How Much Immigration is Too Much and What Kind of Immigration Should We Have?

April 2, 2019

I read two important pieces of literature over the weekend: David Goodhart’s “The Road To Somewhere: The Tribes Shaping British Politics” and David Frum’s article in The Atlantic “How Much Immigration is Too Much?”

This reading underscores for me how complex these questions are, how difficult getting the right answers to them have been, and how important it is to the future of our nation and indeed Western civilization that we do so.

There is no question that the rate of immigration has increased significantly over the last 50 years in the United States, in Europe and in developed countries generally. From a low in 1970 representing about 5% of our population in the United States and 5 million immigrants, the numbers have increased to 15% of our population and 45 million immigrants.

The causes of the change are multiple, including the elimination of what had been very restrictive immigration policies, new family friendly policies allowing more relatives of U.S. citizens to come in, the entry of Eastern and Central Europeans to Western European countries (particularly Germany and U.K.) following adoption by the ECM of European-wide citizenship and the sharp increase of immigration into the United States from Mexico, Central America and, most recently, China and Southeast Asia.

Unless we change our immigration policies, particularly as they apply to family relationships and the definition of “asylum,” there will be a continued increase in immigration in the United States with a continuation of the political and economic pressures this represents.

There are familiar and altogether correct arguments for immigration in this country. After all, we were all immigrants in the beginning. And as you look at the last century and more, a large percentage of our entrepreneurs, Nobel scientists, etc. were first-generation immigrants and, of course, welcoming immigrants has become part of the country’s ethical morae.

Today, being for or against immigration has become a bumper sticker carrying broad-based ideological implications touching on one’s openness to cultural diversity, openness to free trade, as well as the feeling of being “left behind” or not. Immigration likely was the defining issue in the election of President Trump and for the Brexit vote in the U.K.

There is the risk that liberals (like me) can embrace an unthinking broad immigration policy without thinking practically and specifically about what constitutes the right amount and what kind of immigration for the years ahead.

It is a tragedy that our federal government has been unable to come to grips with reaching sensible decisions on these issues.

In my mind, these decisions will include:

Recognizing that for the close to 11 million undocumented workers who are in the country (most of whom for more than 10 years), we must define a legitimate path to permanent residency and then citizenship.

We must provide an immediate path to citizenship for the so-called “Dreamers.”

We must have a disciplined, sound basis for distinguishing between individuals and families seeking asylum based on genuine threats to life and those who are simply, if understandably, seeking a better way of life. Like it or not, we cannot accommodate all the people in this latter category. Making this distinction will admittedly not be easy.

We probably need to limit the degree to which extended family members can immigrate. They should be limited to the closest members of the family, certainly spouses and likely children. I do not believe siblings or more distant relatives should be covered.

We should look at some form of “merit” system of the kind Canada uses to assure that a large percentage of immigrants will be able to achieve a sustaining economic life.

We should invest prudently in helping countries provide healthy sanctuary in their own countries or nearby countries for people who are displaced by civil war as in Syria.

Similarly, we should invest to improve the rule of law and living conditions in those countries where large numbers of individuals are seeking to leave for good and valid reasons. Central America probably ranks highest on that list. I recognize this will not be easy and needs to be done in concert with other nations.

I am sure the particulars I am identifying here are incomplete and may be incorrect in some cases. But they articulate the nature of the decisions that we must address to confront this genuine, overarching issue.

The Most Consequential Geo-Political Events in My Lifetime--And How I See Them Being Threatened

April 1, 2019

I have lived for 80 years.

I have asked myself what have been the most consequential geo-political events of my life time.

Here they are:

1. The defeat of Nazi Germany and the Imperial Empire of Japan.
2. The coming together of most of Europe in the European Common Market.
3. The peaceful dissolution of the Soviet Union and the demise of communism as an ideology competing actively with capitalism for world domination.
4. The rise of China as a preeminent economic and political power.
5. The emergence of global warming as an existential threat to our planet.
6. The immediate, individually directed and global inter-conneted communication enabled by the internet and social media.

