Ever since Congress passed its trillion dollar bailout package, we have been hearing a lot about “moral hazard” (the idea that with the government bailing them out, corporations will be encouraged to act irresponsibly). And while I, as a taxpayer who is bailing these corporations out, do not want to minimize the moral hazard risk, I would like to draw your attention to an aspect of the bailout that has gone virtually unnoticed: corporate good citizenship. If a corporation wants government help, it must contribute to the community.
Comparing Corporations
Think about it. If Chevron was facing bankruptcy, do you think it would be worth its executives’ time to ask Congress for a bailout? How about Microsoft? And what (in then end) is really the difference between Citi Group and Detroit’s Big Three? This is an unconventional take on the matter, but the fundamental different (I think) is that the Big Three are seen as wasteful, inefficient, and some of the worst American has to offer, while CitiGroup has refurbished its image with clever advertising (http://www.iht.com/articles/2007/04/29/business/citi.php ) and, perhaps more importantly, its aggressive corporate giving program (http://www.citigroup.com/citi/foundation/ ).
Citi is of course not the only corporation to try to refurbish its image. Every time I turn on the TV, I see an advertisement assuring me that Chevron is green. It’s part of Chevron’s “Image Fresh Program” (http://medallioncs.com/News/Current+News/89.aspx ). For me at least, it’s not working because Chevron did not start investing in green technology until 2006, in response to the surging oil prices and the accompanying leveling off of demand for gasoline (http://news.bbc.co.uk/2/hi/business/4716334.stm ). So, before I believe the hype, I want to see what this oil company will do now that gas prices are coming down. At the moment, I’m skeptical. If asked, I may be slightly more willing to bail out Chevron than (say) Phillip Morris. But not by much.
I have a better opinion of Bank of America, Wells Fargo, and General Electric. But then, these companies are among the biggest philanthropies in the United States (http://www.cnbc.com/id/27534835) . And good corporate citizenship these days means more than writing a check. According to Foreign Affairs corporate citizenship “includes Deutsche Bank offering innovative microfinance schemes or socially responsible investment products, the Toyota Motor Corporation producing a hybrid car, or Unilever empowering women to become entrepreneurs in rural India while at the same time raising awareness on the importance of hygiene and nutrition” (http://www.foreignaffairs.org/20080101faessay87108-p20/klaus-schwab/global-corporate-citizenship.html ). So there’s a good chance that these companies are as involved in your community as they are in mine.
Corporations Filling Community Needs
This is a trend. Corporations are, increasingly, stepping in to meet community’s needs. Whether its Microsoft Corporation’s information technology, cultural, and disaster response programs, IBM providing support in the wake of Hurricane Katrina (ftp://ftp.software.ibm.com/software/solutions/pdfs/10705499_katrina_cs_hr.pdf ) or various companies banding together to help clear landmines around the world (http://www.state.gov/t/pm/rls/othr/misc/52830.htm ), big and small businesses are trying to help.
And those businesses that are not are the ones that will (in all likelihood) be left to fend for themselves in these troubled economic times.
If you help me, I’ll help you
This is not to say that I am thrilled with the trillion dollar bailout. I’m not. But I also don’t think that the bailout is an unmitigated disaster. For the selective nature of the way the money is being given out is sending a clear message to corporations the world over: corporate philanthropy is good business.
If you help my community, when the time comes (and it will) I will be more inclined to help you.
