Time to Reinvent Corporate America

Time to reinvent corporate America while stopping it from the viral demise: what Trump administration may or may not have triggered

This is not a political article

This is not a political, financial, or even a social article; this is a mere call out of the risks, and a series of suggestions on how corporate America should best go from here. 

Introduction to this article

Regardless of political inclinations, we almost all look for the same things: well-paid jobs, healthy families with manageable healthcare costs, secure retirements, etc. There are 151 million full-time workers in the United States[1]; 39.2 percent are employed at either a large or huge company, while 26.5 percent work at mid-sized companies, and 34.3 percent work at small ones[2]. That’s almost 100 million, or 65% of 150 million employees, who are involved in Corporate America[3].

I fear that corporate America may fall into a big trap of taking what has become the norm in our politics in recent years and applying it in its practices. This would be catastrophic for all 330 million Americans with global ramifications beyond what was previously imaginable; like 2020 magnified

I am not saying that everybody will misbehave as Dr. Samenow[4] does. In his article, he writes "Role models and choices, many youngsters become honest, are hardworking, and become givers rather than takers even though their parents have modeled the opposite qualities." But if parents act irresponsibly, there is a good chance that kids might follow the same path.

There are two schools of thought regarding the matter. One claims that corporate America is way ahead in implementing progressive agenda such as environmental, social, governance checks, and balances embodied in the ESG framework[5]., and the U.S. government is just the last holdout. On the contrary, I believe that the federal government that employs about the same number of people as the six largest U.S. companies combined, and has a total annual revenue that is larger than the top 16 companies in the Fortune 500[6]combined, can have a hugely adverse impact on corporate America's culture, governance, and behavior.

Almost four years ago, I wrote an article that focused on Trump’s 2016 election [7]. I clearly understood why white America and left behind America voted for someone like Trump. I called out almost everything that has happened since Trump's election and asked white America, who elected Trump, but arguably, they did not or could not. Instead of Trump working for them, they have been working for Trump and his agenda. This is my more significant call out, since politics impacts all of us in a gradual and slow manner. Nobody will lose money today if investment in education is cut, nobody will die if sought investments in infrastructure are deferred (COVID 19 is an exception), but millions of people may lose their income and savings, jobs, and livelihood within matters of months if corporate America starts emulating the Trump administration practices. 

Don't get me wrong; Corporate America knows how to take advantage of the loopholes and mess things up. Just look at this list[8]:

1.     Apple (offshore tax evasion; refuses to comply with DOJ warrants and requests)

2.     Google (pay to play, non-payer results are suppressed during product searches)

3.     Amazon (counterfeit products; fake reviews)

4.     Facebook (fake news; paid foreign political agitation, misuse of member data)

5.     Wells Fargo (opening fake accounts without customer consent)

6.     General Motors (failure to address safety issues led to at least 95 preventable deaths over the past decade)

7.     Opioid pharmaceutical makers

 More detail on the Opioid crisis later in this article. 

Trump admin 

It’s not really relevant whether you think it’s justified or not, but the Trump administration has brought a number of the back alley and unorthodox practices into the mainstream:

• Misinformation [9] is "false information that is spread, with intent to mislead." From the well discussed and televised topics, like the size of the crowd in the inauguration, to claimed voter fraud, to claims like windmills cause cancer, to hurricane Dorian sharpie fiasco to as many as 20,000 [10] lies or in politically correct term; misinformation.
• Dishonesty. If misinformation is to misinterpret and misrepresent events and facts, dishonesty is to do something wrong such as covering the existence and impact of COVID 19 or working with foreign governments[11] to sway a democratic election. The list of Trump, its administration, and the enablers' dishonesty doesn’t stop there: seven people from the administration have been criminally charged and 215 have been criminally indicted[12].  One of the in your face ones is to not follow the constitution and refuse to take the vote for the supreme justice nominee ten months before the previous election, yet jamming a favorable candidate 20 days before the next election, are all good examples of how dishonesty makes the U.S. judicial system lopsided, even at the highest level. 
• Political loyalty over the good of the public or competence. From firing Comey to dismissing the attorney general (AG) and firing many capable people in the administration who put duty before blind loyalty. This results in undermining the well-established institutions and the tried and tested processes. It encourages a “witch-hunting” management style, where people who oppose you are hunted and purged. 
• Empty promises; this is to promise something that one has no intention to follow through with. Trump has claimed to drain the swamp but has actually made it much worse than ever before, and said he’d build a wall and that Mexico would pay for it. Unfulfilled promises lead to a loss of trust: People who believed in the promises lose their prior confidence. 

