3.THE OUTCOME OF INEQUALITY

It is often claimed that there is much tolerance in the U.S. for high levels of inequality as long as that inequality arises from a fair contest in which all children, no matter how poor or rich their parents, have the same opportunities to get ahead.

—Miles Corak, Canadian economist

WHEN KEN LANGONE AND I talk to business leaders, we encounter what to us is a strange reaction from many of them. They want to know why we’re wedging issues of inequality of opportunity and income into the business arena. They see it essentially as something outside their field: their job is to make a profit and grow the business, not to be a steward of the larger society. The fact that this country began splitting itself in two some decades ago, in part because of choices made by our public companies, hasn’t crossed their minds. That’s understandable. Based on today’s operating philosophy, it shouldn’t be their concern. They believe business leaders should simply follow what “the market” demands and succeed or fail based on nothing else. Period. We find in these conversations an insistence on a total disconnection between business and what happens in the larger social scene.

After seeing and hearing evidence of this rupture repeatedly—for months—our crisis began to seem more understandable. The people who have the power to really address it immediately—and powerfully—simply refuse to recognize that they should play that role. What’s more startling is that they don’t actually see the problem we’re facing. They aren’t aware of the growing ranks of the Poor Next Door. Also, they don’t think a profit-seeking enterprise is designed to help address this reality in its long-term strategy for growth. (Even though it’s manifestly the biggest obstacle to growth facing the private sector.) They prefer the bubble of isolation. No distractions, no complications, please. Let’s allow business to seek only its own most profitable level—as though profit has always been the one and only consideration of a business enterprise. This hasn’t always been the case.

I knew at this point that I was going to have to break into the isolation chamber of the executive suite with some of the truth about what’s happening outside it. We in business are, in part, culpable for the enormous crisis surrounding us. No, we didn’t create the damage by ourselves, as I will describe a little later. But the lack of fair wages has had a devastating impact on the vanishing middle class. And the lack of serious investment in our businesses, in the creative research and development (R&D) that ensures a better future, has eroded our job base.

Business leaders are first of all citizens of their native country, which in the case of the United States has bestowed plentiful tax breaks that encourage growth, profit, and loyalty when it comes time to locate production facilities. When the question of higher wages comes up, why are we unable to link a business, and its ever-higher profits, with the people and the communities that help create those profits? The absence of that simple, clear, and obvious link has done untold harm; it has split the country apart—and has darkened the future potential of the private sector itself.