I see significant threats for the future in how several of these events are evolving today.

The threats arise in my view from four insidious elements of human nature:

1. The challenge of putting ourselves in the shoes of the other party when it comes to working together.

2. The human tendency to lift ourselves up by comparing ourselves to what we come to see as a somehow inferior or less deserving"other".

3. The human tendency to take advantage of power without adequate regard for the common good.

4. Our human tendency to have to face a really catastrophic situation before taking decisive action.

What are the threats I see?

1. The significant loss of political and economic strength in Europe and in Britain if Britain abandons the European Common Market. While obviously a subject of intense disagreement, I believe that Britain and the ECM will be stronger by Britain being a fully participating member.

Yes, it is correctly pointed out that Britain sends hundreds of millions of pounds annually to support the ECM administration.

Yes, being part of the ECM has opened Britain to a significant influx of immigrants that many understandably find objectionable.

Yet, being part of the ECM offers Britain the long achieved benefit of being a major financial capital for Europe; of having its citizens cross borders easily for employment; and of having equal trade terms with other European countries.

But, there is another benefit of Britain's remaining a key member of the European community which I do not believe has been adequately recognized.

The ECM is still relatively young. Its rules and form of governance will and should be subject to continued improvement--in areas including immigration policy and common currency.

What decisions should rest with individual countries as opposed to those being decided at a European level will be subject to continued debate and resolution, just as has been the case in the United States with respect to which rights should be reserved to the individual states and which to the national government.

The chances of that debate reaching a constructive result for the countries of the ECM will be greatly enhanced in my judgment by Britain's being part of that debate as opposed to looking on from the sidelines.

2. The emerging view that Russia and China are existential enemies of the United States-- not just economic competitors but ideological enemies-- is in my view a dangerous distortion of reality.

Yes, there are differences in our theories and practice of government: the degree of authority invested in the senior leader; the balance accorded to individual rights vs. collective rights.

Yes, there is rampant corruption in both countries, just as there is in many others including our own. Note, I am not saying these are equivalent.

Yes, Russia has worked to interfere in our elections and China has worked to co-opt our technology.

Yes, these countries insist on being recognized as legitimate key players on the world stage.

But these realties should not be conflated to suggest that these countries are seeking to forcefully convert the world to their system of government as the Soviet Union was under communism or, for that matter, radical Islam is.

Above all, these realities should not mask the reality that we must work with these countries on those issues which if we don't work together on the future of the world--the very future of our own nation-- are at stake.

I refer particularly to the risk of nuclear annihilation (let us never forget Hiroshima) and disastrous climate change.

Working with your competitors, even sometimes your enemies, isn't a new thought. We worked, for example, with the Soviet Union to establish treaties to control nuclear proliferation. Dangerously, we now see those treaties being allowed to end.

3. The long term threat of of global warning continues to grow. Sadly, I believe things will have to get worse before they get better. I believe we will need even more evidence, though plenty is already available, of the catastrophic impact of global warming before the world finally takes the action to confront it decisively.

I have no idea how long this will take. I don't know how much time we have before irreversible effects occur. I am optimistic that technology will continue to advance to enable us to provide cost effective energy without the use of fossil fuels once we muster the will to do so.

4. It is way beyond the scope of this short piece to assess the multiple implications of the final element I cite, i.e. the immediate, individually-directed snd inter-connected communication enabled by the internet and social media.

But there is one aspect of this which presents a particular challenge to our future which I want to underscore. That is the degree to which it enables and encourages us all to receive news and communicate with others who already share our views, thereby deepening partisan divides and making constructive dialogue and action much harder to achieve.

Take television: fifty years ago most people got their news on three national channels; each of them with varying degrees of success aimed to present the news in a balanced fashion. Today, most people get their news through cable channels, each of them, with little exception, presenting the news through their own political frame.

