The Free Market 14, no. 4 (April 1996)
Leftist critics of capitalism like Labor Secretary Robert Reich have criticized the alleged shortsightedness of American corporations, while praising the supposedly longer-range perspectives of their Japanese competitors.
Well, the Nissan Motor Corporation just proved that it can be every bit as shortsighted as any American company by giving $150,000 to the National Association for the Advancement of Colored People. According to the new NAACP president, ex-Congressman Kweisi Mfume, the money will be used for “voter registration and education,” presumably to elect more left-wing ideologues like himself.
Nissan executives might think that such a highly publicized contribution will induce blacks to buy more Nissans, and maybe it will. But in the long run, supporting the NAACP’s efforts to move the Congress further to the left is bad for business.
The heart of the Democratic party now consists of the likes of Michigan Democrat David Bonior and AFL-CIO president John Sweeny. In light of this reality, one would think that Nissan executives would remember the political trouble American unions have given them.
For more than a decade, unions have been trying to pass legislation that would force Japanese automakers that have built plants in the U.S. to purchase a certain fixed percentage of auto parts from unionized American companies, regardless of cost and quality. The obvious effect of this “domestic content” legislation would be to increase the cost and reduce the quality of Nissan’s American-made cars.
In the 1980s Nissan spent a small fortune on lobbyists to thwart these efforts; now it indirectly supports its political adversaries. Yet such contributions are a violation of Nissan’s fiduciary responsibilities to its shareholders, and seem to be part of a suicidal impulse that so many companies display in corporate philanthropy.
Nissan’s donations will also make it more likely that the NAACP will get the government to exert even more control over the company’s hiring practices. The NAACP is, of course, a strong proponent of racial hiring quotas and of “equal pay for comparable worth,” the economically absurd idea that female clerks are paid less than male engineers not because of skill differences but because of their sex.
Handing control over business decision-making to government bureaucrats, politicians, and judges is one of the main reasons so many American companies have lost market share to companies like Nissan over the past two decades. If Nissan didn’t have its own plants in the U.S., one might think its grants to the NAACP were an act of competitive sabotage.
In the inner cities, the NAACP is a powerful partner with teachers unions. This formidable coalition is the reason it has proven impossible to cut spending on public schools or allow private alternatives to flourish. As economist Walter Williams has often said, the Klan could not have done a better job of sabotaging the future of young black Americans.
The utter failure of government schooling has created tremendous problems for employers (including Nissan), by granting fraudulent diplomas to youngsters who can barely read, write, and compute and are ill-prepared for the job market.
The NAACP is also an important element of the welfare state coalition in America. Next to racial quotas, its top priority is an ever-expanding welfare state and higher taxes to pay for it. An enlarged government can only come at the expense of a smaller private sector, which in the long-run is not in Nissan’s interest—or in the interest of any business enterprise that seeks to make profits without subsidies.
According to Patterns of Corporate Philanthropy, the 250 biggest corporations donate three times more to anti-market, statist organization, than to those even vaguely sympathetic to the free-enterprise system. Big government is destroying our economy and our culture, while big business is subsidizing its own destruction.
There may be logical reasons for this. Despite all its complaints, big business likes big government if it means special favors and corporate welfare. Corporate executives might believe such contributions are good public relations. Or they may be victims of blackmail—left-wing organizations might threaten to label a company “anti-environment” or “anti-minority” unless the company forks over big bucks.
Big businesses, including multinational corporations, create wealth and jobs when they keep their eye on the bottom line and focus on serving their consumers and stockholders. But when they seek special favors or subsidize others who do, they undermine free enterprise, the basis of prosperity.
Americans who value a healthy, capitalist economy ought to boycott these companies’ products. And as someone in the market for a new car, I have just crossed Nissan off my list.
