Thoughts about Making Capitalism Kinder:

On June 25, 2020, the New York Times published an op-ed by Darren Walker, president of the Ford Foundation, titled “Are You Willing to Give Up Your Privilege? Philanthropy Alone Won’t Save the American Dream.” Walker criticizes his peers leading billion dollar companies for creating mostly low-paying jobs, not paying taxes, and opposing welfare programs, despite their professed desire to increase economic opportunity, and argued that business leaders should commit to making capitalism a kinder system that would once again help people move up the income ladder, as it helped Walker himself. The piece echoes sentiments put forth by Mark Benioff, CEO of Salesforce back in October in his own New York Times op-ed, businesses should follow Salesforce’s lead with firm-level pay initiatives and increased philanthropy to make capitalism great again. These are laudable sentiments for corporate leaders and the heads of foundations that work with them to broadcast in the New York Times Op-Ed section. Unfortunately, there is no reason we should trust individual firms or CEOs to lead the way on reversing the inequity endemic to American capitalism.

Recent reporting on the economic consequences of the pandemic have emphasized stark failures of capitalism. Miles long lines of cars wait for food pantry aid, while farmers slaughter hogs and bury tons of root vegetables. Employers demanded workers in essential industries like meat processing risk exposure to the coronavirus, while they could not adequately distance, or reliably get medical care in the event of exposure. Before the pandemic, those workers were subject to UTIS from lack of access to breaks. Prisons, a source of labor for many companies globally, remain a major source of infection and site of outbreaks across the country. The mechanism of aid provision in the US – expanded provision of unemployment benefits – has left unemployed workers at the mercy of overtaxed and underfunded systems, while banks and landlords have been trusted to use their own discretion in determining whose obligations to defer or waive in the moment. Walker is right to call out his peers for their complicity at worst, and silence at best, but imagining that CEOs will undertake these changes without pressure from activists or the government borders requires superhuman optimism.

Firms affiliated with CEOs Walker praised in his piece illustrate this point. Benioff argued that firms should stop evading taxation, but in 2018, Salesforce had a market capitalization of $160 billion, and paid no federal tax in 2019. Ursula Burns, board member of Uber, has spoken about her personal fears of police racism, but Uber has helped destroy the taxi industry, hollowed out public transit usage in cities, and doggedly lobbies to classify its workers as contractors to avoid paying them overtime and health insurance. Paul Polman, former CEO of Unilever, may have lobbied for corporate support of the Paris Climate Accords, but Unilever was one of the largest global plastics polluters in 2019, and paid an undisclosed amount in 2016 to 591 former workers at a factory in India for getting caught knowingly exposing them to mercury in 2001. Though Unilever acknowledges that it only uses prison labor in a rehabilitative context, wages for incarcerated workers are below minimum wages, let alone market standards. Business leaders using their celebrity for political ends may have good intentions, but company-level policy cannot counteract how their businesses entrench inequity.

Walker and Benioff both lauded the Business Roundtable, an organization created in 1972 to improve the public image of business and lobby against governmental regulation, for an August statement arguing that corporations should maximize ‘stakeholder interests’ of employees, communities, and citizenry, rather than focusing solely on shareholders. Unfortunately, the Roundtable has done much to systemically undermine the social safety net for American workers through its opposition to taxes, corporate regulations, and expenditure on public works. The statement had no specific recommendations for its members. Meanwhile, more than three quarters of the Roundtable’s members’ (and their family members’) 2019 political contributions went to Republicans. Until members acknowledge that elevating stakeholder interests will likely reduce their profits, and back it up with commitments to pay workers more, bring wealth holdings out of international tax shelters, or to promote higher corporate tax rates, the public should assume that corporate leaders are using this as a PR exercise rather than signaling a willingness to change.

Walker is right to ask his peers to stop relying on philanthropy, but much of the outreach by the CEOs he praises amounts to charity. Benioff cited Salesforce’s philanthropic contributions of almost $300 million by 2019, while Ray Dalio, Bridgewater Associates founder, joined Bill Gates and Warren Buffett’s Giving Pledge in 2011, promising to give more than half of his then almost $90 billion over his lifetime.  Charitable tax deductions are regressive. Gifts to build new university boat houses and to purchase more meals for the homeless are rewarded equally by the US tax code, and tax write-offs for charity generate billions of losses in tax revenue yearly. Most organizations give only the annual 5% required to maintain their tax-exempt status, even as their endowments have grown considerably during sustained stock market rallies. Philanthropic organizations are unaccountable to voters or customers and nontransparent; private interests can withhold funds if criticized; and organizations from the Carnegies’ to the Sacklers’ have used their philanthropy to shield themselves and their corporations from public scrutiny. Titles like 2019’s “Silicon Valley Billionaires Keep Getting Richer No Matter How Much Money They Give Away,” should give readers pause. Private largesse will not improve the American income distribution, no matter the givers’ intentions. Concrete demands for peers like Benioff and Dalio would signal more willingness to attack systemic inequity.

The urge to make capitalism work better for the world at large is noble, and has a long history, from Industrial Democracy pre-WW1, to John Maynard Keynes, to Elizabeth Warren’s argument that “Capitalism without rules is theft.” A quick comparison between Benioff and Walker’s proposals with Warren’s campaign, however, reveals a gulf in specificity and scope. Warren’s campaign proposals included protecting rights to join unions, elimination of student debt up to $50,000, and a wealth tax that outraged billionaire Leon Cooperman enough to profanely accuse her of wanting to destroy the American Dream. Jamie Dimon and Lloyd Blankfein argued much the same. Corporate leaders waxing nostalgic for the shared growth of the post-war period should support measures that hearken back to the economic conditions of the post-war period including greater union membership, rising wages, and higher tax bills. Instead, high profile CEOs like Blankfein, a registered Democrat, argued that he would have an easier time voting for Trump than then-candidate Bernie Sanders on the basis of his economic platform, which was advised by the same people working on Warren’s. High-profile CEO endorsement of politicians like Jamaal Bowman, Mondaire Jones, Alexandria Ocasio-Cortez, and other Justice Democrats associated candidates would go much farther in signaling commitment to change, and making way for the sorts of policy reversals that Walker recommends. Using personal wealth to claim authority while calling for change, without promises for how elite leadership will change the system, is a hollow exercise. Racial inequality and environmental injustice owes much to the power corporate institutions wield in politics, and Walker is right to criticize corporate America for exacerbating these problems. But the actions of those he argues understand the problem – company-level policies and the philanthropy –fall short of the goals he states elsewhere in the piece. Billionaires serious about change should create specific and multi-level initiatives; lobby publicly and privately for those changes; and convince fellow billionaires to join. They should begin by paying their workers more, and by paying their taxes. In the meantime, activists and progressive Democrats should continue leading the charge for radical economic and political change.