When trust is gone then others suffer too, such as those who really mean what they promise but cannot find buyers since people are jaded and untrusting. Once the trust is gone in a family, community, and country, then everybody performs suboptimally, like anything worthwhile needs teamwork, and trust is foundational to any collaboration. Lack of trust prevents any long-term undertakings since one needs to trust cohorts to invest in something that might not show immediate results. Finally, one needs to constantly watch their back when there is no trust.

All these issues have felt the difference of such practice implementation: climate change, women's rights, healthcare, immigration, voting rights, national security and foreign relations, social welfare, education policies, and judiciary system.

Corporate America at risk

Corporate America works on one fundamental principle; to create as much value for shareholders as possible. Everything else is secondary. Indeed, some companies do an excellent job of governance and acting responsibly for their communities and environment, but this is not enforced and is more like voluntary work. Take what BP did to environments[13] for example,  or how Purdue exacerbated the Opioid crisis that negatively impacted the entire US population.

After the colossal impact of mismanagement of the 2008 housing bubble in the US, governments got a lot smarter[14] by establishing customer protection, implementing smart environmental regulations, and enforcing a more watchful eye on analysts and people in the know. Most of these got rolled back by the current administration and adding the blueprints of some of the unorthodox practices that worked and is working at the time of this article. It is not hard to see that some of the companies in corporate America may fall for these, which inevitably would have a devastating effect on social, economic, and environmental factors in the short or long term 

An example of corporate misdeed

This example enables a full understanding of why the result could be so devastating and how an industry collectively can impact the entire U.S. population. 

2018 data shows that every day 128 people in the United States die after overdosing on opioids. [15]The misuse of and addiction to opioids—including prescription pain relievers, heroin, and synthetic opioids such as fentanyl—is a serious national crisis that affects public health as well as social and economic welfare. The Centers for Disease Control and Prevention estimate that the total "economic burden" of prescription opioid misuse alone in the United States is $78.5 billion a year, including the costs of healthcare, reduced productivity, addiction treatment, and criminal justice involvement. 

The opioid crisis is a culmination, not an aberration, of the prescription drug industry's business model. Essentially, the opioid epidemic is a cautionary tale that points to what we can expect if lawmakers don't take meaningful action to rein in drug corporations' power to set prices, gouge patients and boost profits at the expense of people's lives.

The courts won't stop drug corporations' aggressive marketing of medicines, a key factor in jump-starting the frenzy of prescriptions that led to the opioid epidemic. Drug companies routinely spend far more on marketing and advertising than on research and development, despite the industry's claims to the contrary.

Between 1997 and 2016, industry spending on marketing increased from $17.7 billion to $29.9 billion. A significant portion of this advertising — $6 billion in 2015 — is taxpayer-subsidized.

Let's take a closer look at one particular company in that industry; Purdue pharmaceutical. 

In the heart of the Opioid crisis, Purdue was the only main company. The lawsuits that Purdue and the Sacklers are seeking to settle allege that their company's sales practices were deceptive and at least partly responsible for the opioid crisis, which claimed more than 400,000 lives from 1999 to 2017, according to the Centers for Disease Control and Prevention. Some of the lawsuits also allege that after 2007, the Sackler family drained the company of money in order to enrich themselves.

"The Sackler family built a multibillion-dollar drug empire based on addiction," New Jersey Attorney General Gurbir Grewal said in May when his state joined others in suing the Sackler family and their company. Massachusetts Attorney General Maura Healey was the first to name family members in her suit in January.

Purdue Pharma, which makes the opioid painkiller OxyContin, and the Sackler family have denied the allegations laid out in the lawsuits.

Another example is the fast-food industry. According to the State of Obesity, obesity-related health problems cost $147 billion to $210 billion across the country each year,. Obesity is also associated with diminished productivity, and increased work absenteeism, costing the country $4.3 billion per year, according to the report[16].

We can go on and on about how different industries can cost the taxpayers billions of dollars, take lives, and eventually ruin our collective livelihood for their own profit-making.

“live by the sword and die by the sword”. This is the time that we all either live by Corporate America or die because of it.

Possible solutions

We established how a rogue company or an industry could ruin lives and the environment and cost the taxpayers billions of dollars. So, is there anything that we can do about it? The good news is yes, but the bad news is that it would require a great deal of will from corporate America and government support.

