The Business Roundtable, one of Washington’s most storied lobby groups, wants the world to know it has just redefined “the Purpose of a Corporation.”
The CEOs of 181 of America’s largest companies all signed on to a new mission statement that rejects “Shareholder Primacy” in favor of serving a broader array of stakeholders.
We welcome this announcement, and we are happy to help the CEOs put to practice their newfound concern for the general welfare.
Jamie Dimon, CEO of JP Morgan, is chairman of the Business Roundtable. He bragged that his group’s “modernized principles reflect the business community’s unwavering commitment to continue to push for an economy that serves all Americans.”
This is great news if it means Dimon will finally drop his pursuit of protectionist regulations that block out competition.
We recall when Dimon, in 2013, explained that post-financial crisis regulations “make it more expensive and tend to make it tougher for smaller players to enter the market, effectively widening JPM’s ‘moat,’” as Business Insider characterized his remarks. Sure enough, the years after the crisis saw a dramatic consolidation in banking and a dearth in new bank formation. Less competition was good for JP Morgan’s profits, but not for banking customers. Consolidation isn’t good for the stability of the economy.
Now that Dimon has led this fight to look beyond mere profits, maybe his bank will begin lobbying to shrink its moat.
Amazon boss Jeff Bezos signed alongside Dimon. Since Bezos is now officially looking out for his customers and not just his bottom line, we look forward to his new lobbying agenda. Surely, a CEO who loves his customers won’t lobby to hike their taxes, even if that’s exactly what Amazon has been doing for years.
Since federal courts years ago forced Amazon to collect sales tax (thanks to its physical presence in so many states), Amazon has lobbied to impose that same burden on its smaller competitors. But Overstock.com customers are all surely Amazon customers, too. So we look forward to Amazon dropping its “tax-the-people” advocacy.
Dennis Muilenburg, Boeing’s CEO, has also joined in this jubilee of good feeling. We expect his attention is now focused on keeping the passengers safe in the planes he builds. But whenever he has that one figured out, we hope he’ll stop lobbying for taxpayer-backed financing.
Yes the Export-Import Bank boosts Boeing’s bottom line by making it cheaper for foreign airlines to finance their 767s, but it puts taxpayers at risk, harms U.S. airlines, and kludges up the economy by allocating financing according to politics rather than economics. A new, enlightened CEO would not lobby for a subsidy agency that mostly helps one company. Surely that is inconsistent with “an economy that serves all Americans.”
If customers are now stakeholders who deserve equal standing with shareholders, then the life insurance industry will surely change its lobbying agenda. MetLife, New York Life, and the Guardian Life Insurance Company all signed Dimon’s letter, and all three are also members of the American Council of Life Insurers. For decades, ACLI has lobbied against its members by lobbying to save the estate tax. You see, taxing inheritances creates an incentive for very wealthy people to buy superexpensive life insurance and other estate-planning products late in life. These are products that those customers would never need if not for the estate tax.
That cynical ploy — lobbying to force your customers to do business with you — is finally ending, we’re sure, now that these companies are turning over a new leaf.
Whenever companies receive special favors from the government, it comes at the expense of the broader economy. Tell a company to stop lobbying for special favors and you’re likely to get a funny look: Why shouldn’t the lobbyists seek as much profit as possible for the shareholder?
Well, no more. Bank of America, Citigroup, JP Morgan, Boeing, Dow, Pfizer, MetLife, and Amazon will stop lobbying for special favors, because they now have higher ideals than mere profit. Cronyism surely doesn’t fit into this new definition of corporate purpose.
Then again, it is possible that we are misunderstanding this letter. Maybe the CEOs just want liberty to steer these companies in the direction that pleases them most personally: Launch some woke campaign of inclusion and win celebrity praise; spend tons of money on sustainable inputs and assuage your guilt for earning so much.
That’s possible. But, well, we don’t think this nation’s businessmen could possibly be so cynical as that. After all, we’re now reliably told that they’re looking out for the public good.
