How Business Can Rescue the U.S. Economy
American business has been on the defensive for a decade—tarred by scandals at Enron and WorldCom, excoriated for excessive executive pay, and, most recently, scarred by the perception that government has rescued many financial institutions whose greed and shortsightedness led to the worst economic crisis since the Great Depression. It shouldn't surprise us that opinion polls show that Americans, and their leaders in Washington, hold U.S. business in low esteem.
Now it's time for business to go on the offensive by playing a leading role in trying to solve the nation's economic problems. Our country faces structural challenges that are undeniable but, politically speaking, untouchable.
For example, we've accumulated a staggering $60 trillion in unfunded government liabilities and promises, principally related to Medicare and Social Security. This burden could destroy the quality of life of future generations. And with our national savings rate low, we're dangerously dependent on foreign lenders. If we don't get our fiscal house in order, these lenders could lose confidence in our economy. That would trigger a true crisis: a plummeting dollar, soaring interest rates, and runaway inflation.
Given what's at stake in this and other challenges, the silence of business leaders is disturbing. (New York Times columnist Thomas L. Friedman has called us "MIAs" in the battle to solve national problems.) In my more than 50 years in business, I cannot recall a time when there were so many daunting national challenges, with business engagement so lacking.
This was not always so. In 1942, in the midst of World War II, businessmen like Paul G. Hoffman (president of Studebaker), Bill Benton (of ad agency Benton & Bowles), and Marion B. Folsom (treasurer of Eastman Kodak (EK)) formed the nonpartisan Committee for Economic Development, a business-led group of academics and executives. Its members included CEOs of major American companies who were pro-growth and who cared deeply about America's future. They helped prevent a return to economic isolationism and beggar-thy-neighbor trade policies. After the war, the committee (which still exists to study and make recommendations on policy issues) helped establish the Employment Act of 1946, the Council of Economic Advisers, the Bretton Woods institutions (the World Bank and International Monetary Fund), and the Marshall Plan, which famously rebuilt Europe. Studebaker's Hoffman became the plan's first administrator.
Those corporate leaders not only formulated policies but also spearheaded the selling and implementing of them. Many of us forget that at its inception the Marshall Plan had a dismal public approval rating of 14%. That changed after the business community launched an aggressive public education campaign about its importance. As former Yale School of Management Dean Jeffrey E. Garten wrote in The Politics of Fortune: A New Agenda for Business Leaders (2002), these men "rose above the interests of any firms or industry and focused instead on the public interest through a pragmatic business lens."
Today we need a private-sector Marshall Plan to rescue our own economy—a vast effort in which business leaders, including CEOs and their boards, organize to be heard on the issues and not just lobby for favors. It's time to create a new nonpartisan organization, a public movement to which business leaders lend their names in order to speak out about our long-term structural problems and their potential solutions.
It's essential, too, that we lead by example. We must readopt the values that animated our leaders—corporate and political—six decades ago. That means any call to sacrifice begins with us. To take just one example: At a time when soaring health-care costs threaten U.S. competitiveness, do we fat cats really think we should get our Cadillac health benefits tax-free?
It's time to get off our butts, cure ourselves of an aggravated case of short term-itis, and create a movement that makes it safe for our politicians to opt for the hard choices and unsafe for them to continue to do nothing—to deny the undeniable and pretend we can sustain the unsustainable.
It's time for business to do the right thing, not just to protect our kids and grandkids but to safeguard our remarkable country's future.