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What happened to stakeholder capitalism?
Sep 14, 2023
Episode 1004

What happened to stakeholder capitalism?

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Plus, a CEO says the quiet part out loud.

In the before times, some of America’s top corporations pledged to rebalance their priorities and serve all stakeholders instead of just shareholders. Today, workers still aren’t feeling the love. We’ll get into the disconnect between employees and CEOs and explain how that’s playing out in recent labor disputes. Plus, why beer drinkers at a Milwaukee bar are feeling down after the Jets win.

Here’s everything we talked about:

Join us tomorrow for Economics on Tap! The YouTube livestream starts at 3:30 p.m. Pacific time, 6:30 p.m. Eastern. We’ll have news, drinks, a game and more.

 

Make Me Smart September 14, 2023 Transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kimberly Adams 

All the things are turned off, all the things are muted. And I am in a good position to have a chat with you for our show.

Kai Ryssdal 

Juan Carlos. I believe that’s your cue. There we go. I have a say.

Kimberly Adams 

You don’t. Hello, everyone. I’m Kimberly Adams, welcome back to Make Me Smart where we make today make sense.

Kai Ryssdal

I’m Kai Ryssdal, 14 September Thursday is what my calendar says.

Kimberly Adams

Yes, indeed. And by now you’ll probably know if you’re a regular listener. And if you’re not then welcome happy to have you. Thursday’s is all about listening back to some of the big stories of the week or of today, depending on when the audio came out. So we’ve got some audio clips lined up, we’re gonna get into what was said in those clips, and what was left out. So here’s the first one.

Shawn Fain

You know, the talking heads, the pundits, the companies want to say that, you know, if we strike and wreck the economy, it’s not that we’re gonna wreck the economy. We’re gonna we’re gonna wreck their economy, the economy that only works for the billionaire class, it doesn’t work for the working class.

Kai Ryssdal

Why don’t you take this one Kai?

Kai Ryssdal 

All right, boy, there was a lot in there. So that was Shawn Fain. He’s the reasonably newish President of the United Auto Workers on CNN the other day. You’ve all heard about the news, that there could be a strike effective this evening, depending on when you listen to this, that would be Thursday, it looks now like it’s not going to be a broad general strike against all three of the big car makers, but more selectively targeted strikes to induce some pain, the UAW is asking for a lot. And it’s asking for a lot because number one, it’s given back a lot over the last five to eight to nine years. But also because the companies are growing and doing a boatload of business I will recommend not for the first time the uh, uh, jeez Kai just speak will you, enough with the uh, uh, uh. What is that? So The Daily had a great episode on this the other day, the other day. And it was it went through the history of the UAW, what the workers gave back what the workers got in the 50s and 60s and 70s. And then what they gave back in the 80s 90s. And then the bankruptcies and all that really super interesting. Anyway, UAW is not messing around this time. And I don’t know how the carmakers given the many billions of dollars they’ve been making, and the huge raises their CEOs have gotten, are going to be able to get away without giving substantial concessions.

Kimberly Adams 

I mean, this is a theme I’ve been seeing in a lot of these strikes, and also just in the labor movements more broadly, so much attention being put on, and we see this with the SAG-AFTRA strikes as well. And it looks like the gamer, a lot of people in the gaming industry are getting ready to potentially go on strike. You know, they’re looking at the pay for the CEOs and saying, you know, you’re denying us these small increases, while you’ve been giving this to your CEOs, and also giving this to your investors. And this, you know, I know, we tried to get at this on the show the other day, and I didn’t quite take it over the finish line. But this idea that a couple of years ago, many of America’s corporations promised that they were going to rebalance their priorities of not just focusing on investor and shareholder value, and giving returns to investors, but to distribute, distribute the gains more broadly, across all stakeholders, including employees, including communities, and we are now in a situation where workers are saying, take some of the profits that are going to CEOs and to shareholders and give them to us. And it’s a fight. It’s a fight.

Kai Ryssdal 

Yeah, you know, it’s funny, I had totally forgotten that promise that those CEOs made. I think it was right before the pandemic, right? It was it was four or five years agon.

Kimberly Adams 

I bet they’re very happy that most of us forgot about it. Business Roundtable,

Kai Ryssdal 

…because it’s my job. But,

Kimberly Adams 

I don’t know, nobody mentioned nobody talked about it once the pandemic kicked in, because there were so many other huge stories. And there also wasn’t really a mechanism to track what those promises like what it would mean for those promises to actually be kept. So if you’re saying that you’re no longer going to focus just on shareholder value, does that mean that that you’re going to allocate a certain percentage of profits that definitely go to workers a certain percentage of your profits that are definitely going to be invested back into your communities. And then how are you going to deal with the lawsuits from the shareholders who say it is your job as a company to, you know, make the most money possible for us, Fox News is being sued right now, because their shareholders are saying that because you all lied and knew you lied about the election, therefore, you ended up having to pay out all this money in settlements. And now that harms us as shareholders, right? And so if you actively do not give shareholders as much money as you possibly can, they can come after you.

