[Congressional Record Volume 166, Number 197 (Thursday, November 19, 2020)]
[House]
[Pages H5938-H5939]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         SHAREHOLDER CAPITALISM

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
Kentucky (Mr. Barr) for 5 minutes.
  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

[[Page H5939]]

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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