PRESS CLUB C Podcast with Ray Keating – Episode #82: Disney Should Listen to Milton Friedman – Ray takes a look at what Nobel Prize winning economist Milton Friedman had to say on corporate social responsibility, and why management at Disney and other companies should take note. Tune in!
by Ray Keating
News/Commentary
DisneyBizJournal.com
April 3, 2022
A corporation getting involved in hot political topics rarely turns out to be a wise choice. Disney executives seem to be getting a lesson on this front recently.
Disney seemed to succumb to pressure from left-wing political activists, including some Disney employees, to weigh in heavily against a piece of legislation in Florida. (That is, the Parental Rights in Education Act, or misleadingly labeled by activists in opposition as the “don’t say gay” bill.) However, leftist groups don’t seem all that pleased with Disney’s tardiness to the issue, while lawmakers in Florida are threatening to turn against one of its top businesses and employers, and people on the Right grumble at the House of Mouse.
In a recent DisneyBizJournal article, I raised questions from an economist perspective – with the help of Nobel Prize winning economist Milton Friedman – about the responsibilities of management in companies to shareholders, that is, to the actual owners of the company, when it comes to corporate social responsibility, which mainly means political issues.
Of course, what often happens in cases like this is that just as suddenly as they appear on the political landscape, they just as suddenly disappear, as another topic earns the spotlight and outrage.
But while in the midst of this current mess, a question was highlighted by a report in the Orange County Register: In effect, what about conservative Disney employees? The Register reported: “An open letter penned by conservative Disney employees asks the company to remain neutral on issues that have politicized the corporate culture, damaged morale and caused some employees to feel their days working at the Mouse House are numbered.”
So, what did this open letter say? Here are several points:
• “As employees of the Walt Disney Company, we believe in the dignity of all people. This is why we do what we do. We write stories. We make costumes. We act in parades. We run cruises. We stream movies. We make magic. We do this because our work contributes to a fountain of wonder that inspires joy, awe, and delight in guests and audiences of all ages. We are proud employees of the Walt Disney Company.”
• “However, over the last few years, one group of cast members has become invisible within the company. The Walt Disney Company has come to be an increasingly uncomfortable place to work for those of us whose political and religious views are not explicitly progressive. We watch quietly as our beliefs come under attack from our own employer, and we frequently see those who share our opinions condemned as villains by our own leadership.”
• “TWDC leadership frequently communicates its commitment to creating an inclusive workplace where cast members feel comfortable sharing their perspectives and being their authentic selves at work. That is not our workplace experience. Over the last few weeks, we have watched as our leadership has expressed their condemnation for laws and policies we support. We have watched as our colleagues, convinced that no one in the company could possibly disagree with them, grow increasingly aggressive in their demands. They insist that TWDC take a strong stance on not only this issue but other legislation and openly advocate for the punishment of employees who disagree with them.”
• “Left-leaning cast members are free to promote their agenda and organize on company time using company resources. They call their fellow employees “bigots” and pressure TWDC to use corporate influence to further their left-wing legislative goals. Meanwhile, those of us who don’t align with this vision keep our heads down and do our work without bringing our personal beliefs into the workplace. We’ve done this without complaint because we don’t want to rock the boat, but the boat is being rocked, and our leadership seems compelled to reward those who are rocking it.”
• “The company we love seems to think we don’t exist or don’t belong here. This politicization of our corporate culture is damaging morale and causing many of us to feel our days with TWDC might be numbered. Furthermore, as this politicization makes its way into our content and public messaging, our more conservative customers will feel similarly unwanted. You can only preach at or vilify your audience for so long before they decide to spend their money elsewhere.”
• “Working for The Walt Disney Company is a dream come true. We love being part of creating the magic that so many people around the world enjoy. Our storytelling is second to none. It resonates with people from all walks of life across the political spectrum. Our parks are the source of joy and inspiration that Walt hoped they would become. Every year, millions of guests escape an increasingly divided world to a place where they can relive fond memories of the past and savor the challenge and promise of the future. They do this alongside thousands of other guests that might not have anything in common with them other than a shared love of Disney.”