I see the need for public and media forums which bring people of different views together to respectfully share their views and seek areas of common agreement. There is also the need for political leadership which without ducking key issues, presents and activates a common, uniting vision which is founded on respect for all people. We also need to address systemic issues, such as gerrymandering, whose very design encourage candidates to adopt and run on far-right or far-left positions, making it far harder to engage in constructive dialogue and debate.

Courage--An Irreplaceable Element of Character

March 28, 2019

In some ways, courage is the most important quality. That’s because it enables everything else to happen. It enables us to act on our deepest convictions and move forward, even when faced with incomplete information. It gives us the strength to stand alone when necessary. In early 1986, a few months before becoming president of P&G, I made this journal entry to express the deep emotions I was feeling at that point in my life:

To be greatly ambitious while knowing one’s limitations takes courage. The counsel of timidity is to stay low rather than to risk great failures. The counsel of cowardice and prudence is to avoid getting hurt. I need to lead boldly and with confidence. I will. Courage is basic. Without courage there is no virtue.
Nelson Mandela said it well: “Courage is not the absence of fear, but the triumph over it.”

My own experience has proven this to be true. To me, courage means:

Being willing to put aside fear of failure, recognizing that to accomplish anything of real value, we must risk
wrong decisions.
Being willing to take a stand long before I’m certain of success.
Standing firmly for something I believe in and not allowing the views of others to deter me.
Fighting for what I believe in, especially if it’s controversial.
Being willing to ask others for their commitment: To ask “I need your help now”; “I need you to believe in
each other.” Not always easy requests to make, but often necessary.

Courage is the willingness to follow your deepest instincts, even if the future is not clear. I’ll always remember what a speaker said at my oldest son, John’s graduation: “Sometimes you have to leap before you look.” You're called to embark on something you’re not sure you can do, but you know it’s right and you know you need to try. I have found many of the most important things in my life have been like that.

That was the case when we entered new business categories in China and Eastern and Central Europe. It was also the situation when we undertook Organization 2005. As I’ve said, I wish I had done differently many aspects of that organization change, but even so, I know it was right to move ahead.
I called on the strength of courage in early 1999 when I agreed to lead the Development Campaign for the National Underground Railroad Freedom Center. I didn’t know then exactly how we would achieve our fund-raising goal of $110 million, but I felt certain that this institution could bring great benefit to racial understanding and cooperation in this country, and that I should play a part in making it happen. These decisions were ultimately sound. They were guided, in the words of Bart Giamatti, by the combination of all my “sometimes contradictory inner truths, the visceral, the open-hearted and the tough-minded.”

I’ve found that you cannot make important changes or introduce new ways of working without controversy. Today, the notion that effective teamwork is critical to achieving a high-performance work system would cause little disagreement. But my journal notes reveal that this idea was not readily accepted as I introduced it to our U.S. organization in December 1986:

Still a lot of controversy within the division manager group on the role of teams. I need to make my position clear and spell out more effectively the direction I want to go. I’m plowing ahead, saying as boldly and as clearly as I can what I believe is the right course for us to follow and why.

“Plowing ahead” is usually what it takes. I was reminded of this recently as I contemplated the anguished words of a distraught U.S. State Department official lamenting the world’s prolonged lack of response to the mass killings in Bosnia: “If you want to take ownership of an issue, you have to do more than hold meetings. You have to make risky decisions and prove you have the courage of your convictions.”
1
Courage is an intensely personal matter. It is physical and moral. We muster and strengthen it in the depths of our hearts and souls, sometimes during the lonesome dark of night. We are tested and challenged. But in the end, it is the defining strength from which great achievements are born.

