It’s an excerpt from “Go Woke, Go Broke: The Inside Story of the Radicalization of Corporate America,” which is scheduled for release Tuesday.
The corporate awakening is infuriating, exhausting to check and understand, but it was also inevitable if you study the zeitgeist of corporate America over the past 50 years. Like all revolutions, the Woke revolution in the office started small: Woke scholars wrote papers. As for economic benefits, seminars spread those ideals in places like the World Economic Forum in Davos, Switzerland. Increasingly, companies have begun to hold internal seminars to talk about sensitive topics, adding “social responsibility” or the need for corporations to set aside shareholder considerations. to address issues such as the environment and ensure that your workforce reflects society. Environmental, social and governance facets are increasingly integrated into corporations’ balance sheets.
Further fueling the corporate awakening, a new generation of business leaders has discovered their position in the ruling class. They were men and a few women, many of whom attended elite schools that instilled in them progressivism even as they sought jobs that would pay them tens of millions of dollars a year thanks to the economic boom created by Ronald Reagan.
This new generation began to deploy its strengths in a circular table called the Business Roundtable, paving the way for the wonderful awakening of corporations to come. The Roundtable is the nation’s largest lobby organization for U. S. businesses. It is like an exclusive country club, yet to be achieved. inside, you have to be a CEO. The leaders include 181 of the world’s toughest leaders, others like Jamie Dimon, the CEO of megabank JP Morgan, and some members of this new, more progressive generation.
On August 19, 2019, Dimon, as head of the Business Roundtable, did something that a few years earlier would have seemed unlikely, even sacrilegious. He declared “shareholder capitalism” dead and canceled the wonderful economist Milton Friedguy, the guy who created what history shows to be the most effective form of corporate governance.
“Since 1978, the Business Roundtable has periodically published corporate governance principles,” the Roundtable implored its members. “Every edition of the document published since 1997 has supported the principles of shareholder primacy: that corporations exist primarily to serve shareholders. With today’s announcement, the new replaces the past and establishes a popular fashion for corporate responsibility.
Dimon continued: “While each of our corporations fulfills its own social purpose, we share a core commitment to all of our stakeholders. We are committed to. . . providing value to each of them, for the long-term good fortune of our companies, our communities and our country.
According to Dimon, shareholder capitalism and Friedman were being replaced by something noble and modern. Also, absolutely awake. If you need to know why each and every company today turns out to be an extension of the Democratic National Committee – committed to far-left green executive orders, to ESG that destroys oil production and creates inflation, to DEI that translates through quotas–, you We can hint at much of this in stakeholder capitalism as a defining principle of corporate governance.
Stakeholder capitalism means that corporations not only make money, but have to take a left-wing political stance for reasons that will become clear. His adherence to progressivism is global: hiring, firing, investment and even advertising. In stakeholder capitalism, the company does not run classified ads to sell products, but rather advertises to sell woke politics. That same year, Dimon got rid of Friedguy, and at the height of the #MeToo era, which featured its own share of hysteria, a shaving company called Gillette spent millions of dollars on classified ads to alert the world that each and every one of the men alive possess the Harvey Weinstein gene for toxic masculinity. Men can do better, society wanted other people to know: its classified ads featured actors representing various bureaucracies of crude, false masculinity, because, they said, “boys will be boys. “
Participatory capitalism at its finest! Dimon and company want us to be distinctive while we shave, because a male oppressor is born every minute. Of course, they wouldn’t say it exactly like that. To them, stakeholder capitalism is refreshing and fair. Bold and loving. Yet when I ask CEOs or economics academics to describe it, I always get a different answer. This is why awakened forces have discovered that it is so easy to hijack it as a tool of postmodern and progressive groupthink, as you will soon discover. Shareholder capitalism, on the other hand, may seem old-fashioned because its strength lies in its simplicity and because it is difficult for any activist to attack. CEOs had only one boss: the shareholder. Do something smart for the shareholder, put other people to work, make money for America, pay your taxes and the rest will take care of itself. The legislation will require that each and every person have an equivalent opportunity. This worked for years until Dimon and the company started betting on what Uncle Milton created.
