A Promising Strategy for Blunting Corporate Blackmail

Screenwriters love creating hostage-taking situations. Blackmail always keeps people at the edge of their seats. And we’ve all, as movie-goers, sat at that edge.

Meet our demands, we watch the bad buys ominously mutter, or you’ll never see your kid again. Don’t give in to the blackmailers, some wise old sage will then counsel. That’ll only encourage more mayhem.

In real life, the bad guys who do the most damage don’t mutter. They lobby — on behalf of the giant corporations they run and represent. And the folks who ought to be wise old sages — our lawmakers — don’t counsel caution. They almost always counsel us to give in and hand corporations whatever tax breaks and subsidies their CEOs should happen to demand.

We have no choice, these lawmakers will inevitably claim. If we don’t give corporations what they want, their execs will pull up stakes and take their enterprise to some more corporate-friendly jurisdiction.

This dynamic is playing out right now in Congress. Corporations are demanding lower corporate tax rates, and Republican congressional leaders and the Trump White House are urging us to give in. And they’ll no doubt also urge us to give in the next time CEOs come calling. And the next time after that.

We clearly need to break this endless blackmail cycle. But how?

Grassroots activists in and around the Democracy Collaborative have one attractive option for us. They’re talking “anchors” — as in institutions truly anchored in their communities.

Some institutions, these activists explain, have no interest in fleeing anywhere. These “placed-based” institutions have a mission of serving a particular geographic area. Universities can fit this bill. So can hospitals or arts and culture organizations.

These institutions all have some serious economic clout. They spend vast sums buying goods and services. Most institutions buy these goods and services — everything from their laundry to their tech support — from large corporations that underpay their workers and overpay their top executives. Their purchases, in other words, help make inequality worse.

But what if these place-based institutions started leveraging their economic clout on behalf of the low- and moderate-income communities that surround them — and stopped funneling their dollars to corporate enterprises that operate solely to make the rich richer? What if these institutions began procuring goods and services from worker-owned cooperatives and other nontraditional businesses that don’t move heaven and earth to lavish rewards on their top executives?

Taking steps like these, a new Democracy Collaborative report details, can help institutions like universities “advance their place-based missions” and help our society “address historic inequalities.”

About a half-dozen universities around the country, from Cleveland State University in Ohio to the University of Missouri in St. Louis, have been working seriously toward these dual goals over recent years — and they’ve been making some real progress.

But old habits — and traditional business practices — die hard. Changing how things “always” get done can take time and effort and, at the same time, displease powerful personages like corporate CEOs. Most nonprofit institutions will, as a result, shrink from change. And they’ll continue to reinforce inequality until the rest of us take action that changes their political and economic environment.

How could we do that? We could, for instance, require institutions that receive our tax dollars to overhaul their procurement practices and deny contracts to business enterprises that pay their top executives more than 25 times their average workers. Small and nontraditional businesses would easily be able to meet that benchmark. Corporate giants that nurture inequality with their pay practices would not.

In the UK, Jeremy Corbyn’s Labour Party is already making moves in this direction. In the United States, state lawmakers in Rhode Island have advanced similar notions. The good guys, in effect, are beginning to rewrite the hostage-and-blackmail script. Do good by your workers, they’re announcing, or go without our tax dollars.

This rewrite, if we keep at it, could have just the happy ending a deeply unequal America needs.

Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest book — The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 — traces how average Americans ended the nation’s original Gilded Age. Follow him at @Too_Much_Online.