Chick-fil-A “Appreciation” Day

Fans of the marriage of capitalism and bigotry should keep their Wednesday lunch plans flexible, because tomorrow is Chick-fil-A Appreciation Day. Mike Huckabee conjured up the day as a celebration of all that is fabulous about a corporation he thinks is “being smeared by vicious hate speech” on the left:

The goal is simple: Let’s affirm a business that operates on Christian principles and whose executives are willing to take a stand for the Godly values we espouse by simply showing up and eating at Chick Fil-A on Wednesday, August 1. Too often, those on the left make corporate statements to show support for same sex marriage, abortion, or profanity, but if Christians affirm traditional values, we’re considered homophobic, fundamentalists, hate-mongers, and intolerant.

I’m hard to know where he finds “those on the left” making “corporate statements” supporting abortion and profanity (“Fifteen minutes will save you fifteen percent on car insurance, and while you’re at it go terminate your fucking pregancy”?), but let’s overlook that for now. With just one shopping day left until C-f-A-AD, we need to answer some of the big questions people have about l’affaire d’chicken.

Does Chick-fil-A hate gay people?

The firm’s defenders would have you believe that the company doesn’t hate gay people; it just hates same-sex marriage. The current controversy was sparked by company president Dan Cathy’s observation a few weeks ago that “we are inviting God’s judgment on our nation when we shake our fist at Him and say, ‘We know better than you as to what constitutes a marriage.’ … We are very much supportive of the family, the biblical definition of the family unit.” The company’s conservative friends contend that “Chick-Fil-A has not turned away a single customer because that customer was a homosexual … [and] has not discriminated in any way against either employees or customers.”

But as groups such as the Equality Matters project have amply documented, Chick-fil-A through its charitable arm the Winshape Foundation donates millions to stridently anti-LGBT causes and organizations. We’re not talking just entities that mount legal challenges to same-sex marriage; these are groups that condemn “any homosexual act” (Fellowship of Christian Athletes), that regard being LGBT as “perverse” and promote “ex-gay therapy” (Exodus International), that frame pedophilia as a “homosexual problem” (Family Research Council), and that characterize the homosexual agenda as “a principal threat to religious freedom” (Alliance Defense Fund).

Chick-fil-A executives may say they are committed to treating people with “honor, dignity and respect … regardless of their belief, race, creed, sexual orientation or gender,” but actions speak louder than words. Through its foundation arm, the company finances hate, simple as that.

What about these reports of mayors and other elected officials threatening to block Chick-fil-A from expanding in their cities? Can they do that?

Certainly not. Voices on both the left and the right have been quick to denounce those threats, to the extent that they were actually threats to use instruments of public policy, as unsavory and absurdly impulsive assaults on the First Amendment. Even LGBT advocates get this. (An exception, a somewhat game but ultimately lame effort on the left to defend the mayors’ actions, is here, effectively refuted here.) But let’s be clear that even if public officials shouldn’t be threatening to make it harder for a business to do business because of political or religious viewpoints, those officials certainly do have the right to use their bully pulpits to express a personal opinion that they find the practices of a corporation offensive. Some have had to walk back their comments because in the scrum of the issue’s national momentum, they didn’t quite grasp the difference.

What about those on the right who locate just a wee bit of hypocrisy in Chicago Mayor Rahm Emanuel’s obstreperous objection to Chick-fil-A’s stance on marriage, given that it is the same position held by Barack Obama while Emanuel served as White House chief of staff, and held by Bill Clinton while Emanuel served in that administration? Do they have a point?

They do indeed.

So bottom line: should you eat at Chick-fil-A on Wednesday?

If you agree with Mike Huckabee that Chick-fil-A, a firm using its profits via foundation contributions to promote intolerant bigotry, is somehow being victimized by “intolerant bigotry from the left” when those contributions are factually revealed and discussed, then sure, knock yourself out. Otherwise I’d say give it a miss.

A version of this post appears on the Nashville Scene‘s Pith in the Wind blog.

Sarbanes-Oxley at 10

Ten years ago today the Sarbanes-Oxley Act (SOX) was enacted, supposedly ushering in a new post-Enron era of corporate governance. A New York TimesRoom for Debate” feature published a few days ago on the paper’s website offers four viewpoints on the law’s value after a decade, although the timeliness of the feature is tempered somewhat by its shallowness.

According to one writer, attorney Michael Peregrine, SOX’s benefit is largely conceptual, the law having catalyzed “a more robust respect for corporate compliance, fiduciary duty to shareholders and ethical behavior.” Another, Broc Romanek, who edits a website on legal issues pertaining to securities regulation and corporate governance, concedes that some of the new requirements embedded in the law “have stopped some frauds in their tracks,” but regards the larger pursuit of governance reform as “in its infancy as board failures remain too common.” A third, former SEC deputy chief of staff Kayla Gillan, points to the law’s merits as a deterrent: “Those who would seek to provide the market with misleading numbers are less likely to be able to do so because the public company internal controls are now much more effective.”