Sometimes we’re conscious of acting courageously, and sometimes we’re not.
Laurent Philippe, who led our business magnificently in Morocco, then Russia, then Greater China, and who is now leading our Western Europe Market Development Organization, recently shared this recollection with me:

It was October 1998 in Moscow, only a few weeks after the dramatic devaluation of the Russian currency. You and I had been store checking the whole day. Moscow was gloomy, as only Moscow can be at the early approach of winter. I recall we did not see a single P&G shopper that day. We had abruptly priced up to recover dollar sales, but local ruble salaries had been kept under close check by the government. I was pretty depressed. But you were forward looking, as always. First, you bought a tube of Blend-a-Med for yourself, gently pretending that you had forgotten your toothpaste from home. So we had at least one P&G purchase decision made that day. More importantly, several times you expressed to the group your strong conviction that the leading brand equities and share positions
we had built in Russia before the crisis would serve us well, and that after the crisis we would emerge stronger than ever before. As we now know, this is exactly what happened. What a great lesson of courage and of leadership you gave me on that very day!

What I said to Laurent and our team that day wasn’t calculated. It wasn’t a special intervention. In fact, I didn’t recall it at all until Laurent brought it to my attention more than six years later. All of which can serve to remind us that often our most meaningful acts of leadership are spontaneous, drawing on our commitment to service and to our deepest-held values of courage and persistence.

While acts of courage are intensely personal, we can nurture and encourage courageous acts from others, as well. I often ask individuals participating in a large group for their personal point of view. For a moment, I sense the hesitation. People would rather not speak up. But with just a little coaxing, someone does speak up and others follow. They say what’s on their minds. We benefit from their points of view and they have, perhaps, experienced an act of courage whose Impact lasts long after the event.

Mark Ketchum did this with brand and advertising agency teams. He refused to accept an “agency point of view”that allows the opinions of individuals to be hidden behind a single, unilateral recommendation.
Mark said:
I go around the room and make everyone in attendance declare their personal point of view on a storyboard, a concept, a selling line or whatever. I know this has made an impact, because my long-term agency partners play back the positive effect this has had in cutting through the politics — and sometimes dysfunctional hierarchies — in the world of advertising.

It does more than that. Motivating others to act courageously becomes habit-forming and character-building.
Acting bravely is easier said than done, of course. Making the right decision — especially what could be a “gutsy”one — can be very lonely. You’re going against the grain; against the majority. You believe you’re right, but you can’t be sure. In a speech he gave at Harvard in 1886, Oliver Wendell Holmes Jr. described in stern terms the role of the leader when facing the toughest decisions:

Only when you have worked alone, when you have felt around you a black gulf of solitude and isolation like that which surrounds a dying man, and then entrust [yourself] to your own unshaken will, then only will you have achieved.

Decisions that rise to that level of tension will not happen often, but happen they will. And it is only with courage that they will be made well. As Edmond Burke, the 18th-century British statesman said, “The only thing necessary for evil to prevail is for good men to remain silent.” 2
The choice is ours:

Will I speak up? Do I act on behalf of what I know is right? Or, do I opt to go with the flow, even if I believe
the flow is going in the wrong direction?
In a meeting when I hear something unfair or inappropriate being said about another person, do I speak upor let it pass?

• If I see misalignment among people who need to work together to achieve a goal, do I do my best to correct it? Or do I let the situation pass in stony silence, hoping somehow it will correct itself, as unlikely as that may be?

In making choices like these, we draw on the deepest foundations of our character, which have been built over the years through countless, individual decisions. No one of them may seem that important, but collectively they are the cornerstone we draw on as we make the most significant decisions in our lives and careers.

This was certainly true for me. I drew on the lessons learned from past decisions as I made every major decision —whether it was changing an organizational design, expanding a major brand, entering a new country, or handling a weighty personnel matter.

