Shareholder Capitalism

Floor Speech

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Mr. BARR. Mr. Speaker, I rise today in defense of mom-and-pop retail investors who benefit from sound corporate governance to promote free enterprise and to warn against the risks of politicizing corporate leaders' responsibilities to their shareholders.

The primary job of a corporation is to maximize shareholder value, not to engage in social engineering or politically correct causes simply to satisfy detractors of corporate America. Corporate leaders have a fiduciary responsibility to their owners which, I fear, is getting lost as leaders try to play the politics of the day.

Last year, leaders of America's largest corporations, through the Business Roundtable, issued an updated ``Statement on the Purpose of a Corporation'' in which they elevated so-called stakeholders above shareholders in their responsibilities. I take issue with this change because it dilutes the accountability leaders have to their owners and reflects an empty gesture intended only to surrender to the pressures of political correctness.

In order to do right by its employees, customers, suppliers, and communities, a business must first be successful and profitable. A business that mistreats its employees or shuns its responsibilities to its communities would not survive in today's market environment.

So why the change? This is nothing more than a public relations exercise designed to preempt any charges from the opponents of free enterprise who suggest businesses should be advancing specific partisan causes.

Unfortunately, the changes resulted only in more ire and attention from officials it was likely intended to satisfy. Charges from the far left suggest that businesses haven't done enough to help their communities. One Senator even used the restatement of a corporation to suggest that she ``expects'' business leaders to support her far-left corporate governance bill that would take our free-enterprise system on a path toward socialism.

The lesson here is this: If you give them an inch, they will take a mile.

Recent developments suggest this remains true. In September, the Business Roundtable called for ``market-based solutions'' to fight climate change and urged businesses to work together on the issue.

Mr. Speaker, I have no issues with businesses setting public goals that mitigate risk and promote long-term growth if they are in the best interest of their shareholders and business goals, but it wasn't enough for the business community's strongest opponents.

Earlier this month, the senior Senator from Massachusetts, Elizabeth Warren, sent a letter to the chairman of the Business Roundtable and the chair of its Energy & Environment Committee. The letter alleged that they were not doing enough and suggested that they should be required to publicly document how companies are supporting emissions- reducing public policy.

Instead of prioritizing their firms' response to the economic and health crisis, keeping their employees safe during the pandemic, and ensuring their customers' needs are met, these CEOs of major U.S. corporations must allocate time and resources to responding to calls from politicians on the far left to be more green.

Mr. Speaker, I am reminded of the classic children's book, ``If You Give a Mouse a Cookie,'' in which a boy gives a mouse a cookie and the mouse keeps asking for more and more and more and more. In this analogy, the radical left is the mouse, never satisfied, and corporate America is the young boy, bleeding resources to fulfill the mouse's ever-expanding demands.

By ceding shareholder primacy, the Nation's business leaders began down a slippery slope. The radical left will not be placated until they remake free enterprise to align with their misguided, socialist goals.

Mr. Speaker, the business leaders of this country would be well served to heed the admonishment of Nobel Laureate Milton Friedman when he wrote:

``When I hear businessmen speak eloquently about the `social responsibilities of business in a free-enterprise system,' I am reminded of the wonderful line about the Frenchman who discovered, at the age of 70, that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned `merely' with profit but also with promoting desirable `social' ends; that business has a `social conscience' and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact, they are--or would be if they or anyone else took them seriously--preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.''

Mr. Speaker, this is a stark warning to those who lead America's largest companies that attempts to appease socialists and radical environmentalists are on a fool's errand. The agenda of the far left is fundamentally incompatible with free enterprise and a free society. The sooner that America's CEOs realize this and the sooner they return to a focus on shareholder value maximization, the sooner we will liberate the American people from the dangerous and morally bankrupt ideas of the socialist far left.

I will conclude, Mr. Speaker, with a final admonishment from Milton Friedman, when he said:

``There is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.''

Profitable businesses help society. Profitable businesses increase employment. Profitable businesses are good for America.

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