The COVID-19 crisis has likely changed American business forever, as politicians use the deadly pandemic to push for changes that will have a major impact on how corporations operate.
How business respond will determine the future of American commerce for years. Important business leaders like BlackRock chairman and CEO Larry Fink are pushing companies to expand their mission beyond maximizing value for shareholders into things that are on progressives’ political wish list.
What Fink and others are advocating for drifts harmfully toward what progressives promote as they seek to control the business sector and move to a centrally planned economy.
If the U.S. economy is to survive, let alone thrive, we need corporate leaders to step up in defense of the free market. They need to eschew the insider deals and crony capitalism that have caused many Americans, especially the young, to lose faith in what, as British statesman Winston Churchill might have quipped, is the worst of all possible economic systems except for all the others.
There are heroes out there like Tesla’s Elon Musk, who recently stood up to Gov. Gavin Newsom and other officials who would not permit his California manufacturing plant to reopen and get people back to work.
To Musk’s credit, even though his empire is built on questionable tax breaks, credits and subsidies, he pushed back where other business leaders have sheepishly complied. He announced he’d be taking his company and the jobs he created to Texas or Nevada, where they would be welcomed. Faced with that, Newsom and company seem to have backed down.
According to recent allegations made in a Delaware court, Armstrong secretly worked to undermine a 2016 board-approved merger between his firm and Energy Transfer, a Dallas-based pipeline company, that would have paid shareholders a significant premium over the then-market value of their shares.
Nearly four years since the pact fell through, Williams continues to seek more than $1 billion in breakup fees, despite Armstrong’s recently alleged involvement in the deal’s demise.
According to court documents, Armstrong even worked behind the scenes with a former Williams senior vice president by using a personal account and leaking inside information to assist a lawsuit filed to block the proposed and ultimately unconsummated merger. As a result, half of his board of directors resigned days after the deal was called off, citing a lack of confidence in his ability to lead the company.
The reason he acted as he did, the court was told, was out of a desire to maintain his position as CEO even if his continued leadership of the company was detrimental to shareholder interests.
Actions like these in the corporate community have regular Americans — more and more of whom join the investor class every day through their 401Ks, Roth IRAs, and by trading stocks online — wondering if their money is safe, or if they’re just feeding corporate cats growing fat off their investments.
Warren Buffet, one of the country’s most respected financial leaders, argued in a recent interview that not enough attention is paid to corporate leadership and governance.
“Almost all of the directors I have met over the years have been decent, likable and intelligent,” he said. “Nevertheless, many of these good souls are people whom I would never have chosen to handle money or business matters. It simply was not their game.”
If the CEOs and boards of America’s companies don’t step up to restore public confidence in who they are and what they do, then the politicians will — as House Speaker Nancy Pelosi, D-Calif., tried to do in the first coronavirus relief bill.
Other than the privileged few who would have been picked to serve on boards if her proposed amendment requiring diversity on corporate boards had been adopted, it would have been bad for business and everyone else.
The clock is running.
— Peter Roff is a senior fellow at Frontiers of Freedom, a former U.S. News & World Report contributing editor and commentator on the One America News network. Contact him at firstname.lastname@example.org, follow him on Twitter: @PeterRoff or connect with him on Facebook. Click here for previous columns. The opinions expressed are his own.