A recession looms, and the nation’s CEOs are growing fearful.
It isn’t the potential of downturn itself that has them alarmed — downturns come and downturns go, but whatever happens, chief executives, like cats, tend to land on their comfortably padded feet.
Instead, the cause of their fear appears to be something more fundamental. As Alan Murray, the CEO of Fortune, writes in a cover story chronicling the C-suite anxiety: “More and more CEOs worry that public support for the system in which they’ve operated is in danger of disappearing.” They’re worried that when the next recession breaks, revolution might, too. This could be the hour that the ship comes in: The coming recession might finally prompt the masses to sharpen their pitchforks and demand a reckoning.
Company executives are right to worry. A downturn will mark the end of a record period of uninterrupted economic expansion. The U.S. economy has been growing for more than a decade, stock indexes recently hit new highs, and the unemployment rate is at a 50-year low.
And yet the vast majority of Americans will not look back on the past decade as years of fat and plenty. This was a gilded expansion, a decade of creaking wage growth and profoundly unequal outcomes. The number of Americans receiving food stamps is 40% higher now than in 2008, yet we have twice as many billionaires as we did a decade ago.
This was an expansion driven by outsized gains to a handful of “superstar” firms in “superstar” cities. Economic devastation reigned in rural areas alongside catastrophic success in urban ones — an expansion marked by housing crunches and infrastructure nightmares that every level of government seems incapable of addressing. Corporate profits grew as if there were no tomorrow, but they didn’t trickle down to everyone else. Instead, dividends and stock buybacks got bigger while CEO pay went through the rose-gold roof. The rest of us got smartphones, money-losing conveniences — Uber, WeWork, Netflix and meal delivery apps — and mountains of student debt.
And so, when recession comes, we’ll be right to ask: Was that it? Is this the best it gets? And if so, isn’t it time to go full Elizabeth Warren — to make some fundamental, radical changes to how the U.S. economy works, so that we might prevent decades more of growth that disproportionally benefits the titans among us?
But the CEOs now have a plan to head off revolution. They want you to know: Actually, they really do care about the world. Like, a lot.
This week, in a statement widely feted by well-meaning Davos types, the Business Roundtable — an association of chief executives of nearly 200 companies, including Apple, Amazon, General Motors and Walmart — declared that the era of soulless corporatism was over. The Business Roundtable once held that a corporation’s “paramount duty” was to its shareholders. Now, the Roundtable is singing a new, more inclusive tune. A corporation, it says, should balance the interests of its shareholders with those of other “stakeholders,” including customers, employees, suppliers and local communities.
In other words: no more Mr. Terrible Guy. Corporations are people, my friend, and it turns out that they’re really nice people, both interesting and interested, and we really must have them over for dinner sometime.
I spent a tedious few minutes this week trying to come up with an analogy to convey how thoroughly empty I found the Roundtable’s gesture to be. I think I got one: Imagine a co-worker has been stealing your lunch from the office fridge for years. Then, one day, he strolls in with a big grin and grand announcement. Maybe he unfolds a scroll and blows a trumpet. He has realized that “lunch maximization” might not have been the best approach after all, and he will now try to be aware of the wider consequences of some of his actions. Yes, he still really wants your lunch. Yes, he will probably still fight any efforts to prevent him from taking your lunch. But you should know that he also feels a tinge bad about how it’s all worked out. So, no hard feelings?
I mean: Yay? It’s nice that CEOs have vowed to turn over a new leaf. But their statement lacks any call for greater structural changes in the U.S. economy — changes to how companies are taxed or regulated, or how executives are paid, or how they should be judged.
And because a public corporation’s most direct incentives — including the CEO’s pay — remain tied to stock performance, there’s no reason to believe that corporations will voluntarily move away from pleasing shareholders alone, despite the new, high-minded ideals. In fact, the fanfare surrounding the Roundtable’s empty statement could be read as an effort to stave off structural economic reform rather than accelerate it. It’s a way for the CEOs to tell us that they’re on the case, so we don’t have to resort to something unthinkable, like a Warren presidency.
If I sound cynical, it’s only because I’m not a complete idiot. In the Donald Trump era, America’s CEOs have become masterful at talking out of both sides of their mouths. They’ll rush to issue virtue-signaling denunciations of the latest outrage from Trump in order to please their woke, restless customer bases, while on the down low, they’ll champion his tax cuts and regulatory dismantling. And when the president gets too rowdy, they’ll tell him to knock it off over a friendly dinner.
It’s all a game to the moguls in charge. Their greatest fear is that we’ll stop playing.
Farhad Manjoo is an opinion columnist for The New York Times with a background of reporting and writing about technology.