8 Chapters
Medium 9781523082681

3. The Outcome of Inequality

Georgescu, Peter Berrett-Koehler Publishers ePub

It is often claimed that there is much tolerance in the U.S. for high levels of inequality as long as that inequality arises from a fair contest in which all children, no matter how poor or rich their parents, have the same opportunities to get ahead.

—Miles Corak, Canadian economist1

WHEN KEN LANGONE AND I talk to business leaders, we encounter what to us is a strange reaction from many of them. They want to know why we’re wedging issues of inequality of opportunity and income into the business arena. They see it essentially as something outside their field: their job is to make a profit and grow the business, not to be a steward of the larger society. The fact that this country began splitting itself in two some decades ago, in part because of choices made by our public companies, hasn’t crossed their minds. That’s understandable. Based on today’s operating philosophy, it shouldn’t be their concern. They believe business leaders should simply follow what “the market” demands and succeed or fail based on nothing else. Period. We find in these conversations an insistence on a total disconnection between business and what happens in the larger social scene.

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5. Shareholder Value Gets Lean and Mean

Georgescu, Peter Berrett-Koehler Publishers ePub

IN MY TWENTIES, WHEN I was closer to the bottom than the top at Young & Rubicam, I had a front-row seat at a drama that revealed to me the heart of free-market capitalism in one of its finest moments. It became an episode much studied in the following years for the way a particular CEO acted with integrity, courage, and moral grit—and by doing so, he rescued his company’s hopes for a profitable future. In the short term, he faced an enormous hit to the firm’s market value and the possibility that his tenure at the helm would be viewed as a catastrophic failure. And yet he didn’t flinch. Short-term shareholder value was the last thing on his mind.

The corporation was Johnson & Johnson. The year was 1982. On the morning of September 29, in Elk Grove Village, Illinois, an unsuspecting mother opened a bottle of Tylenol and gave her feverish twelve-year-old daughter, Mary Kellerman, a capsule that turned out to be tainted. Mary was dead by 7 p.m.—poisoned by potassium cyanide believed to have come from the Tylenol. In rapid succession, six more people in the Chicago region died after ingesting cyanide-laced Tylenol.

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6. The Way Forward

Georgescu, Peter Berrett-Koehler Publishers ePub

IN THE MID-1990S, alone in my office, I was preparing for a major meeting with AT&T’s still newish CEO and top management. For some time, AT&T had been struggling. Separate from operational issues, a number of business initiatives that had been a slam dunk in the past just weren’t working. I got the call to meet with AT&T’s top team and explain our view of what was happening in the marketplace. It wasn’t a strange request. I’d had the same concern for some time, and several other clients were struggling with similar issues. What we needed weren’t just new tactics or new communication efforts. First we needed to grasp the fundamental changes in the marketplace—changes that created an unfamiliar discomfort, a sense of dislocation. The old tactics weren’t effective. We were at a loss.

The epiphany came with a song that popped into my head. R.E.M. had released “It’s the End of the World as We Know It,” and it concluded with the words “I feel fine.” The world felt as though it were ending, yet we felt anything but fine. Those lyrics were like a taunt. I needed to know just what it took to feel fine in a new and unrecognizable world. In the days to follow, with that song playing in my head, I figured out the new rules of engagement.

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8. The Time to Act is Now

Georgescu, Peter Berrett-Koehler Publishers ePub

FACED WITH ALL THIS, Ken and I talked about what we could and couldn’t do to raise awareness among key influencers in the private sector. For months we met with CEOs, think tanks, nonprofits, foundations, and other individuals and organizations, and we found common ground in many places. Yet we wanted to jump-start the process a bit—scale it up somehow. We needed to ring the bell—to call attention to the issue and ignite constructive conversation about it.

We decided to do an op-ed, which is easy enough to write (if you know what you need to say, and we did) but hard to get published. We made a list of potential news organizations and decided there were only four viable choices: the New York Times, the Wall Street Journal, the Washington Post, and the Financial Times. We started with the New York Times. At least I knew where to send the story. I’d been submitting pieces for months on various subjects, to no avail, but I’d always gotten a polite and brief decline. Luckily, this one caught the eye of an editor, and a long back and forth of revisions ensued until we’d polished it enough to pass muster. I was told early, a week before the publication date, that it would appear on August 9, 2015, in that Sunday’s “Week in Review.” It would go online at the Times’s digital site two days earlier. But first we faced a gauntlet: the fact-checkers.

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1. Capitalism on the Brink

Georgescu, Peter Berrett-Koehler Publishers ePub

I’M UP EARLY, READY for breakfast with an old friend, Ken Langone, who is planning to pick me up and take me to his favorite Florida haunt for a meal. I’m going to tell him how worried I am about the state of our economy. My hopes for the future depend on being able to find common ground with people like Ken: conservative, smart, and willing to recognize that our system is in trouble.

Reports regularly tell us that our economy is recovering, but I don’t believe it. Certain indicators are up, but people are living in debt, and incomes have been stagnant for decades. Meanwhile, during those same years, roughly since the mid-1970s, profits and productivity have risen, with only occasional slight dips before bouncing back to the same rate of increase from year to year. What’s happened over those years is that most people have been locked into their stations in life, while the corporations that employ them are thriving. Opportunities to improve and get ahead have withered, and though many people are getting by—while getting deeper into debt in the process—they are losing hope. What’s needed is action from people like Ken, who have the power to influence how we do business—because business, the private sector, is what generates opportunity in a free-market capitalist system. Without the creation of new opportunities within the private sector, that profit-making system itself will come apart. If wealth rises to the highest ranks of our society without circulating back into the system in the form of wages and benefits, then spending inevitably declines or collapses.

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