• “When Disney takes sides in political debates, they deprive the world of a shared love we all have in common. TWDC is uniquely situated to provide experiences and entertainment that can bridge our national divide and bring us all together.”
• “Disney shouldn’t be a vehicle for one demographic’s political activism. It’s so much bigger and more important than that. More than ever, the world needs things that we can unite around. That’s the most valuable role The Walt Disney Company could play in the world at this time. It’s a role we’ve played for nearly a century, and it would be a shame to throw all of that away in the face of left-wing political pressure. Please don’t let Disney become just another thing we divide over.”
The U.S., unfortunately, is a nation increasingly divided, as politics supplant or overrun other institutions. It’s nice to be able to sit down to entertainment that amounts to great storytelling devoid of the latest political flare up. Disney has long done that, but now many people seem to be wondering if that will be the case going forward.
__________
Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.
The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
Two great ways to pre-order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks at
https://raykeatingonline.com/products/cathedral and/or the Kindle edition at
https://www.amazon.com/dp/B09WYW2Q2V
Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks at https://raykeatingonline.com/products/weeklyeconomist and/or the Kindle edition at https://www.amazon.com/dp/B09WKN81RG.
Get more out of 2022 with The Disney Planner 2022: The TO DO List Solution! It combines a simple, powerful system for getting things done with encouragement and fun for Disney fans, including those who love Mickey, Marvel, Star Wars, Indiana Jones, Pixar, princesses and more. Also, “The Disney Planner 2022: The TO DO List Solution” comes with a handy spiral binding for easy use.
Keating has three new books out. Vatican Shadows: A Pastor Stephen Grant Novel is the 13th thriller/mystery in the Pastor Stephen Grant series. Get the paperback or Kindle edition at Amazon, or signed books at www.raykeatingonline.com. Past Lives: A Pastor Stephen Grant Short Story is the 14th book in the series. Again, get the paperback or Kindle edition at Amazon, or signed book at www.raykeatingonline.com. And order the 15th book in the series What’s Lost? A Pastor Stephen Grant Short Story – grab it at Amazon.com or signed editions at www.raykeatingonline.com.
Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.
by Ray Keating
Commentary
DisneyBizJournal.com
April 1, 2022
Nobody seems happy with The Walt Disney Company and its CEO Bob Chapek these days, especially those in politics. Indeed, Chapek and his management team have managed to anger those on both the Left and the Right. That’s actually quite a political feat, but one with which company shareholders (full disclosure: I am a shareholder) might not be too pleased.
Is there a lesson here for Disney and other companies? Yes, it’s really quite simple: Company executives shouldn’t play politics with the shareholder’s company.
To put a finer point on this: Disney executives should have listened to the late Nobel Prize winning economist Milton Friedman.
Before getting to specifics from Friedman, it seems like common sense to understand that it will not turn out well if the executives of a company decide to engage on political issues that have nothing to do with the company’s business. On the opposite end, if government is looking to tax or regulate a business or industry, then company executives would have a responsibility to shareholders to weigh in on matters. But getting involved in a hot political topic that has nothing to do with a firm’s business simply because a group of activists pressures executives to do so – as is the case with Disney’s current public/political woes – not only threatens to toss the company into a political maelstrom, but it is fundamentally wrong.
To sum up the current Disney situation, Florida’s legislature put forth a bill that was opposed by a group of activists on the Left. The legislation – the Parental Rights in Education Act, or labeled by activists in opposition as the “don’t say gay” bill – was both poorly written by the legislative authors, as well as misrepresented by opponents. Nevertheless, these activists, including some Disney employees, pressured the company into opposing the measure, with company executives pledging to work to have it repealed now that it has been signed into law. Subsequently, activists on the Right have attacked Disney, and perhaps most interesting, Florida lawmakers are now talking about repealing an assortment of benefits that the Disney company enjoys in the state of Florida.