A little history about the guy who started the stock capitalism movement: Milton Friedguy specialized in the field of econometrics, or the use of complex mathematical formulas to examine inflation, consumption, and how to grow GDP. He was one of the leaders of the Chicago School of Economics that rejected the Keynesian consensus on taxation and spending and championed the principles of the flexible market, adding tax and cash cuts to achieve economic goals such as full employment.
He also promulgated the theory that CEOs were trained to be smart at safe express things, such as building a business and serving shareholders, and thus sticking to them. Let’s leave things difficult to the political class. Unlike politicians, CEOs were not elected to make the global a better place. If they tried, they would ruin it.
During his many decades in public view, Uncle Milton accomplished something rare in economics: he was a Renaissance man, a writer, and an intellectual audience who spoke openly about cultural issues and advised presidents and prime ministers on public policy. He won the Nobel Prize in Economics in 1976 for his research on value stability. It contributed to the economic recovery of the Reagan years.
The politicization of directors’ forums, the fact that CEOs interact for political reasons, as he saw since the 1970s, infuriated him, because Friedman also considered it morally wrong for the CEO to take his eyes off the shareholder ball. . According to him: “There is one and only one social duty of the company: to use its resources and interact in activities aimed at increasing its profits, as long as it remains within the rules of the game, that is, it has interactions in open and open activities. loose party without deception or fraud.
Friedman, one of the most important economists in history, died in 2006, but without leaving his mark, until the Business Roundtable came along and tried to turn him into an economic asterisk. In the 1980s and 1990s and into the new millennium, when Friedman’s influence reigned supreme, the United States experienced an economic recovery from the malaise of the 1970s. Technological revolutions created wealth like never before. Acting smart meant making money, rewarding shareholders for their capital investments, and using that capital to expand and hire people, offering them decent salaries and benefits.
What has participatory capitalism brought us? ESG everywhere. Quota hiring, ultra-powerful DEI advocates within companies, and, if you haven’t heard already, transgender influencers in beer advertising and comfortable men’s swimsuits transitioning to women at the Target store, Goldman Sachs’ pronoun consultant and former Disney CEO, Bob Chapek, uses corporations. Cash to replace a Florida law that prohibits sex teaching to young children.
I found it strange that Dimon, someone I know well and admire, has put this bet at the center of Friedman’s shareholder capitalism. The Jamie Dimon I know is a centrist politician. He is also a long-time senior executive who worked at Harvard Business. He teaches to help Sandy Weill, a legendary bank operator, build another megabank, Citigroup. Operationally, he is one of the greatest CEOs of all time, having led JP Morgan through the 2008 currency crisis, when other primary banks needed federal help. , or the company would have become insolvent.
It achieved this by doing a lot of artistic destruction instead of locating each and every path to accommodate a diverse workforce. He spent his time buying up smaller banks and brokerages, shrinking them, and making sure everything worked together for shareholders. Dimon carried out several major layoffs during his tenure, which were not favorable to stakeholders.
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At least before waking up, Dimon identified that corporations struggling to drive down prices perish when their products become obsolete, putting everyone out of work. Henry Ford, in the mass production of automobiles, put buggy whip brands out of work, yet those displaced personnel were given well-paying jobs at Ford plants, as well as at GM and Chrysler. The medium and ordinary categories have an efficient means of transport.
Now that Dimon has woken up, he and the other capitalists seem oblivious to what sets us apart from the rest of the world: the once-hyper-competitive, great American economy. Productivity, the breast milk of American prosperity, has been at a standstill since 2005. Is it a coincidence that this is the moment when corporate America began to wake up?What’s undeniable is that what Friedman railed against light compared to what’s happening today in corporate boardrooms, driven at least in part through Jamie Dimon. And it pains me to say that.