These are all lovely, essentially upbeat sentiments, but the Times package is incomplete because it comes off as a bit of a whitewash, omitting the widely held view on the right that the SOX law does more harm than good and should be dismantled. The Cato Institute crowd has been espousing this view for quite some time, and we now find ourselves with a major party presidential candidate who is on the record favoring outright repeal of the law.

While it’s certainly plausible (even likely) that a sweeping reform law passed in the emotional wake of scandal overreaches, it is hard to believe that doing away entirely with the law’s new regime of accounting controls and executive responsibility for the integrity of firms’ financial statements is a way to advance boardroom ethics. As the Wall Street Journal has reported, “Many businesses have complained that the new requirements are onerous and costly.” As well they should be.

“You Didn’t Build That”: The Conversation We Aren’t Having

It’s been a week since President Obama in a speech in Roanoke, Virginia offered up his “you didn’t build that” observation about business success, and Team Romney is still trying to make hay out of it. As recently as yesterday Romney declared in a stop-by at a local business in Massachusetts that “The president does, in fact, believe that people who build enterprises like this really aren’t responsible for it.”

It’s hardly surprising that a campaign trying desperately to shift from a defensive posture on matters of private equity and tax returns would seize on anything to change the subject, and perhaps that explains how this particular tidbit of second-rate campaign discourse distortion has kept its legs for a full week — an eternity in the news cycle game. (There’s nothing like yet another gun rampage mass shooting to really change the subject.)

But while Romney may have twisted Obama’s remarks last Friday into something never said or intended, the Mittster does edge dangerous close to having a point when he says of Obama, as he did yesterday, “It wasn’t a gaffe. It was instead his ideology.” The conceptual relationship between capitalism and infrastructure is actually a crucial and fascinating subject, one that does define significant differences between the candidates and their parties — or one that might if there could be a serious conversation about it instead of just harping on out-of-context utterances.

First let’s be clear about the distortion involved. This is what Obama said in Roanoke last Friday on this subject, from start to finish with no omitted words:

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allows you to thrive. Somebody invested in roads and bridges. If you’ve got a business you didn’t build that. Somebody else made that happen. The internet didn’t get invented on its own; government research created the internet, so then all the companies could make money off the internet. The point is that when we succeed, we succeed because of our individual initiative but also because we do things together. There are some things, like fighting fires, that we don’t do on our own.”

And this is how Mitt Romney recounted Obama’s remarks:

“He said, ‘If you’ve got a business, you didn’t build that. Somebody else made that happen.'”

It does seem rather obvious that “you didn’t build that” refers to what came in the sentence before — infrastructure such as roads and bridges. Yes, one could make a grammatical argument, as James Taranto at the Wall Street Journal did, that “roads and bridges” is plural, while “that” is singular, so the word “that” should properly be “those” if Obama meant to say that successful entrepreneurs didn’t build roads and bridges. Point of grammar taken. But on that small fault in syntax we should believe that Obama meant to say something different that the otherwise extremely clear meaning of the entire passage? Really?

But campaign out-of-contextery aside, it is more than legitimate to ponder the extent to which business success does owe itself to public works and collective enterprise (indeed, to socialism! There! I said it! Socialism socialism socialism! Let the mouth foaming begin.) This issue sometimes arises as a policy argument in relation to the flatness vs. progressivity of tax rates. Writing in 2007 about progressive taxation, George Lakoff and Bruce Budner discussed the notion of “compound empowerment,” which refers to ways that the use of collective wealth and resources is compounded by corporations, investors, and wealthy individuals:

Consider Bill Gates. He started Microsoft as a college dropout and has become the world’s richest person. Though he has undoubtedly benefited from his unusual intelligence and business acumen, he could not have created or sustained his personal wealth without the common wealth. The legal system protected Microsoft’s intellectual property and contracts. The tax-supported financial infrastructure enabled him to access capital markets and trade his stock in a market in which investors have confidence. He built his company with many employees educated in public schools and universities. Tax-funded research helped develop computer science and the internet. Trade laws negotiated and enforced by the government protect his ability to sell his products abroad. These are but a few of the ways in which Mr. Gates’ accumulation of wealth was empowered by the common wealth and by taxation. As Warren Buffet famously observed, he likely couldn’t have achieved his financial success had he been born in Bangladesh instead of the United States, because Bangladesh had no banking system and no stock market.

