Wednesday, December 18, 2013

Popular Economics

In 1970, Milton Friedman wrote a famous essay entitled "The Social Responsibility of Business is to Increase Its Profits."  In his view, "the key point is that . . . the manager is the agent of the individuals who own the corporation . . . and his primary responsibility is to them."  Forty years later, a survey sponsored by the Public Affairs Council asked "In your opinion, whose interests should most major companies put first? The interests of...
Their stockholders
Their top executives
Their employees
Their customers or
The communities where they are located"

The most popular choice was customers (39%), followed by employees (25%), communities (19%), stockholders (14%), with top executives bringing up the rear at 3%.  Republicans, conservatives, and supporters of the Tea Party were more likely to agree with Friedman, which isn't surprising.  (Although the liberal/conservative difference was smaller than I expected).  The pattern of demographic differences is more interesting.  There were some racial/ethnic differences in the percent choosing "stockholders," but they weren't that big:

                           Stockholders  Execs   Employees Customers  Communities
Non-Hispanic Whites             14%        3%        25%      42%        17%
Non-Hispanic Blacks             10%        4%        30%      32%        25%
Hispanics                       12%        4%         8%      27%        29%

Substantial gender differences:
Men                             19%        4%        22%      37%        19%
Women                            9%        3%        27%      41%        20%

Big income differences 
Under $10,000                    6%        4%        27%      33%        30%
Over $150,000                   24%        1%        14%      48%        13%

Big age differences:
18-24                            7%        2%        22%      37%        33%
65+                             21%        4%        24%      36%        15%

and big differences by education:
Not HS graduate                  8%        7%        25%      38%        31%
Post-BA education               21%        2%        19%      42%        16%

The educational differences remained substantial after controlling for age and income.  In the discussions over the future of the Republican Party over the past year, some people have proposed "libertarian populism" as a winning strategy.  But as these figures show, the libertarian (or classical liberal) position is more popular among affluent, well-educated people.  Among people with low income or education, more than half say the primary responsibility should be to employees or the community.  And even among people earning over $150,000 a year, the combined total for employees and the community is larger than the number choosing stockholders.  The idea that the primary responsibility of business is to its employees or the community has sometimes been called "corporatist," which ironically has become a favorite term of abuse among conservative critics of the Obama administration.  But if you want to be a populist, that's the direction to go.  

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