Kai Ryssdal 

Yeah, yeah, we can’t. Now we should be clear here. There’s a difference between between malfeasance on the part of the company and a judgment against Fox of million dollars. And companies in the normal corporate business not doing anything wrong. But yeah, I take your point. I take your point.

Kimberly Adams 

Yeah, sure. All right. Much more to say about this as we go along.

Kai Ryssdal

All right. Here we go, next.

Mitt Romney

I think it’s time for guys like me to get out of the way and have people in the next generation step forward. Because they’re going to be shaping the world they’re going to be living in. And over the last couple of decades, people of my age, the boomers have done pretty well for ourselves. We voted for all sorts of benefits and programs for us, and we haven’t paid for them. And I think some of the people that are coming along next want to have a say in how we we leave the earth and how they prepare for the future they’re gonna live in.

Kimberly Adams 

Yeah, I think. Um, so that was Mitt Romney, Senator Mitt Romney of Utah, speaking on C-SPAN about his plan to retire at the end of his first term. And what really struck me a lot of the attention was made to the fact that he was saying he was basically too old to stay in, in government, right. And, you know, hint, hint, wink, wink, nod, nod, nudge, nudge to Trump and Biden, about, you know, people who are older, this idea that maybe it’s time to give space to a new generation of leaders. But what actually struck me about those comments was him saying, and it’s one of the first time I’ve heard people on the Hill, especially of that generation, saying what a lot of younger folks are saying, particularly on social media, which is this idea that older Americans have benefited economically from a lot of the policies that are in place. And there’s an argument to be made, that is at the expense of younger generations, we have decreased our investment in education, we have decreased our investment in children overall, we spend more on the national debt, which therefore goes to pay for Social Security, Medicare, retirement benefits, sort of subsidies and tax benefits that come from contributing to retirement accounts, which typically benefit older and wealthier people in America. More is spent on like interest on the national debt than we spend on children in this country. And this idea that he’s saying out loud what a lot of the complaints have been. I wonder if it’s the opening of a very uncomfortable conversation? Because how do you have this conversation without sparking, like generational warfare?

Kai Ryssdal 

Yeah, I agree with all that, I think. What do I think? I think he’s right, that that people vote where their interests and experiences are. And if you’re a 76, 77 year old guy like Romney is or, you know, 60 year old Senator like Mark Kelly is I think he’s 60, 58 ish, whatever, from Arizona, or whoever, Patty Murray from Washington, you vote with your experience and your age. And you know, if there was a 30 year old in there, instead of Mitt Romney from Utah, there would be different votes being taken. And I think that’s a really good point. The challenge, of course, is that people then, this is the age old challenge, right? People with power have to decide that they don’t want or shouldn’t have the power anymore, and that’s a really, really difficult nut to crack.

Kimberly Adams 

Yeah, but I mean, there’s a there’s a really high risk for not, shall we say, having a peaceful of transfer of power across generations, because the risk there is getting a bunch of millennials Gen Z’s and, you know, younger, who are recognize that they can never own homes, who are bitter about seeing, you know, the wealthier older generations living their best lives and retirement while they struggle. And then when it does come time where those gentle aerations are in power, and older generations are reliant on them to make decisions to care for them. Like how is that going to translate you know?

Kai Ryssdal 

Totally, totally. And, and yet voters, and this, you know, so. So, you know, I’m going to take the presidential election here, but but this applies in the Senate applies in the house, and I’m sure it applies in cities and states across the country, but voters keep voting for the old people, right? The only president in the last I don’t even know how many Well, ever, who was born in the 1960s was Barack Obama, he leaves and we go to a guy born in 1946. And then he leaves. And then we go to a guy born in 1942. Right.

Kimberly Adams 

I mean, it’s a very imperfect system. And we don’t always with our best available options. But you know, this is why we had that discussion about rank choice voting the other day isn’t it?

Kai Ryssdal

Right. Good point. There you go. It was a little shoutout.

Kimberly Adams

Yeah. Yeah, go back to our deep dive. It was very interesting. And I’m also very curious that some of these other ideas, I do feel like there’s probably an untapped well, of ideas to make these systems better if given a chance. But as you said, it relies on the people in power, actively choosing to give up some of that power for the greater good, which we don’t have exactly a great track record of doing, here in these United States of America. Anyway, let’s go on to the next piece of tape. This is Tim Gurner, a CEO of an Australian real estate company called The Gurner Group, and he’s talking at the Australian Financial Review, property conference this week, you may have seen this clip on social media, but we want to talk about it.

Tim Gurner

We need to see unemployment rise, unemployment has to jump 40, 50% In my view, we need to see pain in the economy, we need to remind people that they work for the employer, not the other way around. I mean, there is a there’s been a systematic change where employees feel the employer is extremely lucky to have them, as opposed to the other way around. So it’s a dynamic that has to change. We’ve got to kill that attitude. And that has to come through hurting the economy.