The compound empowerment argument regarding tax progressivity is that rates should tilt steeply because “the wealthy have made greater use of the common good — they have been empowered by it in creating their wealth — and thus they have a greater moral obligation to sustain it.” It’s an interesting angle on tax policy, but not a debate we should realistically expect Obama and Romney to engage in the present climate, where stalemates between advocates of top marginal tax rates less than a handful of percentage points apart can paralyze the entire political system.

But the relationship between collective infrastructure and individual entrepreneurship is at the heart of the role of government in the economy, and is a conversation we should be having. I might be inclined to give Romney credit for raising this compelling question of political philosophy, except for the fact that he had to flagrantly distort his opponent’s comments to do so. Even so, it is disappointing that the Obama camp hasn’t taken the bait in a substantive way. Instead of just crying foul for the Romney distortion, there is an opportunity here to flesh out a very real and substantive difference between their philosophies (indeed, in Romney’s phrasing, their ideologies) and advance a meaningful conversation.

Not happening. Shocking.

A version of this post appears on the Nashville Scene‘s Pith in the Wind blog.

False Dichotomy of the Week

It comes in an otherwise worthwhile piece of analysis and commentary on corporate corruption by Eduardo Porter in today’s New York Times business section:

Company executives are paid to maximize profits, not to behave ethically.

They are, of course, paid to do both. (And some other things as well.) As is everyone else.

Best Paying One-Day Job Ever

Photo: brokinhrt2 (Creative Commons)

Those who justify exorbitant levels of CEO pay as functional examples of how markets work will perhaps have a tough time explaining the strange case of Bill Johnson and the Duke Energy Corporation. Johnson signed a contract last week to become Duke’s chief executive upon closure July 2 of a merger with Progress Energy Inc. (which Johnson had previously led). The merger took effect on July 2, and Johnson resigned as CEO at 12:01 am on July 3. A company spokesman says the hasty (to say the least) departure was by “mutual agreement,” and nobody else is talking.

But what we do know is that a half a day’s employment can be very, very lucrative. Let’s just quote from the Wall Street Journal‘s account:

Despite his short-lived tenure, Mr. Johnson will receive exit payments worth as much as $44.4 million, according to Duke. That includes $7.4 million in severance, a nearly $1.4 million cash bonus, a special lump-sum payment worth up to $1.5 million and accelerated vesting of his stock awards, according to a Duke regulatory filing Tuesday night. Mr. Johnson gets the lump-sum payment as long as he cooperates with Duke and doesn’t disparage his former employer, the filing said. Under his exit package, Mr. Johnson also will receive approximately $30,000 to reimburse him for relocation expenses.

“As long as he doesn’t disparage his former employer.” That’s precious. Why on earth would he do that? Apologists for executive compensation like to argue that astronomical pay can’t be avoided “because if I don’t pay them, someone else will.” I look forward to their application of this theory to the strange case of Duke Energy and Mr. Johnson.

Forging Coalitions With Corporations

Photo: J. Rover
(Creative Commons)

Bill Scher of LiberalOasis has a highly worthwhile op-ed in Sunday’s New York Times on the role and importance of corporate support for liberal public policy initiatives. In the wake of last week’s Supreme Court ruling on the Obama health care bill, Scher points out, it’s worth reminding ourselves that the bill’s passage followed significant behind-the-scenes conversation and deal making between the White House and the pharmaceutical industry (as revealed in emails released last month).

Drawing broader lessons for progressive policy, Scher concludes:

The necessity of forging coalitions with corporations is understandably difficult for progressives to accept. Every time it happens, corporations seem to quickly go back to their usual tricks. They lobby to weaken enforcement. They litigate to have rules overturned. They abandon politicians who risked compromise for them. Corporations are exasperating, irritating and untrustworthy partners.

But most of the time politics is exasperating and irritating, not euphoric and cathartic. As Roosevelt himself told a group of dissatisfied youth activists in 1940, “if you ever sit here you will learn that you cannot, just by shouting from the housetops, get what you want all the time.”

Scher also writes that “when corporations are divided or mollified, reformers can breathe.” There’s truth to that, but progressive policy making should not have to depend on divisions among corporate interests. There are numerous reforms that ought to attract business support far more than they do, in part because corporate interests are reflexively wedded to the kinds of orthodox anti-regulatory or small government mantras of institutional actors such as the chambers of commerce or the NFIB. As Scher observes in the Times op-ed, the health care reform bill is a fascinating counterexample that found the U.S. Chamber and Big Pharma on opposite sides. The idea that corporate interests as expressed and applied in public policy diverge from where those interests ought to be to advance social and economic progress is one I am developing as a central theme in my current book project.