Browsing the blog archives for April, 2016.

The New Corporate Social Agenda

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Many progressives argue that large corporations use their market power to promote their own financial agendas at the expense of “social advancement.” The facts tell a different story.

It is true that firms traditionally stayed on the sidelines with regard to social issues, leaving them to the people and their elected officials. But most Americans believe that firms have a “social responsibility” above and beyond the honest pursuit of profit. In fact, a recent survey by the Global Strategy Group reported that 78% of Americans want firms to be active in social policy. Companies like Hobby Lobby, Koch Industries, and Chick-fil-A have taken conservative or libertarian views on various issues in recent years, only to face vilification in the media and threats of boycotts from activists. These firms are the exceptions, however.

Seeking to avoid the attention of activists, many companies have become advocates for the progressive agenda. Apple’s support for gay rights is well known. Large firms and the U.S. Chamber of Commerce have lobbied for legislation softening laws and enforcement with regard to illegal immigration. There are other examples as well.

Citing contradictions with its own human rights policies, Dow and Monsanto are fighting legislation in Indiana and Missouri that allow firms to deny same-sex couples certain benefits as a matter of religious freedom. Ironically, these companies have been on the receiving end of progressive vitriol for years. This fight is a convenient way for these companies to balance the ledger of perceptions and stay off of the boycott list.

The National Basketball Association even announced that it would relocate its 2017 all-star game from Charlotte if the State of North Carolina did not amend HB2, a measure that requires men and women to use public restrooms in accordance with the gender noted on their birth certificates. The NBA’s PC agenda has made it harder for me to watch the professional version of the game I love. It’s difficult to see why the league should seek to bully the NC governor and state legislature over this issue.

Overall, the political influence exerted by big business is mostly on the progressive side of issues today. Ironically, the left continues to castigate business as evil and the firms capitulate accordingly. But if anyone should be offended by the corporate political agenda, it should be the political right. Times have definitely changed.

Perhaps this is why more and more rank-and-file Republicans and Libertarians are actively opposing the corporate largesse. Perhaps this is why many are attracted to Donald Trump’s brand of populism.

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California’s Minimum Wage

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At least California Governor Jerry Brown tried to tell the truth when he signed a bill this week to raise the state’s minimum wage to $15 an hour by 2022:

“Economically, minimum wages may not make sense. But morally, socially, and politically they make every sense because it binds the community together to make sure parents can take care of their kids in a much more satisfactory way.”

Brown’s first point is correct, an admission that he understands what is obvious to most economists. A minimum wage is not sound economic policy. When an employer is forced to pay an individual more than that person would otherwise earn in a free economy, then several things can and will happen: (1) the employer will absorb the cost and pass it along to the customers, (2) the employer will hire fewer workers, (3) the employer will automate more so that humans become expendable, or (4) the employer will cut other benefits to make up the difference. The best option depends on a host of factors, from the cost of training to the competitiveness of the industry. Most employers choose a combination of the four. Whatever the choice, an increased minimum wage means fewer jobs and higher prices.

Why have a minimum wage in the first place? Brown gives us an answer; it’s good ethically, socially, and politically. He’s definitely right in terms of politics. Most voters subscribe to the Marxist rhetoric of workers and consumers as powerless, and demand that politicians force them to play fair. In this sense, raising the minimum wage is good politically.

Brown’s social claim is elusive. The concept of social justice—also rooted in Marxist thought—is ill-defined and typically refers to making things right where the market fails. If your labor is worth the $10 an hour you get in your present job, then the market is not failing. You need to work your way up or build your track record so you can get another job.

But Brown’s notion that a $15 minimum wage is ethical (moral) is the kicker. He claims that parents can raise their kids more effectively when the minimum wage is higher. Of course, few minimum wage earners are actually full-time workers heading households. I guess parents earning the minimum wage who don’t lose their jobs after a mandated increase will be better off, but what about everyone else? How is the minimum wage better for consumers who must pay higher prices, teenagers who can’t convince an employer to pay them $15 an hour, or those without skills who need a place to start at any wage? What kind of incentives does it create for young workers deciding if high school or job training is worth the effort? And what about the employers whose businesses are at risk?

No, raising the minimum wage is not moral. If it were, then why not be “more moral” and raise it to $50 an hour? Employers can’t afford $50, you might say, so that would be a bad idea. Then why do you assume they can always afford $15?

It’s really simple. Raising the minimum wage is bad economics, so it’s not the moral thing to do.

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Trump, Lewandowski & Fields

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By now everyone has viewed the Michelle Fields – Corey Lewandowski video dozens of times, if not frame by frame. I’ve drawn my own initial conclusions from the video, but I will wait to pass judgment until all of the facts are in. As videos depicting Michael Brown and others have underscored, there’s usually more to the story than meets the eye. In this post I will analyze Donald Trump’s response to the incident. He’s the candidate, and we can learn a lot of studying his approach.

Predictably, most pundits and all of the other Democrat and Republican candidates called for Trump to fire his campaign manager. The incident is a distraction, Lewandowski put himself in a difficult predicament, and he should go. Besides, this is politically expedient, as it positions the other candidates as proponents of high standards at Trump’s expense. But is this valid?

It is commonplace to unload a member of your political team when detractors demand a scapegoat. Arguably, Lewandowski’s behavior might have been a little more combative than necessary, but there is no clear evidence that he intended to physically harm anyone. He made a split-second decision to get between Fields and Trump in what has become a heated campaign environment. He shouldn’t be penalized for making a tough call.

People frequently make the wrong split-second judgment or choose the wrong words to answer a question. The only way to avoid such mistakes is to avoid action. Business leaders like Trump understand and appreciate this reality. In the world of politics and spin, elected officials are expected to avoid offense at all cost and fire anyone on their team who is called into question. This is the personification of political correctness and it’s a big part of the reason why Trump is getting so much support. Many Americans are tired of the PC mentality and they want to elect a president who is as well. They respect Trump for not throwing Lewandowski under the bus.

Trump noted—and rightfully so—that Lewandowski should have been let go immediately if he had pulled Fields to the ground. I agree. There is a point where serious action should be taken, but there is no evidence that this occurred. For this reason, I believe Trump handled this situation properly. It demonstrates his strong leadership instincts and loyalty to his fellow team members.

Like Trump or not, he got this one right.

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