Dog Bites Man in Davos
Business moguls, policy makers, and finance reporters returned to Davos, Switzerland, this week for the 49th annual World Economic Forum. The Forum and the city in which it takes place have long been synonymous with the “global financial elite,” so remarks delivered there are treated as major developments in the war of world historical economic systems.
Speaking to CNBC on Wednesday, J.P. Morgan Chase CEO Jamie Dimon took the (one world think unsurprising) position that socialist governments are bad at efficiently allocating capital and that “most state-owned enterprises don’t do a particularly good job.” The head of the world’s largest bank not being a fan of socialist economic planning would normally be something of a dog-bites-man story, but Dimon’s interview nevertheless produced headlines around the world.
This non-story story highlights how risk-averse today’s generation of business leaders have become when it comes to making a certain category of “political” comments. Why wouldn’t every CEO in the world simply be expected to defend the superiority of a voluntary, market economy? Why, in the words of my venerable colleague Fred Smith, are businessmen so lacking in self-esteem? As Fred wrote for Forbes in 2013, many business leaders are anywhere from nervous to petrified about having to defend the virtue of capitalism, per se, on a public stage:
Today, both business schools and the corporate world have opted not to defend capitalism, but rather apologize for it. Focused on the failures of capitalism—externalities, public goods, collective action problems, and others, the dominant story is that business is good but flawed. It pollutes too much, it ignores its community, and it fails to address inequality and prejudice. And of course, the enlightened “intellectuals” have the answer to these problems: the expansion of government programs.
There are many reasons why a CEO should focus on making his company’s products, rather than himself, the center of attention. An executive who wants to spend all of his time talking about controversial political topics should probably run for Congress instead. But when it comes to merely stating that a free economy is superior to a centrally planned economy? That should be a public position that’s easy to take—especially for anyone being paid to manage other people’s money.
That doesn’t mean that corporate executives should only defend capitalism and not talk about solutions to societal problems. Fred again, in Forbes in 2016, had choice words about what CEOs should be saying about inequality. That advice includes challenging the assumptions of people pushing questionable policy prescriptions and remembering what brought us the levels of prosperity we enjoy today—long-term economic growth based on free exchange, entrepreneurship, and a legal system that protects property rights. To the extent that a trendy new program for economic regulation threatens those things, it’s no solution, but a spider’s nest of new problems waiting to hatch.
Encouraging capitalists to defend capitalism seems like an odd project to have to undertake, but it’s nothing new. Economist Joseph Schumpeter (1883-1950) famously wrote about how even the most capable executive—“a genius in the business office”—may be unsuited to defending the ideas undergirding the modern economy, either in his own personal life or in public sphere. Moreover, the temperament of a prudent business leader rarely lend itself to the dramatic visions that politicians use to capture people’s imaginations. Capable managers don’t generally have the “mystic glamor” that charismatic (and demagogic) leaders exhibit.
Fortunately, C-suite denizens aren’t in it alone. There’s a robust free-market movement of nonprofit and academic organizations whose research and communications functions are waiting to assist our friends in the business world who want to present a simple, compelling explanation of why they, their company, and the business world in general are a force for good. From the U.S. Chamber of Commerce to the Small Business and Entrepreneurship Council, there are resources out there to help everyone understand the true role of business in the modern world. Of course, think tanks like the Competitive Enterprise Institute are happy to help as well.
Some of the groups doing important work in this area were even started by the handful of CEOs who did decide to jump into the world of ideas and politics themselves. Home Depot co-founder Bernie Marcus started the Job Creators Network and Whole Foods co-founder John Mackey created Conscious Capitalism. Following their example, we can look forward to a future where more business leaders are willing to defend their life’s work on the merits, rather than apologize and donate their way to a shame-faced atonement.