Kai Ryssdal 

So first of all, Mr. Gurner has apologized. Second of all, too little too late. Third of all, come on man. And fourth of all, look, there’s a real detachment between the upper echelon of corporate, Australia in this case, but it applies here as well. And those who are working and providing the the labor that provides the content that provides the material that provides the product. And holy cow. I mean, you know, I’m sure you’ve seen it, this guy just got clobbered rightly so rightly. So. Yeah.

Kimberly Adams 

I mean, he was saying that unemployment needed to jump to like 40 to 50%, I guess so people can be,

Kai Ryssdal 

Not jump to, but it needs to jump by 40 or 50% so I guess people can be desperate.

Kimberly Adams 

By 40, or 50%. Sorry, thank you for that. But what struck me in this one, was he’s saying the quiet part out loud, right? This is a belief held still by a lot of executives, a lot of people in general. I mean, if you listen to the, you know, people don’t want to work crowd, as opposed to the people do not want to do the jobs available for the wages available crowd. And, you know, there’s been a backlash to this. Yes. But I wonder how how much that backlash really matters when the levers of power are still being held by people, many people who do think like this. And we still have a relatively I don’t want to say tight but something a little bit less than tight job market here in the United States, and that some employers are still struggling to fill all the roles that they have. People still aren’t, you know, I know Mitchell was talking about this today. It’s still, it seems like most of the people who want to find jobs can find jobs even if not as quickly as they would like, but I don’t know it. This one really got me I was just like, wow, you said that out loud. And on the one hand, thank you for saying it out loud so we can have the conversation. But wow. Like that’s, that’s something, that’s something.

Kai Ryssdal 

It is indeed. Last one, here we go.

AJ Bayatpour

And the mood has changed considerably. That is because the Jets just won the game on a long touchdown and overtime. You could take a look. This is the reaction from a bar where people are realizing the bar tabs they’ve been racking up all night thinking certainly with Rogers hurt. The bar was going to be paying that tab. It is setting in they are going to have to go to the bar and pays that tab.

Kimberly Adams 

I came across this on social media, it was so funny. So that was AJ Bayatpour. He’s a reporter at CBS58 in Milwaukee. And he was at Jack’s American pub. And they were running this promotion called “Jets lose, you win free beer” with this idea that if the Jets were to lose, you would get free beer. And I guess people expected the jets to lose I’m gonna…

Kai Ryssdal 

Well, well so so so the sorry let me just interject the sports so the Jets perennially the Jets perennially have been terrible. This year they got Aaron Rodgers, he’s a three or four time MVP came came from from Green Bay. He’s won the Super Bowl a couple of times. And so the Jets were like, Yay, this is gonna be awesome. So, so this, this bar figures, you know, is great. I mean, we’ll do this promo people are gonna buy beer and we’re not gonna have to pay because the Jets are gonna lose. So 75 seconds into the game. Aaron Rodgers just snaps his Achilles tendon.

Kimberly Adams 

That’s terrible. I’m sorry, I’m not laughing at him.

Kai Ryssdal 

No I know. But he goes down. And everybody says this is amazing, the Jets are gonna lose. And they start buying beer and buying beer and buying beer. And then like in the closing minutes of the game, the Jets win. The Jets win. It was amazing. It was amazing.

Kimberly Adams 

And what’s amazing about this video of this reporter, it’s like you can see people like coming to the realization and this one guy is like slapping his forehead and other people, you can see them trying to count up in their head how much they’ve spent. And so the reporter did do a follow up after getting so much attention. About 350 people opened tabs at the bar that night, the biggest bwas $160, which was all beer. And the manager said that the owners are actually on a retreat in the guest the Dominican Republic. And they haven’t decided yet whether or not they’re going to continue this promo in the future. But I mean, they’ve got the publicity for it. They’ve made their money back. That was great. You have to watch the video because watching people sort of have this dawning realization that they’re about to have to pay these bills is quite entertaining. Oh, boy, and you know, I feel a little bit bad for them. I do. Kinda sad. Okay. Anyway, that is it for today. Please, if you all have video, audio or video clips that you think we should talk about in the show do send them our way. But in the meantime, join us tomorrow for economics on tap. Our YouTube live stream starts at 3:30 Pacific 6:30 Eastern Time

Kai Ryssdal 

Today’s episode of this podcast, which is called Make Me Smart was produced by Courtney Bergsieker with assistance from H Conley. Audio Engineering by Juan Carlos Torado. Ellen Rolfes writes our newsletter. Our intern is Niloufar Shahbandi.

Kimberly Adams 

Marissa Cabrera is our senior producer. Bridget Bodnar is the director of podcasts. And Francesca Levy is our executive director of Digital.

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