I have always come back to three simple checks in order to test if my decision is a correct and courageous one:

Is it consistent with my own vision, my beliefs and my understanding of the facts?
Am I doing what I believe is morally and ethically right? Does it feel right? (If it doesn’t feel right, it probably
isn’t.)
And finally, would I feel comfortable telling my wife, Francie, and my children what I have done and why I have done it

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This blog is drawn from a chapter of my book, "What Really Matters"

A Brief Glimpse Into Benjamin Franklin

March 19, 2019

BENJAMIN FRANKLIN BY EDMUND S. MORGAN

I just finished this delightful, short (300-page) biography of Benjamin Franklin.

Wow! How little I knew; how much I learned.

Of course, I had heard about his extraordinary curiosity, his scientific discoveries, his luminous writing. But I really had not appreciated the role he played in navigating relationships with Britain and then France, first in the path leading to the Revolutionary War and then the path to win the war and peace.

He spent years in Britain, where he became a highly respected intellectual, and then later years in France as he worked, successfully, to secure loans which were essential to the American victory.

In Britain, in the years leading inexorably to the Revolutionary War, he approached the subject as a British-American, trying to persuade the British government to rescind the taxes they were imposing, give the Colonies a significant degree of freedom, and not subject then to parliamentary rule. He warned them that if they did not do this, they were going to be giving up the most valuable colony they could ever have. They didn’t listen. He was right.

The striking out for independence was inevitable. The size of the United States, its strength, and eventual population made it a question of time. But it happened a lot sooner because of the intransigence of British leadership. It took a long while for Franklin to come to see that full independence needed to happen, and when he saw that, he was riveted on it with total focus.

Franklin would have preferred not to involve the French in supporting America in the fight against Britain but, practically, there was no choice. We needed French money in order to build the ships and provide supplies. Franklin secured the loans to do it.

*****

There is an extraordinary felicity in Morgan’s ability to describe Franklin. A few examples:

“People trusted him. And with trust came power, a power he never sought or at least gave no sign of seeking. What won in people’s trust and the power that accompanied it was his care to act the part of a foot soldier in campaigns where he was in fact the commanding officer. He made an asset out of an apparent weakness, the fact that he was not a good public speaker.”

I can identify with some of these same qualities.

Franklin was a product of his age and his view of different ethnicities. His focus was to have “Englishmen keep multiplying in America.” Why allow anyone else to come, he asked. “Why should the palatine boors (that is, Boers, peasant farmers) be suffered to swarm into our Settlements and by herding together establish their Language and Manners to the Exclusion of ours? Why should Pennsylvania, founded by the English, become a colony of Aliens who will shortly be so numerous as to Germanize us instead of our Anglifying them and will never adopt our language or Customs, any more than they can acquire our Complexion?

Wow. As we have long known, racial prejudice is not a newborn thing.

Franklin again and again asserted that the right way to govern was to recognize the importance of public opinion. In assessing the treaty to end the Revolutionary War, he believed it would not be merely a matter of hammering out the limits, boundaries and privileges of each party in a treaty. As Morgan writes, “There has to be trust. There had to be goodwill. Franklin knew that nations act in their own interest, but he also believed that it was in every nation’s interest to cultivate goodwill, just as France had cultivated American goodwill by its generosity.”

Franklin wrote presciently, “If you do not with the Peace recover the Affections of that People, it will not be a lasting or profitable one; nor will it afford you any Part of that Strength which you once had by your Union with them and might (if you had been wise enough to take Advice) have still retained as its Adoption.”

The War of 1812, which was to follow, amply bore out Franklin’s counsel, as wishful as one has to say it was at the time.

Franklin’s reputation today rests on his pragmatism, his down-to-earth realism in dealing with human relations on a day-to-day basis.

The venom with which our countries’ leaders attacked each other is a reminder that the assaults we hear today on character are not new.

John Adams, accusing Franklin of messing up the treaty wrote: “As if he had been conscious of the Laziness, Inactivity and real Insignificance of his advanced Age, he has considered every American Minister, who has come to Europe, as his natural enemy.”

