CRO POV: Money Making Not the Root of All Evil

Corporate responsibility and profitability can co-exist.

By Jay Whitehead

I was caught completely flabbergasted by American Prospect Editor Robert Kuttner’s editorial “Beware of Corporate Do-Gooding” this past Sunday in The Boston Globe. In a sophomoric search for attention, Kuttner wrote that any and all responsible behaviors by corporations should be waived off as cynical diversionary tactics of profit-hungry devils. “Whenever hugely profitable corporations mount a charm offensive, keep your hand on your wallet,” Kuttner wrote.

This profit-paranoid conspiracy theorist then went on to list several corporate efforts that should be seen as nothing but the black art of greed: Wal-Mart’s Sustainability 360 program, universal health care proposal, and diversity efforts; Astra-Zenica’s campaign to simplify Medicare reimbursement; TXU’s cancellation of coal-fired generating plants; and the Hedge Funds Care efforts from the hedge fund industry. Kuttner’s rant reminds me of comedian Mike Myers’ line in his Austin Powers movie, “There is no pleasing you.” It also reminds me of dozens of college-day arguments I had with ivory tower academics with no interest in participating in the real world.

American Prospect, with an audience of 55,000, was founded in 1990 by Kuttner and the outspoken former Clinton administration Labor Secretary Robert Reich. The magazine identifies its readers as orthodox liberals, in the Great Society, anti-Vietnam War, Ralph Nader anti-corporate crusader tradition. But wait. Kuttner’s outburst puts him on the very fringes of civil society—outside the world where most of us live and work. Hey, I work for a corporation. And my clients and members are corporations…in fact, my best friends and customers run the biggest corporations on earth, the Russell 1000, employers of nearly a quarter of all working Americans.

But because my clients and I seek profit and at the same time embrace the very changes in corporate behavior that Kuttner vilifies, that make us enemies of Liberal causes. How could that be? I thought that good governance, sustainability, corporate social responsibility, corporate citizenship, diversity and enlightened stakeholder relations were the very essence of Liberal thought. corporate responsibility is, in all its flavors, enlightened competition.

Communicating with several American, Canadian and European corporate colleagues over the weekend, I mentioned Kuttner’s poisonous position piece. One wrote that, “it sounds like the death rattle of a flavor of intellectual arrogance that is rapidly dying, both on campus and off.”

I agree. Kuttner’s argument ultimately leads to the conclusion that to do anything to compete for advantage and profits is essentially evil. I know from direct experience that Wal-Mart, Astra-Zenica, and hedge funds are all doing what they are doing because they truly believe that enlightened competitors will have a long-term advantage, even if it costs more in the short run.

The corporate execs involved in today’s corporate responsibility programs believe in their missions in the same way my father, who in the 1960s and early 70s ran the San Francisco Public Schools’ busing for school desegregation program, believed in his Great Society, essentially liberal mission. In every fiber of his being, he believed that racially integrated public schools made better kids and a better America. He also championed sex education in the schools as a way of reducing teen pregnancy. During his life, he was honored often as an enlightened educator. Both programs gave kids a competitive advantage. But busing and sex education also gave profits to its advocates—school bus companies, school administrators, sex education teachers and manual publishers.

Is a program, corporate or public, essentially evil if, while doing good, it delivers a profit to its backers? In Kuttner’s academically arrogant world, is profit inherently bad?

In the same editorial, Kuttner also addressed Sirius Satellite Radio’s CEO Mel Karmazin’s congressional testimony defending its proposed merger with XM. Apparently Kuttner does not believe that any merged company would be better for consumers, since the result might mean more profits. He would rather that shareholders continue to waste billions of dollars to support two nearly identical pay-to-listen services, that compete with a product that is free. In Robert Kuttner’s world, waste is good, profit is bad, and enlightened corporate practices should be banned. “When profit becomes the sole purpose of society,” Kuttner wrote, “it can drive the economy right off a cliff.”

I would counter with this: The corporate responsibility movement is about the death of arrogance in all its forms. Corporate responsibility fans cheered when the above-the-law arrogance of Dennis Kozlowski and Jeffrey Skilling sent them both to prison. Corporate responsibility proponents support dogged regulators who pursue their above-it-all targets. Corporate responsibility advocates applaud when a company’s corporate social responsibility (CSR) report or an activist investor unveils a need for a change in unaccountable management, or when a non-governmental organization (NGO) batters a company into changing abusive practices or when some Internet-age crusader discovers a bribe or arrogant anti-diversity policies. Similarly, corporate responsibility supporters will decry academics who cannot understand that doing well and doing good can and do happily co-exist.

If you are true to your academically arrogant profit-paranoia, Robert Kuttner, we urge you to stop charging American Prospect magazine advertisers and subscribers immediately. After all, your profit is obviously undoing any good you might be doing.