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April 10 2017

Progressives, Inc.

via Weekly Standard
by Naomi Schaefer Riley

When Darren Walker, president of the Ford Foundation since 2013, called for a “reimagining of philanthropy's first principles and its relationship to our market system," few people thought this meant that he would join the board of directors of PepsiCo. But that's exactly what he did last fall. Walker, who stands to make somewhere between a quarter and a half a million dollars a year in his new role, insisted he would introduce a distinctive view into Pepsi's corporate deliberations: "I will bring my perspective as the leader of a social justice organization. .  .  . I will bring my perspective as someone who is deeply concerned about the welfare of people in poor and vulnerable communities."

Some of Walker's allies in the progressive community seem skeptical about his self-assigned role as corporate reformer. Pablo Eisenberg, a senior fellow at Georgetown University's McCourt School of Public Policy and longtime critic of foundations and corporations, wrote an open letter to Walker in the Chronicle of Philanthropy last month taking him to task for accepting the appointment. "You failed to understand the negative impact your action could have on philanthropy, and on those working to change corporate behavior."

In other words, Eisenberg is accusing him of selling out.

Eisenberg notes that in the eyes of activists like himself, Pepsi has been a bad actor in the corporate world for a long time. Not only have Pepsi executives opposed legislation to combat obesity (only small sodas, please) but the company's business model is designed to sell "junk food" and sugary drinks—even to poor people.

Walker, for his part, insists that he will not serve on Pepsi's board as "window dressing" but will actually work to change the company's policies. Pepsi's CEO Indra Nooyi told the New York Times that she invited him to join her board because "we want people who give us trouble and ask tough questions. I saw in Darren someone who would hold us accountable."

That may be true, but Pepsi no doubt prefers to hear its critics asking tough questions in the privacy of the boardroom rather than leading protests outside corporate headquarters or at public shareholder meetings. Adding Walker to its board is an easy and relatively cheap way for the company to signal to its critics that it is on the "right" side of controversial issues like climate change, public health, diversity, and inequality. (Walker apparently couldn't do much to protect the company from the backlash it received over an ad in which Kendall Jenner seems to be cheapening the Black Lives Matter protests by offering a Pepsi to a police officer.)

In Pepsi's defense, it is true that the company is selling more healthy products these days—a fair amount of bottled water and items with less sugar and salt—but this is more because of changing tastes in the marketplace than in response to heavy-handed campaigns led by the likes of Michael Bloomberg and his own multi-billion-dollar foundation. Pepsi says it is planning to reduce its environmental impact in the next few years as a concession to critics concerned about climate change. No doubt the company will rely upon Walker to put the official stamp of progressive approval on whatever plans it eventually releases.

All of this mutual backscratching between leaders of liberal institutions and corporate America is nothing new. As Eisenberg noted in his letter, "Judith Rodin, who just retired as head of the Rockefeller Foundation, has been a member of at least three corporate boards, and some of [Walker's] predecessors at Ford have also enjoyed the sizable perks that come with corporate directorships." Hugh Price, who used to lead the Urban Institute, sits on the board of Verizon and MetLife. Anne-Marie Slaughter, the New America CEO, served on the boards of McDonald's and Citigroup. Large corporations have long made it a practice to invite critics to join their boards on the assumption that it is always better (in Lyndon Johnson's immortal words) "to have [them] inside the tent pissing out than outside pissing in."

What is new in Eisenberg's criticisms is that some progressives are starting to see that their erstwhile allies who join corporate boards are in effect providing cover for corporate practices they once criticized. Perhaps, they are suggesting, it is better for corporate critics to remain "outside the tent" where they can at least criticize corporate practices with a clear conscience.

In a recent interview on the Ford Foundation's website, Martin Whittaker, CEO of JUST Capital, expressed worries about the dangers of "unchecked capitalism" and suggested that today's market culture "strips capitalism of any humanity and incentivizes and rewards short-term financial gain at the expense of the broader social good"—not exactly a novel criticism. He went further to question whether Adam Smith would still support the free market if he could see how it operates today. His is actually one of the rosier views of capitalism that the Ford Foundation has promoted in recent years. It is a good question whether Walker's decision to join the Pepsi board is compatible with the anti-corporate and anti-capitalist views his foundation has staked out.

As Michael Siegel, a professor at Boston University's School of Public Health, told the New York Times, "Pepsi is not in the business of public health; they're in the business of selling soda." This is true, though beside the point. If Pepsi did not sell soda and other products not officially approved by progressive elites, the company would not be in business today to allow the likes of Walker to join its board.

For years, left-wing intellectuals have been pushing the idea of corporate social responsibility as a way to get companies to do the things they want, even if it costs the companies money. Whether it's reducing carbon emissions or making their workforces more diverse or changing the products they make, the goals these progressive gadflies are pursuing are no closer to being realized today than they were three or four decades ago when activists first learned they could shake down corporations for donations and occasional board positions in exchange for toning down their public criticisms. Much of the journalistic profession has by now signed on to the enterprise, calling on corporations to change their practices and to join one or another progressive crusade. This has at length evolved into a ritualized performance with all sides embracing "change" while recognizing that nothing fundamental has changed or is likely ever to change.

The cover story in the Atlantic this month about the small number of women employed by Silicon Valley concludes that the only way to achieve workforce diversity is to pay managers bonuses to hire more women. That's an expensive proposition and a fairly complicated one to carry out. It would be easier, some executives are bound to conclude, to deflect this kind of criticism by appointing a few feminist leaders here and there to their corporate boards.

Progressives like Eisenberg and Walker are badly confused about the role large corporations can or should play in American society. On the one hand, by focusing so persistently on corporate reform, they express a tacit acceptance of the important role that large corporations play in the American economic system. They do not wish to eliminate corporations or to cut them down to size, as an earlier generation of progressives wished, but to bend them in their political direction by inducing them to embrace diversity, feminism, environmentalism, gay marriage, and other causes—something that corporate leaders are more than willing to do, up to a point. At the same time, progressives want corporations to give up their market-oriented missions by curtailing production of sodas, fossil fuels, guns, large automobiles, beer, cosmetics, furs, and any number of other items that run counter to the progressive vision of a pure and uncorrupted society. But this is something corporate leaders will not and cannot do without selling out their stockholders, employees, and customers. In short, they can afford to pay lip service to progressive complaints but cannot do anything fundamental to satisfy them. And for this reason the ritual dance between the two sides will continue.

But the corporate leaders are playing a perilous game and risk forgetting Kipling's adage that "once you have paid him the Danegeld, you never get rid of the Dane." They have made their alliance with progressives who are surely no friends of the American corporation, while antagonizing conservatives who should be their natural allies, but whose support they have long taken for granted. Those conservatives are aware that they win support today mainly from small business, blue-collar workers, and small town and rural voters—and have little direct interest in defending large corporations, whether in the areas of taxes, regulation, or trade. Corporate leaders at Pepsi and elsewhere may soon find themselves in a situation where they have no genuine allies to support them.

James Piereson is a senior fellow at the Manhattan Institute. Naomi Schaefer Riley is a senior fellow at the Independent Women's Forum.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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