James Madison reported to Jefferson at about the same time about John Adams’ conduct, writing that, “Congress yesterday received from Mr. Adams several letters…not remarkable for anything unless it be a display of his vanity, his prejudice against the French court and his venom against Doctor D. Franklin.”

Then there was this comment in a letter Franklin wrote to Livingston, assessing the character of John Adams: “I am persuaded, however, that he means well for his Country, is always an honest Man, often a Wise One, but sometimes in some things, absolutely out of his Senses.”

I appreciate Morgan’s conclusion about Franklin: “We may discover a man with a wisdom about himself that comes only to the great of heart. Franklin knew how to value himself and what he did without mistaking himself for something more than one man among many. His special brand of self-respect required him to honor his fellow men and women no less than himself. His way of serving a superior God was to serve them. He did it with a recognition of their human strengths and weaknesses as well as his own, in a spirit that another wise man in another century has called ‘the spirit which is not too sure it is right.’ It is a spirit that weakens the weak but strengthens the strong. It gave Franklin the strength to do what he incredibly did, as a scientist, a statesman and a man.”

Support United Way in Tough Times to Change Lives

March 17, 2019

Opinion: Support United Way in tough times to change lives

John Pepper, Opinion contributorPublished 6:19 a.m. ET March 17, 2019

I’ve lived in Cincinnati for 55 years. Without question, my wife Francie and I have come to see the United Way as, by far, the single-most important nonprofit in the city. The reason? It impacts 300,000 men, women and children every year. That’s more than 1 in 6 of every one of us.

I’m not just throwing numbers around. These are real people who without the support provided by the United Way’s agencies, would not be living the quality of life they have today. The journey that opened my eyes to the life-changing impact of the United Way began 55 years ago.

The P&G campaign was coming up short; my job was to help close the gap. I was on Eastern Avenue going door-to-door, talking to real people, raising money and at the same time learning firsthand what the United Way was all about. In the end, P&G made its goal, and so did the total campaign. I made my first gift that year; Francie and I have been part of the United Way ever since.

For more than a century, the United Way has lived its mission of uniting communities to change lives. It’s allowed folks like me and my wife, who have been given advantages far beyond what we have earned, an opportunity to help our neighbors in this region.

Why have I and so many other people been so deeply committed to the United Way and its agencies for so long? In a word, impact. That applies particularly to children, because of the 300,000 people served by United Way agencies 140,000 are age 24 and under; 60,000 are 5 and younger.

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Make no mistake, when it comes to helping our youngest children from birth to age 5 get a strong start in life, no private organization comes close to the United Way and its agencies in providing needed services.

When it comes to helping families work to emerge from poverty, no other private organization surpasses the support that the United Way and its agencies provide.

Our United Way has taken a hit during the past two years, as have other cities across the nation. Our annual collections declined from $60 million to $50 million dollars. That $10 million dollar decline is taking a painful toll on the lives of people served by United Way.

Trust me when I tell you organizations that have been around for a long time inevitably go through painful times. I’ve lived through it at the company where I spent more than 40 years, so I can tell you that strong companies respond to challenges head on, they face up to reality and they make significant changes.

United Way is doing just that with a focused and strategic plan to include:

Listening and connecting to donors personally, showing them how their donations have impact.
Learning how to strengthen real diversity and inclusion among staff and with external partners.
Tapping into innovative technologies to strengthen workplace giving and engagement.

We have clearly identified urgent needs to meet in this community when it comes to fighting poverty. It’s by far the number one issue we are facing that in one way or another has impact on all of us. Francie and I have never wavered in viewing the United Way as perhaps THE linchpin in helping our community tackle these critical issues. Our conviction in its importance is stronger today than ever.

Join us, along with the almost 90,000 people who give annually to United Way, in helping our community for generations to come. Support United Way, just as this community has done ever since I arrived here 55 years ago, uniting together, even in tough times, to change lives.

John Pepper is a retired chairman and CEO of Procter & Gamble and the retired chairman of Disney.

