Over a decade ago, I met with a group of small business leaders to talk about the perils of rising income and wealth inequality, and its destabilizing impact on the economy. This was years before the 2008 economic meltdown, the Occupy movement, Thomas Piketty’s Capital, and the electrifying presidential campaign of Senator Bernie Sanders.
“Where are the business voices?” one small business leader asked me. “Where are the enlightened capitalists who understand that stagnant wages and rising wealth inequities are the real threats to the proverbial goose that lays the golden egg?”
I knew from experience that such business leaders were there. One was Jim Sinegal, the now-retired CEO of Costco, who fended off Wall Street pressure to cut wages and eloquently made the moral and business case for a higher federal minimum wage. “The more people make, the better lives they’re going to have and the better consumers they’re going to be,” Sinegal told The Washington Post. “It’s going to provide better jobs and better wages.”
Unfortunately, such voices are outliers.
The outspoken ones are often retired CEOs, who—like retired military generals—are outside the constraints of institutional group think and can honestly speak their minds. They are owners of private companies, protected from the tyranny of short-term horizons and grumpy shareholder value activists, who are hell-bent on squeezing every nickel out of an enterprise. They are among the ranks of Responsible Wealth and the Patriotic Millionaires, defending the federal estate tax against repeal because they understood the corrosive impact of concentrated wealth and monopoly power.
Most business leaders, however, are not engaged in these important debates. They see little upside at being the skunk at the country club or in the boardroom. They stand by as their local chambers of commerce and business trade associations spend money to lobby for wage and anti-tax policies that would disinvest the commonwealth and widen the wealth gap.
Breaking this code of silence, Peter Georgescu burst on the scene two years ago with an op-ed in The New York Times about the business risks of growing income inequality. Georgescu, a retired CEO of a global marketing company, lamented that the United States was becoming a “caste system,” and asked: “Are we willing to control the excessive greed so prevalent in our culture today and divert resources to better education and the creation of more opportunity?”
Teaming up with his friend, Home Depot angel investor Ken Langone, Georgescu began knocking on the doors of CEO executive suites to engage business peers about the dangers of growing inequality. “Inequality leads to unequal opportunity,” they railed, “which backfires on healthy economic growth and capitalism.” They engaged with CEOs who held the warped worldview that inequality is a good thing—that it “drives people to do better.” Georgescu pushed back, telling stories of people stuck in a death spiral of debt and the economic dead end of consumers with no disposable income.