other words, two minority parties--Democrats and the GOP--can rule over a larger population of Independents simply by horse-trading with one another and ignoring the excluded middle-class.

This could be countered by President Trump, if he manages to reduce popular support for both the establishment GOP and Democrats by 5% each in the next few years.

Such a strategy could call for running a large number of 3rd-party candidates in selected liberal districts, as well as primarying "Never Trumpers" in GOP strongholds. The goal would be to either bring the Independents into the GOP as "Trump Republicans" (like "Reagan Democrats"), making the party more representative, or laying the groundwork for a Third Party such as the one which replaced the Whigs, or Theodore Roosevelt's Bull Moose Party.

At a minimum, this means that the current GOP marriage to the private sector--especially now openly hostile corporate CEOs--must be dissolved and replaced with a marriage with the broad majority of American people, a marriage which would include government jobs as part of the pre-nup...something Pres. Trump could probably negotiate.