Remember when Biden said, “Milton Friedman isn’t running the show anymore” in an interview with Politico back in April of 2020?
Many people either thought it was just another example of Biden’s dementia speaking and simply ignored it, but he was a little more sane then and it was an important tell in then candidate Biden’s planned game of three-card Monte.
Milton Friedman was a staunch defender of shareholder capitalism, the idea that corporations have one single purpose, one reason to exist and that is to make as much money as possible for their shareholders—and that attempting to do anything else is a breach of fiduciary duty. It is the idea that the primary purpose of any business is to make money, because without turning a profit, nothing else is possible – no investments, no expansions, no capital improvements, no innovation, and no funding of community related projects.
What Biden and his Merry Wokesters want is stakeholder capitalism. Stakeholder capitalism is a system in which corporations are oriented to serve the interests of all their stakeholders – among which are customers, suppliers, employees, shareholders, and local communities. Under this system, a company's purpose is to create long-term value and not to maximize profits and enhance shareholder value at the cost of other stakeholder groups. The idea is that doing good is enough even if your P&L and balance sheet sucks.
Stakeholder capitalism is an example of what happens when a corporation goes woke.
Several people have asked me why, after the idea that “get woke, go broke” hit some organizations like a truckload of cinderblocks, would corporations run in to pick up the Woke flag and continue the charge. Considering that for a bit, I think there are several reasons. Here’s the top six off my list:
Corporations never do anything by choice that hurts the bottom line. For all the BS they spew from the office of the Chief Diversity Officer, they are still about making money. There must be some angle for profit-making in being woke or they wouldn’t be doing it.
The Woke Corps get to set the rules for the rest of the entities in their industry. Peer pressure works and being woke has been crafted as a competitive advantage, especially in consumer goods.
When the Woke Corps get to set the rules, they get to self-police. They can spin a lot of “rules for thee, but not for me” and force less prepared, less financially able companies to comply while they get to skate and do nothing. The woke self-identify as criminals, then because they do, they are selected as police and then they watch everybody else but themselves.
Self-policing allows them to raise the barriers to entry. By adopting expensive propositions like ESG (environmental, social and governance) scoring, a general term used in capital markets and used by investors to evaluate corporate behavior and to determine the future financial performance of companies, they can force others in their markets to comply and therefore raise their costs for something they can afford to do. Adopting woke has the same effect as large corporations that seem, counterintuitively, to love regulation. They can afford regulation with their thousands of staff members who can be tasked to handle compliance – smaller, better managed, more innovative companies cannot. The smaller companies simply do not have the resources. Regulation helps the big guys keep the small fry out of the big pond.
It allows them to get in bed with the government. Public/private partnerships are all the rage these days, and it is a marriage made in Hell. The government gets private companies to do things the Constitution forbids government to do, and the corporation gets a favorable seat at the High Table. They get to enjoy employing all the force of political power without the risk.
Woke-ism allows the company to satisfy their CEO’s thirst for good publicity. The CEO gets invited to all the right parties, invited to be on high profile advisory boards and panels, and even gets them invitations to the White House. Narcissists love stuff like that.
Long story short, the car companies tried pre-woke stakeholder capitalism back in the 70’s and 80’s and the result was crap cars and loss of market share to Japanese companies that were hyper-focused on quality and efficiency through the use of the team concept of manufacturing management and the Toyota Production System as a means to manage productivity and quality – and guess what else – a focus on shareholder capitalism.
Today’s woke corporations are scams, they are another con perpetrated upon the investors and stockholders.
None of this is about diversity, inclusion, or equity. Social justice doesn’t even factor into the equation.
The bottom line IS the bottom line.
As AOC said, it is all about the Benjamins.