Greed Is Not Good

Internal Boeing documents released recently reveal a frightening picture of corporate cultural malfeasance. The company knew there were design problems with the 737 Max. The company knew it was dangerous. They knew they were putting one over on the FAA and still they rushed to production. Many lives were lost and many more were just plain lucky.

Boeing is putting up a high-power public relations campaign now to mitigate the damage, but the problem isn’t a one and done embarrassing mistake. It is a nationwide epidemic of corporate cultures so focused on making money, they have forgotten they have a responsibility to the people and the nation.

Recently, a distinguished corporate attorney with a long and successful career, including time with the Securities and Exchange Commission, was asked, what he thought was the percentage of corporations that operated with a genuine culture of social responsibility. He said, “About ten percent.”

That number is not terribly surprising. Social responsibility doesn’t seem too high a priority in many of our American institutions these days, but his evaluation was nevertheless stark. Even if he’s wrong by 20 or 30 points, it is still clear we have a big problem.

Bloated CEO salaries that reflect honest value, rather than the incestuous mutual benefit pact currently in vogue, would be a good place to start. Most boards of directors in America are comprised of an intricate network of friends and colleagues who go out of their way to feather each other’s nest. It's a practice that doesn't even benefit the stockholders.

Boards should also be required to be comprised of people with distinguished track records of integrity, expertise and judgment. Boeing’s board has a former drug company CEO that was repeatedly sued for deceptive marketing. Another presided over a real estate company known for exploiting tenants. Another moved his company in an out of the United States to avoid taxes. Another famously led his company into bankruptcy and then reneged on a non-disclosure agreement. Two former high-level admirals are there for the big military contracts; a couple of former administration appointees are there for political clout; and two celebrities from opposite parties, Nikki Haley and Caroline Kennedy, are there for a wide range of connection. Only one member of the entire board, a former CEO of an airline company, was even remotely familiar with the industry before joining the board.

But these issues are only a superficial indication of the major overhaul that’s needed in American business. In his 1970, New York Times treatise, Milton Friedman, infamously argued that companies have no social responsibility – its only responsibility is to its shareholders. That wrongheaded thinking gave corporate America all it needed to look the other way and destroy most of the gains of the Progressive Movement from a hundred years earlier.

It is time we do a complete overhaul of the laws and penalties that govern our nation’s business practices. We don’t have to start over. Excellent foundations in principle were created by the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the Federal Antitrust Act of 1914 and the Wall Street Reform and Consumer Protection Act of 2010. We need to revisit, revise and revive this legislation and make it work for a new age. We need to give the principles embedded in these landmark acts renewed vigor and real teeth.

Just as importantly, we need to roll back Taft-Hartley and other union busting legislation that’s been passed over the years and breath new life into our unions and middle class. And, we need to do everything possible to end the influence of Washington lobbyists and money in politics.

President Trump is the poster boy for socially irresponsible business practices. Forget the sideshows, he’s on a vendetta to eliminate as many controls as possible to drive the economy to new heights. He doesn’t care about the people, the workers or the environment. He believes the economy is everything, and that is his Achilles heal.

We have a great case to make, but we’re not making it. We’re being far too personal and hateful to be heard. We’re using 100-year-old rhetoric that scares the hell out of people and pie-in-the-sky proposals we can’t hope to justify. We’re not being smart or strategic. To make our case, we need to stand on principle, focus on the corruption and problems people can see, and speak with an honest, clear and human voice. If we do, the people will hear us, and they will follow.


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