Last Thursday, industry super fund HESTA wrote to the ASX200 companies’ bosses and boards imploring them to lower carbon emissions, appoint more female leaders and moderate executive bonuses.
The letter came just days after Assistant Minister for Superannuation Jane Hume lashed industry super funds for taking an activist role in corporate governance instead of merely seeking profits for members.
This is the latest incarnation of an age-old debate. This month marks 50 years since economist Milton Friedman wrote his famous essay urging companies to focus solely on maximising profits for shareholders, and not waste their money on “social responsibility”.
This “greed is good” mantra came to dominate corporate governance around the world. Board members increasingly acted in the narrow financial interests of shareholders; they further relegated labour, consumer, environmental and ethical concerns in corporate life.
Yet since the banking royal commission exposed our nation’s zenith of unscrupulous profiteering, businesses riding roughshod over stakeholders and the environment are attracting increasing scrutiny. Most recently, mining giants BHP and Rio Tinto’s disrespect towards Indigenous communities has caused severe repercussions for board members, and Westpac’s board is facing criticism for its failings on gender and major compliance failings which led to criminal exploitation.
Thus even the AFR’s neoliberal paragons marked Friedman’s anniversary by editorialising against his vision of shareholder primacy. The Oz’s Adam Creighton was early to the party, lashing Friedman’s greedy vision a year ago. So where to next?
From the shop floor to the boardroom?
Writer and former Labor Party (ALP) adviser Dr Nick Dyrenfurth recently articulated a new corporate vision: German-style co-determination. He wrote in The New Daily that the aged-care sector could be reformed by designating board seats for workers and resident representatives — an idea he’s long been pushing for economy-wide.
Dyrenfurth is in good company. Elizabeth Warren and Bernie Sanders championed this in the US Democratic primaries, as did Jeremy Corbyn and (believe it or not) Theresa May in the UK.
The Australian Council of Trade Unions (ACTU) passed a motion at its 2018 congress in favour, and the ALP committed to “examine” the policy in its national platform. Scott Morrison responded with characteristic aplomb, telling the NSW Business Chamber that if Labor wins government: “Sally McManus will be a board member, figuratively, on every single one of your companies”.
Far from a dystopian economic future, many European countries already mandate employee or union board representation with no impediments to economic competitiveness and modest benefits to employees. It can break up insular “old boys” clubs, provide fresh perspectives, ensure broader distribution and fewer scandals.
But it is no silver bullet for our often-toxic corporate culture.
I’m conducting graduate research at the University of Melbourne on how staff-elected members have fared at the ABC and in higher education — some of the few Australian institutions that still designate board seats for elected stakeholders. While my research is still under way, the public record suggests their influence is possible but far from guaranteed.
When employees are a small minority on the board, much depends on the open-mindedness of other board members. At the ABC, partisan stacking has meant many members reject the idea of co-determination based on the prejudiced belief that all staff are raving communists, leaving staff-elected members either in constant conflict with others or accused of complicity in controversies.
We’re all in this (company) together
In the decades after Friedman articulated his doctrine, Australia almost took a very different path. The Whitlam, Dunstan and Hawke governments promoted “workplace democracy” by putting workers on government boards, and funded a diplomatic trip for unionists to the Nordics to steal their best ideas for “reconstructing Australia”. Bill Kelty was appointed to the Reserve Bank board.
But enthusiasm for this agenda waned in the Keating years, and Howard revoked most cooperative initiatives.
Now the Coalition is obsessed with preventing shareholder activism by industry super funds, which are part-governed by unions. It’s little wonder with members like Tim Wilson, who swore his parliamentary oath with his hand on Friedman’s “free market bible”.
As we once again must “reconstruct Australia” after COVID-19, one can only hope the libertarian right shakes its ideological predilections as the UK Tories briefly did. Co-determination and cooperation are particularly useful during and after crises such as COVID-19, often helping to save jobs by finding alternative savings measures.
The last thing we need is another half century of greed masquerading as the common good.
IT seems to me that the great Friedman lie was practiced more by board members increasing their bonuses. The massive difference that I see is the way companies were once proud to say how much they paid employees and how many new people they put on. Then it became how many people they had sacked. IN the western world the USA led the train. Its manufacturing products become low quality, its industry moved away, the middle class began to vanish. Who would want to work for a company that treated them like shit? Britain took the same view. They blather about free trade deals, but what do they have to offer? It is the massive consumption, delusion of infinite growth and reliance on population increase which must ultimately destroy the planet that we need to solve, Friedman never had a solution to anything except making obscenely rich people richer.
Not so fast. Friedman’s tenet was that maximisation of individual wealth was a noble pursuit that would lift living standards for all. Of course, we know, some of us only now, that his creed is utter tosh. But it strikes me that the core of neo-liberalism, personal selfishness, is now at the core of our profligate obsession with personal vanity and visible affluence. We know, or ought reasonably know, that the proliferation of SUV’s and dual-cab utes (larger vehicles that get larger and with bigger engines) causes a staggering amount of CO2 emissions globally, but if 100 of us went out to buy a new car tomorrow, about 50% of us will be buying an SUV or dual cab. We know, or ought reasonably know that every time we eat a MacDonalds or Hungry Jacks and throw out the food containers, we are adding to a problem that causes incalculable environmental damage to the planet. But unless governments legislate, we won’t do anything to force business to change their practices. We know, or ought reasonably know that there are more unemployed and under-employed than there are full-time jobs, but do we really care? No way – we still tend to criticise the unemployed and accuse them of being bludgers who choose to be on JobSeeker. These are just examples of our personal greed and how we rationalise that greed. Even when corporates present a facade of social responsibility, for most it comes down to pretentious platitudes dreamed up by spin-doctors and marketers. “We” still want bigger cars, bigger houses, holidays in exotic places, more of everything and I can see that changing anytime soon and marketers have worked out how to make us want more, not less. We have passed the personal greed tipping point and it will take a while to reverse that, but “we” won’t change until the damage our behaviours do is visible and for the most part, we are dismissive of the facts that tell us just how awful we really are.
It’s no wonder the LNP wants to reduce the super gaurantee. Wouldn’t want the actual owners of all these big companies to actually have a say in how they’re run. Most upsetting to the old boy’s club.
Has anyone else noticed how little the media is paying attention to Trump’s tax avoidance? It should be headline news around the world. How are billionaires getting away with paying almost no tax? It’s an outrage. It goes to the very heart of democracy, but no. They are doing their best to quash the whole thing. Not even much of a story here. They want you to think it’s everyone’s problem but the rich.
What they really want everyone to think is that one day YOU will be rich, and you wouldn’t want your hard earned being taxed away – you know the persuit of the American Dream.
I think the salient point of Trump’s tax returns is that he’s NOT a billionaire. It was a lie all along. He’s not avoiding paying tax. He.s paying what he should because he’s nearly broke
He’s in debt up to his ridiculous haircut.
It’s probably the cost of maintaining that tonsorial atrocity that has sent him broke.
Post Covid-19 we can no longer afford to keep the hyper rich miners in the way they’ve become entitled. This need not mean nationalisation. It can be done by opening the field. Mining rights are a state responsibility. Dismantle the exclusivities, which will attract other players, including some state owned, and increase employment. Universal guaranteed income can become a feasible system.
Currently JobKeeper/Seeker is the UBI that none dare name.
Which is why Fraudberg wants to slash it asap.