How Times Have Changed in Our Nation's Antitrust Policy

March 16, 2019

How Times Have Changed—Antitrust Policy: FTC Vs. The Procter& Gamble Company

On April 11, 1967, the Supreme Court of the United States ruled in favor of the FTC’s finding “that the acquisition (of Clorox) by Procter & Gamble in 1957, eliminated Procter, the most likely entrant into the liquid bleach field, as a potential competitor, was supported by the evidence.”

The Supreme Court’s ruling overruled that of the Sixth Circuit Court. Divestiture of Clorox by Procter& Gamble was affirmed.

It is hard to believe how far antitrust legislation and the Supreme Court’s ruling on it have changed during the course of the last 50+ years. Here was P&G being required to divest Clorox on the predicate, unproven by any evidence, that it might have entered the liquid bleach field. The elimination of P&G as a potential competitor to Clorox, which would have been an outgrowth of the merger, was the primary factor leading to the denial of the acquisition.

Contrast this ruling with what is now being allowed in mergers and acquisitions.

Facebook acquires Instagram, a smaller growing competitor, in the very same market. A vertical integration if there ever was one.

Or Google acquires Waze, an up and coming competitor in the maps and traffic management. Or Amazon acquires Whole Foods, despite already holding a substantial on-line business in the majority of product lines which Whole Foods sells.

Since roughly the 1980s, antitrust policy has been anchored more or less single-mindedly on the “test” as to whether the proposed merger would have a lowering effect on the consumer prices. That has always been one key “test,” but by no means the only one that guided anti-trust policy.

The trust-busting actions taken and supported by the Supreme Court during the early part of the 20^th century, and led by the Roosevelt, Taft and Wilson administrations, were focused just as much on preventing the accumulation of concentrated economic and political power in the growing combinations of railroads, banks, steel and oil. The potentially nefarious impact of over-concentrated political and economic power should not be ignored today.

I am well aware of the enormous benefits to consumers provided by corporations like Google and Facebook and Amazon. But I am also aware of the anti-competitive impact of their acquiring companies that otherwise would have been separate competitors, providing alternative and potentially fresh innovation streams.

The history of antitrust law and policy has been one of alternating permissiveness and restriction. I believe we are in a situation of gross permissiveness today. If not reversed, I believe it carries a significant risk of long-term harm to our country.

Getting the Balance Right: To Whom is a Corporation Responsible?

March 13, 2019

We are witnessing a continuing debate as to whether a corporation is solely responsible to its shareholders to maximize profit or whether it carries a broader responsibility, not only to its shareholders to provide an acceptable, competitive profit return, but also to its employees, its consumers and the communities in which it lives.

This question has been argued from almost time immemorial and continues to be argued today, including under new vocabulary: the pursuit of “socially responsible capitalism” and “inclusive capitalism.”

I believe we risk complicating an issue which, at least for me, in its essence, is quite simple.

Certainly, a corporation has the responsibility to provide a fair, competitive economic return to its shareholders as produced through the value of its stock (influenced mightily by its profit) and by its dividends (also enormously influenced by its profit). It has the responsibility to do this over time.

It also has the foundational responsibility to better serve its consumers, for without consumer satisfaction flowing from the purchase of its product or service, a corporation will not exist let alone thrive. A corporation also has the responsibility to provide its employees, who make the corporation go, a sustainable financial existence and an environment which nourishes their growth. Finally, a corporation has a responsibility to contribute to the community in which it lives and in countless ways it depends.

Now you can try to have it both ways. You can postulate that the asserted singular mandate of maximizing profit for the long-term depends on honoring these responsibilities to other stakeholders. You could go on to say that, only to the extent that honoring these other responsibilities maximizes the long-term profit is it appropriate to bring energy against them.

