Today's WSJ reported on a Senate hearing in which bank CEOs got slapped around by both Democrats and Republicans, albeit for different reasons. This part caught my eye:
Pennsylvania Sen. Pat Toomey, the top Republican on the panel, pressed the firms on their stated support for “stakeholder capitalism.” Mr. Dimon led a group of executives who in 2019 said corporate decisions should take all stakeholders—employees, customers and society at large—into account.
“I would just ask you to reconsider this because stakeholder capitalism is meant to diminish the importance of a company’s obligation to shareholders, relative to other stakeholders, and I think that’s a contradiction of the fundamental aspect of capitalism,” Mr. Toomey said. ...
Some questions generated an awkward silence. Sen. Tim Scott (R., S.C.) pressed the executives to explain why some of their firms or executives signed a recent statement that expressed opposition to Republican-led voting bills in Georgia and other states.
Asked what specific portions of the Georgia law they objected to, none of the executives responded.
“It came out of our teammates…expressing grave concern,” Mr. Moynihan said.
You might almost think the CEOs had not familiarized themselves with the issues, but instead just echoed Democrat talking points.
Oddly enough, I've been reading the 1973 debate my dear friend and mentor the late Henry Manne had with Henry Wallich over corporate social responsibility. In it, Henry opined that:
Positive utility may be experienced by corporate executives either from the prestige and prominence that come from claiming to be "corporate statesmen," or it may come from removing some discomforting external pressure. Such pressures, coming either from one's business peers or from outside the business community, may create discomforts for corporate executives who do not conform to the standards demanded. ...
If a contribution, program or activity will free the relevant corporate executive from pressure and harangue by outside groups, such as the Project on Corporate Responsibility, other Ralph Nader supported groups, or various environmental protection groups, this may well be the use of funds which has the highest utility for that individual. As we have already noted, expenditures of this sort present little danger of adverse governmental or shareholder reaction, and thus to the extent that some positive utility is realized by the executive, it is also effectively concealed. ...
Another interesting implication of this theory of charitable giving is that it should make no great difference to the donor (realistically viewed as those in control of the corporation) whether or not the expenditures actually accomplish the purpose for which they are allegedly made. The important thing is that the contribution itself either gains the positive utility desired or relieves the donor of the disutility he is experiencing. In fact, as long as the contribution or activity is thought by its advocates to have the effect claimed for it, it will not be in the interest of the donor to expend any time or effort at all to find our what the actual result of the expenditure is. In other words, the satisfaction or utility will come from being seen to make the expenditure and not from the results allegedly purchased.
As applied to today's environment, we might infer that the bank CEOs don't really care about the voting rights of Georgians. Instead, what we're seeing is a form of greenwashing, in which the CEOs got to look like statesmen and appease their activist employees. Ironically, however, it doesn't;t appear to have bought them much credit with folks like Elizabeth Warren:
Sen. Elizabeth Warren (D., Mass.) criticized JPMorgan for collecting nearly $1.5 billion in overdraft fees in 2020. “You and your colleagues come in today to talk about how you stepped up and took care of customers during a pandemic, and it’s a bunch of baloney,” Ms. Warren said.
