01 June 2007

The Policy That Matters Most

The policy that will most impact the average person is business policy, not political policy.

Federal policy matters. So does state and local policy. Education policy matters more than most people seem to appreciate, but even that does not seem to have as immediate and as real an impact as the policies of heads of business.

It's worth remembering that when Wal-Mart founder Sam Walton first came to national prominence, his story had some simple themes. One, he'd gotten rich by cuttings costs and prices. He not only offered his customers bargains, but he traveled from store to store in an old pickup. Two, he made his employees partners in the creation of wealth. Even people working jobs like cashier were making enough money to send children to college, to buy vacation homes, or to retire early.

Some leaders are inspired by a variable sum ideal. They believe that they can create wealth that didn't previously exist. Other leaders are inspired by a zero sum ideal. They believe that gains and losses add up to zero - whatever I get comes at your expense and what you get comes at my expense. At best, these leaders take from competitors; at worst, they take from their own employees, firing employees and / or reducing wages and benefits in order to drive up profits and their own pay.

Some corporate leaders have created wealth and brought along a group with them. People like Bill Gates of Microsoft or Robert Beyster of SAIC not only founded companies that made them wealthy: they made thousands of employees millionaires as well.

Others have merely shifted wealth. 'Chainsaw Al’ Dunlap, in less than two years as head of Scott Paper, fired 11,000 employees (one-third of the workforce), slashed the research budget, moved the world headquarters from Philadelphia (where it was founded in 1879) to Boca Raton, Florida (where he has a $1.8 million house), eliminated all corporate gifts to charities, and barred managers from being involved in community affairs. Then he sold what was left of the company to Kimberly-Clark, which promptly announced it would cut 8,000 of the combined companies’ workforce and close Scott’s new headquarters in Boca Raton. For his labors, Dunlap has just walked off with a cool $100 million. ” [Robert Reich, Locked in the Cabinet (New York: Alfred A. Knopf, 1997) 294.]

The policy proposals and consequences of government officials receive enormous scrutiny. By contrast, the policy, philosophy, and abilities of corporate executives seem to escape notice from most of the media. And yet, just as the choices of a government leader can determine whether a person lives in the midst of war or peace, the choices of a corporate leader can determine whether a person lives comfortably or in a state of constant financial stress. The difference between working for a company where, in her 40's, the stock price raises by 500% or where, in her 40's, an employee is forced to change careers is the difference between affluence and poverty.

More could be done to highlight the importance of corporate policy. The media could do more to shame and praise corporate leaders. Mutual funds could also do more to publicize the consequences of poor policy choices, and use their massive investment power to influence policies. Politicians, too, could bravely criticize and praise corporate leaders. Finally, savvy corporations will themselves begin to create conditions akin to a free press within their walls, working towards the adoption of policies that make everyone wealthier - customers, employees, suppliers, and yes, even the corporate leaders.

Corporate policy will determine things as varied as the quality of our goods and services, environment, and careers. It deserves much greater scrutiny and attention.

3 comments:

exskindiver said...

ron,
i have to confess...
i have a buzz going...
i didn't even attempt.

will you watch my video?

heeheehee...

ThomasLB said...

I don't think there's any way to wrestle control back. The majority of stock isn't owned by individuals any more, it's owned by other corporations.

Have you read this article? The big guys just laugh when the little guys complain. They know they're untouchable.

Chrlane said...

And isn't this what I have been saying all along?

So how do you justify some businesses starting out on the right track, and then morphing into a conglomerate nightmare?

Thomas has a point there, too. It has become a tangled infrastructure, with the stupid people stifling out any decisions made buy those with a conscience. It's the main problem I have with a democratic system not properly channeled by ethical policy. The asses of the World tend to have the strongest voice, as the stupid will always predominate.

Politicians are following ages old customs which dictate that you do not rock the boat at any cost. They are panderers, after all, especially when dealing with an uneducated public.

Which brings us back to education. No matter where we take the discussion, it always comes back to education, which is, ultimately, the foundation, and reason why I chose it as my main career focus.