While seemingly convenient, I regard this as a cop-out. Specifically, I would argue that maximizing profitability is not the right goal, per se. Maximizing profitability could lead one to cut corners in the sustainability effort for a company, or cut corners in the benefits being provided to its employees, or cut corners in terms of philanthropic support for needy people in the community in which the company resides.

The notion that corporations should devote themselves to maximizing profits is often taken to be one of the bedrock principles of corporate law and governance, especially since Milton Friedman’s famous article in 1970 which asserted just that.

In the history of corporations, however, business corporations were much different. As Blackstone wrote in his Commentaries, corporations could only be formed if they served public purposes. Today that rule no longer applies. Legally, modern business corporations are considered private entities that need not serve any explicitly public objective. Indeed, corporate officers who fail to focus on the profitability of the business for the long term would be a breach of their fiduciary responsibilities. And properly so.

I recently came across a fascinating historical case bearing on this in Adam Winkler's fine book, "We the Corporations". It occurred in 1916 as Henry Ford was sued by two business partners, James and Horace Dodge. The Dodge brothers, who built Ford’s engines and owned 10% of Ford Motor Company stock, had been made immensely wealthy from their relationship with the company; their $10,000 investment netted them more than $32 million. Yet, the brothers were unhappy that Ford refused to maximize profits even more. They saw him running the company in ways designed to benefit employees and the larger community instead of solely its stockholders.

In 1914, for example, Ford announced that he would begin paying workers $5 a day, double their previous wages. Every year the company lowered the price of cars even as significant improvements were introduced and inventory sold out. Ford had decided the stockholders were earning enough, explaining that he did “not believe that we should make such an awful profit on our cars.”

In 1916, Ford announced that his company would not distribute a special dividend to stockholders despite having on hand an extraordinary surplus of $60 million. Ford justified this decision as necessary to avoid “the discharge of a large number of employees in case there should be a sudden depression of business,” something he felt possible following the end of World War I.

The Dodge brothers condemned Ford for not running the company “as a business institution.” Helping employees and the largely public goals were “worthy of themselves but not within the scope of an ordinary business corporation.” They agreed.

During the trial, the outspoken Ford insisted that his company had the right to make business decisions in the interest of the public even if stockholders had to sacrifice. The Ford Motor Company was organized “to do as much good as we can, everywhere for everybody concerned,” Ford testified and only “incidentally to make money.” “My ambition,” Ford said, is to “spread the benefits for this industrial system to the greatest possible number, to help them build up their lives and their homes.”

Citing Ford’s testimony, the Michigan Supreme Court ruled against Ford and his public spirited view of the corporation. While corporations might lawfully make “an incidental humanitarian expenditure of corporate funds,” the court held they could not commit to a “general purpose and plan to benefit mankind at the expense” of stockholders.

Ford could have claimed that his corporation would benefit in the long run from his policies, as he should have and as executives often do today when pressed to defend socially responsible policies. But Ford stubbornly refused on principle.

“A business corporation is organized and carried on primarily for the profit of the stockholders,” the court explained. “The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself.”

There we are, facing the question, “What is the end we seek?”

I believe the corporation must fulfill its responsibilities to its shareholders and its other stakeholders, all in the context of maximizing the sustained, healthy life of the firm. Yes, shareholders have every right to expect a fair competitive rate of return in their investment. But they should also expect the corporation to be a responsible citizen in its relationships with its employees, the community and the consumers it serves.

I don’t find it surprising that surveys of long-term financial performance show a consistent, even if not perfect, correlation between companies that deliver the best financial returns and those which rank highest in social responsibility.

As Roberto Goizueta, the brilliant former CEO of the Coca-Cola Company once said, “While we were once perceived as simply providing services, selling products and employing people, business now shares in much of the responsibilities for our global quality of life.”

Or, even more directly, as John Smale, former CEO of Procter & Gamble, wrote:

“It isn’t enough to stay in business and be profitable. We believe we have a responsibility to society to use our resources—money, people, and energy—to the long-term benefit of society, as well as the company.”