It’s official. Nancy Pelosi is going to be the next Speaker of the House and Harry Reid will be the next Majority Leader of the Senate. Should the Left consolidate its power past 2008, the future of tax cuts and pro-growth legislation would be in doubt and economic growth would suffer as a result. There is, however, another less obvious implication from the election that may significantly affect the economic well-being of our country: the Democratic takeover of the Congress hands the political levers of power to people who support the efforts of the Corporate Social Responsibility (CSR) activists.
The CSR movement contends that the responsibility of a corporation is to serve the interests of broader society. It is not enough for a company simply to produce goods that customers want to purchase and in so doing provide profits to its shareholders. Now, in addition to these roles, CSR activists want corporations to perform public service programs; such as alleviate poverty, promote overall economic development, and safeguard the environment. Obviously, such activities blur the line between private and public activities. It creates a corporate conglomerate that combines the private business activities of a for-profit firm with the public government activity of a government legislative and regulatory body.
In the business world, well performing companies are focused. On Wall Street when two separate and unrelated companies are combined into a conglomerate, the performance of both companies typically worsens. This is why Wall Street generally dislikes conglomerates. It is also why CSR is such a dangerous trend. Left unchecked, the policies and activities that CSR proponents suggest will continually worsen the health of those corporations that succumbed to its policies; the other part of the CSR conglomerate (the social good) suffers in tandem.
With the Democratic takeover of Congress (powered by the far Left) not only do the aforementioned issues still exist; they are amplified. To fully appreciate why, a little background on the genesis of the CSR movement is necessary. In his 2004 book, Biz-War and the Out-of-Power Elite: The Progressive-Left Attack on the Corporation, Jarol B. Manheim describes the relationship between the Progressive-Left’s loss of political power, culminating in the Republican Revolution of 1994, and the rise of CSR. Manheim goes through painstaking detail to illustrate the Progressive-Left’s plan of capturing the money, power and influence of corporations. The plan involves painting Big Business and capitalism as an enemy of the public. Once vilified, the next stage is for the CSR advocates to offer corporations the one and only redemption: buy credibility through the implementation of CSR programs that redeem the corporate evil-doers by promoting the CSR advocates’ preferred social goals.Once companies have accepted the CSR paradigm, they are on the slippery slope of the Progressive-Left (now CSR advocates) agenda. Having won the hearts and minds of corporate executives through coercion, corporations become an instrument to implement the Progressive-Left’s agenda. Despised Big Businesses have become a Trojan-Horse from which the Progressive-Left can implement the policies, which voters rejected at the ballot box, one company at a time.
The CSR advocates have been reasonably successful implementing this plan as more and more companies implement CSR programs and monitor their “Triple Bottom Lines”. The Triple Bottom Line being a construct created by the CSR advocates themselves that forces companies to report on their success at implementing the Progressive Left’s social programs in addition to their financial goals. As discussed in previous columns, these successes are weakening the economic vitality of our economy. But, now things are worse.
A Democratic Congress (with a far Left leadership) creates a natural ally for the CSR advocates; and vice versa. For the CSR advocates, they now have a Congress with a friendly ear toward implementing regulations with the stated purpose of controlling capitalism to ensure that it “works for the benefit of all people”. The legislators are consequently all too happy to codify the behaviors and activities the CSR advocates have been “persuading” companies to implement for years. For the Democratic Congress, the CSR advocates, and especially the corporations that have been brow-beaten into advocating the CSR policies, provide important political cover for increasing the regulatory burdens on industry. As opposed to having to explain to their constituents why they sided with anti-business activists, the Democratic Congress can “truthfully” explain that a broad coalition of corporate and public interest groups illustrated why the higher regulations are good for our country.
A Congress that is philosophically inclined to side with the positions of CSR advocates raises the stakes in the battle for the corporate boardroom. How advocates of free-markets and limited government respond to this changed landscape will help shape the future vitality of our economy.