“It’s The Economy, Stupid”

My appeal to purpose-driven business leaders to embrace the business argument.

A History Lesson

Back in 1992, when Bill Clinton was running for president, advisor James Carville reminded campaign staffers of one key fact, “It’s the economy, stupid.” Running against George H.W. Bush in the midst of a growing recession, Carville was reminding the team that the economy overwhelmingly dictates the outcomes of presidential elections. Make a winning argument that Clinton is better for the economy and you win the election (and “don’t forget health care”).?

Fast forward 32 years and we find ourselves mired in another election cycle. No, not the presidential one (we’re not going there with this op-ed), but an election of public opinion over societal values, climate action, green energy initiatives, and equitable access to opportunities and outcomes.?

And we have seemingly forgotten the lessons Carville taught us. We’re losing the war of public opinion because we can’t make the argument everyone knows to be true: this is good for business, good for the economy, and good for the long-term well being of all of us. Yes, it's the right thing to do, but it's also the right thing to do.

Win the argument or make the argument??

While many of my well-intentioned colleagues are insistent on winning the argument and being right, they’re forgetting to make the argument, forgetting to bring it back to things that can’t be politicized. Good business is good for business.

Reducing our carbon footprint and emissions isn’t just good for the environment, it lowers a company’s bills & increases resiliency, and when done right, attracts customers and becomes a magnet for top talent, according to a study by the World Economic Forum . ?

And almost every piece of research shows diverse teams perform better. In fact, according to a McKinsey study released in late 2023 , companies with diverse executive teams and boards are significantly more likely to financially outperform their less diverse peers. And bringing in different people from different races, genders, ethnicities, cultures, and socioeconomic backgrounds leads to better innovation and decision making, according to research published in the Harvard Business Review . It drives creativity, performance, and bottom line results.?

We’re straying from the winning argument and allowing ourselves to be co-opted by academic language, acronyms, and a large amount of self righteousness--rather than focusing on the business & societal outcomes we're driving. Let’s let the economic results speak for themselves, continue to do the work, and continue to demonstrate the results.?

Capitalism as a catalyst

We the people…control everything. The beauty of capitalism lies in the lines of the supply and demand curves. When Milton Friedman wrote about shareholder primacy in his famous 1970 New York Times op-ed , he was simply making an argument rooted in economic theory. I’ve beaten this dead horse, man in this case, enough in my TEDx talk , so I will leave him alone in this piece. But here are his two key arguments, again they are rooted in economic theory, explaining why this whole purpose driven business thing won’t work:?

1. Employees want to work for the employer that pays them the most.?

True, we do care about what we earn (I haven't met anyone that thinks they're overpaid). But we also want purpose, and we want to work for a company that does business the right way. A report by Deloitte puts this number at 86% for Gen Z and 89% for Millennials, and Bain published a report calling purpose "the secret weapon in the new war for talent." We’ve shifted the supply curve of talent in the marketplace, and the demand is steadily decreasing for jobs at companies rooted, and still operating, in 20th century “profit over everything” principles.?

2. Customers want to buy the best product at the lowest price.?

True, but this is also becoming more of a "Yes, and" statement. Those of us with the luxury to afford to do so want to buy a product that’s made better, made by employees making a living wage, and made without destroying the environment in the process--it's why I try to buy from B Corps whenever possible.?According to PWC, we're actually willing to pay almost 10% more for sustainable products , even with the inflationary pressures of 2024.

As we continue to make the business case for good business, good jobs, and good products, the rest of the business world will follow. They’ll follow the point where the newly shifted supply and demand curves meet. And this is one of, if not the most powerful tools we have at our disposal.?

Doing the work

We have to keep going, have to continue doing the work, and demanding more of our employers & the companies we buy from. We have to continue, whenever possible, to reward the companies doing things the right way, with our employment and our purchases. We have to ensure they’re growing and profitable.

And we also have to keep advocating, but not based on being right and not based on theory. We have to keep advocating for good business and a reimagined version of capitalism. We have to keep making the business case.?

If we boil down our principles to common denominators, we find principles that the vast majority of Americans will get behind. We want the best for our children, and we want them to do better than we did. We want our friends and neighbors to be able to make a good living and enjoy their time on Earth. We want there to be an Earth.?

But we have to make a better argument rooted in these commonalities and support the businesses working to make them a reality. And we have to put our pride aside and commit to doing the work, not winning the argument. The argument won’t change anything, but the work, and the economic evidence, will.

At the end of the day, like Mr. Carville so eloquently reminded us, "it's the economy, stupid."

Photo Credits:

James Carville speaking at the 2016 Politicon at the Pasadena Convention Center in Pasadena, California . Photo by Gage Skidmore . CC BY-SA 2.0

The Classic Supply & Demand Curve Photo by: Sustainable Rural . CC-BY-SA 2.0