So, Disney has managed to get itself in a political mess largely of its own making over an issue that has nothing to do with its business.
All of this gets back to a fundamental point: Company executives who use company resources, that is, shareholder resources, to engage in politics, including so-called corporate social responsibility adventures, are, in effect, guilty of stealing from the company’s owners.
This idea that companies have a “social responsibility” beyond trying to make a profit has been around for some time now. And that brings us to Milton Friedman and a now-classic essay that he wrote for The New York Times Magazine in September 1970. That’s right, these kinds of issues have been banging around the public square for more than a half-century.
While referencing certain issues at the time, Friedman hit on important points regarding the purpose of a business, and how that does and doesn’t relate to politics and social responsibility. The title makes clear where Friedman is coming from – “The Social Responsibility of Business is to Increase its Profits” – but I urge people on all sides of this issue to take the time to read the full essay. For our purposes, here are some key points raised by Friedman:
• “The discussions of the ‘social responsibilities of business’ are notable for their analytical looseness and lack of rigor.”
• “In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose – for example, a hospital or a school. The manager of such a corporation will not have money profit as his objectives but the rendering of certain services.”
• “Of course, the corporate executive is also a person in his own right. As a person, he may have many other responsibilities that he recognizes or assumes voluntarily – to his family, his conscience, his feelings of charity, his church, his clubs, his city, his country. He may feel impelled by these responsibilities to devote part of his income to causes he regards as worthy, to refuse to work for particular corporations, even to leave his job, for example, to join his country's armed forces. If we wish, we may refer to some of these responsibilities as ‘social responsibilities.’ But in these respects he is acting as a principal, not an agent; he is spending his own money or time or energy, not the money of his employers or the time or energy he has contracted to devote to their purposes. If these are ‘social responsibilities,’ they are the social responsibilities of individuals, not business.”
• “What does it mean to say that the corporate executive has a ‘social responsibility’ in his capacity as businessman? If this statement is not pure rhetoric, it must mean that he is to act in some way that is not in the interest of his employers… In each of these cases, the corporate executive would be spending someone else's money for a general social interest. Insofar as his actions in accord with his ‘social responsibility’ reduce returns to stockholders, he is spending their money. Insofar as his actions raise the price to customers, he is spending the customers' money. Insofar as his actions lower the wages of some employees, he is spending their money.”
• “The executive is exercising a distinct ‘social responsibility,’ rather than serving as an agent of the stockholders or the customers or the employees, only if he spends the money in a different way than they would have spent it. But if he does this, he is in effect imposing taxes, on the one hand, and deciding how the tax proceeds shall be spent, on the other… The whole justification for permitting the corporate executive to be selected by the stockholders is that the executive is an agent serving the interests of his principal. This justification disappears when the corporate executive imposes taxes and spends the proceeds for ‘social’ purposes.”
• “But precisely the same argument applies to the newer phenomenon of calling upon stockholders to require corporations to exercise social responsibility (the recent G.M. crusade, for example). In most of these cases, what is in effect involved is some stockholders trying to get other stockholders (or customers or employees) to contribute against their will to ‘social’ causes favored by activists. Insofar as they succeed, they are again imposing taxes and spending the proceeds. The situation of the individual proprietor is somewhat different. If he acts to reduce the returns of his enterprise in order to exercise his ‘social responsibility,’ he is spending his own money, not someone else's.”
• “Whether blameworthy or not, the use of the cloak of social responsibility, and the nonsense spoken in its name by influential and prestigious businessmen, does clearly harm the foundations of a free society. I have been impressed time and again by the schizophrenic character of many businessmen. They are capable of being extremely far-sighted and clear-headed in matters that are internal to their businesses. They are incredibly short-sighted and muddle-headed in matters that are outside their businesses but affect the possible survival of business in general… The short-sightedness is also exemplified in speeches by businessmen on social responsibility. This may gain them kudos in the short run. But it helps to strengthen the already too prevalent view that the pursuit of profits is wicked and immoral and must be curbed and controlled by external forces. Once this view is adopted, the external forces that curb the market will not be the social consciences, however highly developed, of the pontificating executives; it will be the iron fist of Government bureaucrats.”
