The COVID-19 crisis has changed American business, probably forever because some politicians are using it as an excuse to push for changes that will have a major impact on how corporations operate.
How business responds to this will determine the future of American commerce for years. Important business leaders like The Blackstone Group’s Larry Fink who jumped on board this crusade are pushing companies to expand their mission beyond maximizing value for shareholders into things that are on the progressive’s political wish list.
Whether Fink and others are trying to co-opt the greens and social and economic justice warriors (thereby controlling them) or are sincere in their beliefs is not clear. What they’re advocating for drifts harmfully away from what the American system stands towards what progressives promote as they seek to control the business sector and move to a centrally planned economy.
This can’t be allowed to happen. It would make America more like Venezuela as it is now or East Germany as it once was than the country we are today – even if unemployment, thanks to the coronavirus, has risen to a level not seen since The Great Depression and blue-chip companies like Exxon/Mobil have seen their stock price cut almost in half over the last six months.
If the American economy is to survive, let alone thrive, we need corporate leaders to step up in defense of the free market. They need to eschew the insider deals and crony capitalism that have caused many Americans, especially the young, to lose faith in what, as Churchill might have quipped, is the worst of all possible economic systems except for all the others.
There are heroes out there like Tesla/Space X’s Elon Musk who recently stood up to Gov. Gavin Newsome and other officials who would not permit his California manufacturing plant to reopen so his people could get off the dole and back to work. To Musk’s credit, even though his empire is built on questionable tax breaks, credits, and subsidies, he pushed back where other business leaders have sheepishly complied. He announced he’d be taking his company and the jobs he created to Texas or Nevada where he was sure they would be welcomed. Faced with that, Newsome and company seem to have backed down.
For every hero, though, there are goats like Alan Armstrong, the CEO of Williams Co., an energy pipeline company.According to recentallegations made in a Delaware Court, he secretly worked to undermine a 2016 board-approved merger between his firm and Energy Transfer, a Texas-based pipeline company, that would have paid shareholders a significant premium over the then-market value of their shares.
Nearly four years since it fell through, Williams continues to seek more than a billion dollars in breakup fees, despite Armstrong’s recently alleged involvement in the deal’s demise. According to court documents, he even worked behind the scenes with a former Williams senior vice president by using a personal g-mail account and leaking inside information to assist a lawsuit filed to block the proposed and ultimately unconsummated merger. As a result, half of his board of directors resigned days after the deal was called off, citing a lack of confidence in his ability to lead the company.
The reason he acted as he did, the court was told, was out of a desire to maintain his position as CEO even if his continued leadership of the company was detrimental to shareholder interests.
Actions like these in the corporate community have regular Americans – more and more of whom join the investor class every day through their 401Ks, Roth IRAs, and by trading stocks online – wondering if their money is safe or if they’re just feeding corporate cats growing fat off their investments.
Warren Buffet, one of the country’s most respected financial leaders, argued in a recent interview that not enough attention is paid to corporate leadership and governance. “Almost all of the directors I have met over the years have been decent, likable and intelligent,” he said. “Nevertheless, many of these good souls are people whom I would never have chosen to handle money or business matters. It simply was not their game.”
If the CEOs and boards of America’s companies don’t step up to restore public confidence in who they are and what they do, then the politicians will – as House Speaker Nancy Pelosi tried to do in the first coronavirus relief bill. Other than the privileged few that would have been picked to serve on boards if her proposed amendment requiring diversity on corporate boards had been adopted, it would have been bad for business and everyone else. The clock is running.
Peter Roff is a senior fellow at Frontiers of Freedom and a former U.S. News and World Report contributing editor who appears regularly as a commentator on the One America News network.
He can be reached by email atRoffColumns@GMAIL.com. Follow him on Twitter @PeterRoff.