Taking the Long View in a Crisis: It’s Time to Fix the Rules So the Future has a Voice
An internationally renowned futurist and business strategist, Peter Schwartz specializes in scenario planning, working with corporations, governments, and other institutions to create alternative perspectives of the future and develop robust strategies for a changing and uncertain world. As senior vice president strategic planning for Salesforce, he directs policy and politics throughout the world.
As this global pandemic shakes communities and economies around the world, it is all too clear that well-functioning institutions are a matter of life and death. As societies become more complex, interconnected and technology-driven, our ability to respond to risks and crises—and foster shared opportunity and prosperity—is less about our reactions to single events and more about the “rules of the game” that reward certain behaviors and discourage others.
As the economy revs back up and political debate takes center stage, it would be irresponsible for us to revert to the status quo that had two-thirds of Americans questioning capitalism, government, and their fellow citizens. It is because of an imbalance in the rules of the system itself, which over the past few decades have shifted to give undue weight to concentrated wealth, that this distrust has grown.
In society and in business, it’s essential to have the right rules in place. If they are well-chosen, stable, and apply to everyone, these rules create enormous value. They reduce risk and create incentives for innovation and investment. They build trust, as employers share gains with employees and other stakeholders. They ensure profits reflect full costs and competitors that take the long view are rewarded, not penalized.
Consider the example of emissions standards. Over the past several decades, the Clean Air Act and the emissions standards that came with it have produced huge environmental gains, with cars that are 99% cleaner than the cars of my childhood. While those in the industry may not have been wildly in favor of those standards, having the same regulation for everyone created a level playing field, so none of them was taking a unique risk.
Unfortunately, over the past 30 years or so, businesses have paid more and more attention to short-term shareholder returns. One strategy for boosting these short-term returns is to lobby for rules that favor weaker competitors. Increasingly, if you’re a company that can’t meet emission or water quality standards, then you push to roll back those standards or undermine their enforcement. Rather than developing a better product or service, you resort to cronyism, using political influence to obtain subsidies, exemptions or special favors.
In this sort of pay-to-play environment, it becomes harder for companies to take the long view. CEOs feel they must play the game or be fired. Regulations become more complex and uncertain, creating confusion and increasing the risk of investing for the long-term. This is why, with the recent proposed emissions changes, the industry pushed back. With programs already underway and standards that applied to everyone, they argued, it is simpler to follow through on existing investments to improve.
To be clear, it isn’t that business shouldn’t have a voice in political processes. But the government spending rules that have permitted corporations to be treated as people have fundamentally undermined the democratic process. Businesses are unique in the concentration of resources at their disposal. That concentration creates disproportionate power and influence, overwhelming the voices of citizens and the public interest.
In short, today’s rules of the political game make it impossible for either government or business to take the long view. They enable short termists to distort regulation and lobby for favors. They distort the marketplace and weaken our democracy, fostering cynicism and the perception that the interests of business are fundamentally at war with the interests of people.
I do not believe it has to be this way. Far-sighted businesses, including Salesforce, are reconceiving the purpose of business, recognizing the need to serve all stakeholders, not just shareholders. These leaders understand the need for new rules to reward those who take the long view, and end this era of rampant cronyism and short-termism.
This is why I am proud to join Business for American Promise, and more than 125 leaders from businesses across the country, working in firms from the Fortune 500 to the corner grocery store, who are calling for an amendment to the U.S. Constitution to address the problem of money in our political and economic systems. It is time for far-sighted business leaders to set the record straight: We need to fix the rules of competition, so our future has a voice.