TigerHawk

Peter G. Peterson has an essay in last week's Newsweek (sorry, I was travelling, but Technorati registers exactly no blog links to it so this is "new to you") that asks the question, "Where have all the corporate statesmen gone?"

Tom Friedman, The New York Times columnist, recently referred to us as MIAs (Missing in Action). They wonder why, for example, so few in the business community speak out about our soaring budget deficits, our unprecedented trade and current account deficits, our plunging savings rates, and our dysfunctional dependence on foreign capital....

So the question naturally arises: Shouldn't we business leaders try to help our nation do something about it? And if we don't do so out of genuine civic concern, shouldn't we at least do so out of collective self-interest? That started me thinking: Was it romantic to imagine there ever were many corporate statesmen? How many such leaders have I known about?

Peterson then recalls the enormous contributions of CEOs to public policy in the last seventy years, including initiatives to shape or promote the Employment Act of 1946, the Bretton Woods institutions, the Marshall Plan and so forth. What has changed, he wonders?

If it was possible back then to build an effective business consensus behind strengthening our national balance sheet, why is it proving more difficult today? It's certainly not because the problem has gone away.

Peterson has answers masquerading as questions. I have taken the liberty of supplying answers in italics.

To explain what has happened, I only have questions, no answers. They are my hypotheses. Has business leadership become so hypercompetitive, so global and so focused on corporate governance that it has no time left for anything else?

[Yes. Today's CEOs work enormously long hours just to stay even. Today's New York Times has an essay by Daniel Altman that explains how we are experiencing resurgent economic growth without price inflation: intense competition in every segment of our economy. And CEOs must perform or they will be fired -- the average tenure of CEOs has declined significantly (60% of Fortune 500 CEOs hold their job less than six years). And yes, CEOs (and other executives) are burning staggering amounts of time on corporate governance. But today's CEOs are also much younger (the average age has declined significantly in the last decade), and they often have spouses with jobs. It is telling that it never occurs to Peterson that CEOs today have to to run their companies and schlep their kids to weekend sporting events and go to parent-teacher conferences. Something's got to give, and you can bet that it isn't the company.]

Have too many of us in business forgotten that public policy is too important to be left to the politicians?

[No. But the rise of professional activist organizations -- which barely existed when Peterson was Secretary of Commerce -- means that others are far more influential than some guy who has credibility only because he runs a company. Other than in their capacity to give money, most CEOs are no more credible on matters of public policy than any well-read blogger, and probably less so. It is therefore far more difficult for them to "lead," as Peterson so quaintly puts it. That is why today's CEO's often involve themselves in projects that essentially bypass democratic governments. See, for example, the Gates Foundation's work on infectious diseases.]

Have recent corporate scandals left CEOs feeling so morally crippled that they feel they lack public credibility?

[No. They lack public credibility because it is arrogant to assume that they should have it in the first place. CEOs are as credible as any other accomplished person, but not inherently possessed of unique credibility. Most CEOs of large companies have their job because they have survived bureaucratic wars. One might well ask why that should give them a special ability to declaim on matters of public policy.]

Do executives worry that the "gotcha" media will defame us if we stick our heads up?

[Absolutely. Unless your company sells a consumer product, there is no reason to speak to the media. At our company, which sells products only to hospitals and surgeons, we call back reporters from local papers, but decline all other exposure. Indeed, media attention is so toxic to a business over the long-term (again, unless it sells consumer products) that it is my firm belief is that CEOs of such companies who speak to the mass media do so for their own aggrandizement, rather than to benefit their own stockholders. How could it be otherwise?]

Is Washington so relentlessly mean, vindictive and polarized that we fear retribution if we occupy a lonely but sensible centrist position?

[Yes. And it isn't just Washington, but our whole society. Most people involved in public dialogue have stopped caring about the content or merit of an idea, and only consider its political implications. How will that idea influence the next election? Why would anybody want their company associated with that kind of partisanship? Why, do you suppose, that I write this blog anonymously?]

Has the anonymity of the noncitizen become the best executive policy?

[Absolutely.]

Did the great big party in the 1990s, when all of us were getting fat, rich and happy, leave CEOs caring less about standards of behavior?

[No, I do not think that this is a consideration. The scandals of the "great big party" involved a very small number of people as a proportion of the whole, and most CEOs that I know genuinely believe that the bad guys of that era are dirtbags. I have met many CEOs, and I think they are at least as ethical as the average person, probably more so. Indeed, one might plausibly argue that they do not want to get involved in politics because of their concern for ethics. How, after all, can a CEO get involved with politics without making campaign contributions? Indeed, during the last election cycle Peter G. Peterson contributed to John Kerry, Wesley Clark and George W. Bush. That may be in the interests of the Blackstone Group or Peter G. Peterson personally, but it is not principled.]

Do our stock markets so discount the future that we assume we are judged largely by short-term results?

[It is not a question of assuming that we are judged by short-term results -- we are. That is why the tenure of CEOs today is so short. Six years is the average, meaning that many CEOs are in office for a much shorter period. Why? Because their stock price did not perform. If it had, they wouldn't have been fired (although not all departing CEOs are fired.]

And are CEOs saying to themselves, "If my tenure is only for four or five years, let somebody else worry about our collective future"?

[No. But the short tenure means that they have to establish themselves and their credibility before they can afford to spend it advocating for public policy that does not directly benefit their stockholders. CEOs who throw themselves into public affairs before they have established themselves should remember that Carly Fiorina was attending the World Economic Forum in Davos while her board was meeting to fire her.]

Frankly, I think that the whole idea of the "statesman CEO" is appalling. There are only two respects in which CEOs should involve themselves in politics. First, they can certainly do it in their capacity as citizens, which means carefully disclaiming any association between their political views and their company. Second, they may do it to specifically advance the interests of their stockholders. If a particular public policy, regulation or piece of legislation advances their business, they may have to get involved, however distasteful that may be. But Peterson is not talking about CEOs getting involved in their capacity as citizens or to advance legislation that is particularly in the interests of their stockholders. He thinks that CEOs should leverage credibility that they have only because they are fiduciaries to advocate for public policy that the believe in as individuals, whether or not it benefits their stockholders. Looked at that way, isn't it the "statesman CEOs" who are unprincipled? Good riddance, I say.

Disclosure: I have been the CEO of a public company.