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The New Economy

Corporate responsibility is a conservative cause

Many conservatives believe corporate responsibility is a liberal idea. But the roots of corporate responsibility stretch back to ancient, biblical truths.

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Properly managed, a revolutionary return to old moral sentiments might actually reduce animosity among America's political leaders. That's a crucial element in our political economy as trust was the lubricant of pre-Friedman and pre-Rand capitalism. Today's selfish activities by elites are grit in that lubricant. So here's a modest example of how we might get ahead of the curve in rebuilding trust in our organizations.

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America's global corporations are aggressively lobbying their friends in Congress to reduce or eliminate the taxes on what they earn overseas. They currently keep that money overseas to keep it from being taxed. Some CEOs have publicly echoed Friedman by arguing they are simply acting in the best interests of shareholders. Such corporate moves irk many progressives, including President Obama, because they see such acts as socially irresponsible in an age of federal deficits, joblessness, and record poverty. They also argue that the last tax amnesty on such "repatriated" profits did nothing to curb CEOs from reaping big bonuses by laying off even more Americans in the name of productivity and efficiency.

But what if progressive politicians and conservative business leaders agreed to a deal that would help America without punishing shareholders with supposedly onerous taxes? Corporations might repatriate their profits with the 5 percent tax rate used during the last amnesty as long as they used the money to create jobs in the United States. Companies, not government, would decide what new jobs make economic sense. If it made no sense for a company to hire in the US, it wouldn't repatriate any profits, creating more wealth overseas, which is socially responsible in the larger sense.

The benefits of such a deal might be spread far and wide. More working Americans might then have money with which to buy, a favorite cause of progressives. Small US businesses, which used to be important engines of job creation but can no longer get financing for such, might win as major corporations could invest in more capital goods to equip those workers. Or major corporations might make loans to capital starved small businesses that are critical suppliers. The federal government might actually benefit as more people escape welfare and pay taxes. That broadening of the tax base is a favorite cause of libertarians anyway. Our young people might begin to believe America has a future after all. Our older people might invest in their future again.

The cost for all this? There might be some short-term taxpayer subsidy, since the Internal Revenue Service might have gotten more money (in theory, at least) from repatriated profits, assuming corporations had a change of heart and repatriated it despite the taxes. But the major cost would simply be surrendering the radical and selfish moralities of Friedman and Rand for the old conservative tradition of both personal and social responsibility. As Drucker understood, loving one's neighbor as oneself in business and politics is actually a sound organizing principle for any society.

Gary Moore, an author and investment counselor based in Sarasota, Fla., runs financialseminary.org, which seeks to build bridges between the economic, political, and moral communities.

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