1.  Presidents are elected based on the success of their campaign and are elected by people who may not fully understand what it takes to do the job. On the other hand, CEOs are usually picked by a group of people who know exactly what it takes to do the job. The first line of defense should be to ensure the right criteria are sought after; attributes like integrity, compassion, and a longer view of what is right for the greater good than quarterly reports and tactical stock price hikes. Better vetting and transparency can go a long way. This means CEOs should be evaluated on equal credit by not only how much value they create for their shareholders but for how they believe in their community, the environment, and just social causes. And these should be published and made accessible to the public, very much like how a supreme court judge vetting process is made public. 
2. Benjamin Franklin said three could keep a secret if two of them are dead. Nothing can be done without many people in the organization knowing about it. Traditionally, one of the H.R.'s job has been to cover the organization's back for liabilities and other perceived risks. It is now time to create HRs that protect the organizations from within—creating safe avenues for their employees, customers, and partners to provide information on any wrongdoing or potential risky practices. There exist laws and protection for whistleblowers[17], but as long as corporate America's CEOs who, in most cases, run a very tight autocracy, most cases will be muffled, ignored, and destroyed before seeing the light of day. If internal HR cannot get the job done, we need federal level support with ample resources that are able to wholeheartedly look into every allegation.
3. ESG or Environment, Social, and Governance[18] framework has been around for many years. On paper at least, many of the major corporates have tied some of their senior leadership bonuses to the organization's ESG ranking. Studies have shown that this works. Savita Subramanian, Head of U.S. Equity & Quant Strategy and Global ESG Research and BofA Global Research, shows in her report "Can ESG Investment Strategies Outperform[19]?" that organizations with higher ESG ranking actually outperform their counterparts by 3%. ESG can be worked into "responsible investment" with some clear carrot and stick approaches attached to it by the lawmakers to greatly punish and deter the investors from investing in the culprits.

Conclusion

If corporate America slips, we will all do so alongside it. It’s imperative to have awareness and the right measures in order to ensure the greedy or uninitiated will not put the country in a hole that the rest of us would not be able to climb out of. Just think of the 2008 financial or 2020 COVID 19 crises.

In my next article, I will discuss the ways corporate America actually can take the lead to deal with these issues while fixing many deep-running challenges of our generation. As the proverb says “live by the sword and die by the sword”[20]. This is the time that we all either live by Corporate America or die because of it.

[1] https://www.statista.com/statistics/269959/employment-in-the-united-states/

[2] https://www.nysscpa.org/news/publications/the-trusted-professional/article/more-americans-work-at-big-firms-than-small-ones-040717

[3] These numbers are from pre-COVID-19 era.

[4] https://www.psychologytoday.com/us/blog/inside-the-criminal-mind/201304/role-models-and-choices

[5] https://en.wikipedia.org/wiki/Environmental,_social_and_corporate_governance

[6] https://www.brookings.edu/blog/fixgov/2020/03/16/trumps-failed-presidency/#_ftn2

[7] https://www.dhirubhai.net/pulse/angry-america-should-own-up-follow-through-ramin-erfanian/

[8] These can be argued

[9] https://www.dictionary.com/e/misinformation-vs-disinformation-get-informed-on-the-difference/

[10] https://www.washingtonpost.com/politics/2020/07/13/president-trump-has-made-more-than-20000-false-or-misleading-claims/

[11] https://www.cnn.com/interactive/2017/politics/trump-russia-connections/

[12] https://www.politifact.com/factchecks/2020/jan/09/facebook-posts/many-more-criminal-indictments-under-trump-reagan-/

[13] https://www.ecowatch.com/will-u-s-taxpayers-foot-the-bill-for-bp-oil-spill-cleanup-1881643901.html

[14] https://www.cbpp.org/research/economy/the-financial-crisis-lessons-for-the-next-one

[15] https://www.drugabuse.gov/drug-topics/opioids/opioid-overdose-crisis

[16] https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2015/11/02/citing-cost-to-taxpayers-cities-and-states-tackle-obesity

[17] https://en.wikipedia.org/wiki/Whistleblower_protection_in_the_United_States

[18]https://en.wikipedia.org/wiki/Environmental,_social_and_corporate_governance#:~:text=Environmental%2C%20Social%2C%20and%20Corporate%20Governance,companies%20(return%20and%20risk). 

[19] https://www.bofaml.com/en-us/content/esg-investing-research-report.html

[20] https://en.wikipedia.org/wiki/Live_by_the_sword,_die_by_the_sword