None of this means that Milton Friedman opposed political activism. To the contrary, he argued strongly for greater freedom across society. But he did so with disciplined thinking. It’s not the responsibility of corporate executives to use the resources of others, that is, the shareholders, to do the bidding of political activists or to pursue whatever political issues those executives might favor. Each individual, from the CEO to the newest employee, engages in all kinds of political, societal, religious and cultural activities with their own resources. And such freedom should be celebrated.
While Friedman didn’t say this explicitly in his essay, the inference stands, and I will reiterate: CEO’s using shareholder resources for endeavors that have nothing to do with the company’s business is not about freedom, rather it’s theft. And efforts to turn private businesses into vehicles for political causes is a dangerous game that elevates politics and undermines free enterprise – and therefore, given that free enterprise, or capitalism, has proven to be the greatest wealth-generator and poverty fighter in the history of mankind, does real harm to the well-being of every individual in the nation.
Milton Friedman famously concluded that “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.” He was right.
Shareholders would do well in driving home this point to the managers they hire to run their companies, from Disney to all other firms.
__________
Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.
The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
Two great ways to pre-order Cathedral: An Alliance of Saint Michael Novel, which is Ray’s sixteenth work of fiction, and the first in the Alliance of Saint Michael series. Signed paperbacks at
https://raykeatingonline.com/products/cathedral and/or the Kindle edition at
https://www.amazon.com/dp/B09WYW2Q2V
Two great ways to order Ray Keating’s new nonfiction book – The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist. Signed paperbacks at https://raykeatingonline.com/products/weeklyeconomist and/or the Kindle edition at https://www.amazon.com/dp/B09WKN81RG.
Get more out of 2022 with The Disney Planner 2022: The TO DO List Solution! It combines a simple, powerful system for getting things done with encouragement and fun for Disney fans, including those who love Mickey, Marvel, Star Wars, Indiana Jones, Pixar, princesses and more. Also, “The Disney Planner 2022: The TO DO List Solution” comes with a handy spiral binding for easy use.
Keating has three new books out. Vatican Shadows: A Pastor Stephen Grant Novel is the 13th thriller/mystery in the Pastor Stephen Grant series. Get the paperback or Kindle edition at Amazon, or signed books at www.raykeatingonline.com. Past Lives: A Pastor Stephen Grant Short Story is the 14th book in the series. Again, get the paperback or Kindle edition at Amazon, or signed book at www.raykeatingonline.com. And order the 15th book in the series What’s Lost? A Pastor Stephen Grant Short Story – grab it at Amazon.com or signed editions at www.raykeatingonline.com.
Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.
by Ray Keating
Commentary
DisneyBizJournal.com
April 17, 2021
The statement kind of hits like a cold bucket of water over the head: “I will tell you for the first time we received some incredibly well-written scripts that did not satisfy our standards in terms of inclusion, and we passed on them.”
As noted by the Hollywood Reporter, Walt Disney Television chairman of entertainment Dana Walden made this declaration recently during a panel discussion. And it’s the direct result of a set of inclusion standards – i.e., actual percentage breakdowns of “groups” populating on-screen presentation, creative teams and behind the scenes – set up in the fall 2020 by ABC/Disney.
Before pondering possible implications, and given the political powder-keg that such declarations can ignite, there are a few quick things that need saying. First, there are those on the Right who mistakenly believe that racism and prejudice simply don’t exist. Second, many on the Left see racism and prejudice everywhere, and believe that racism is as bad as it has ever been in this country. Disagreements in this area often rank as the most strident and ugly in our public life, and feed an increasing tribalism – that is, I have my group, you have yours, and we are not together in any true sense. So much for the U.S. motto of E Pluribus Unum. The reality is that racism and prejudice very much exist, much work still needs to be done in healing our divisions, but also so very much already has been accomplished. Anyone who cannot see all of this is ignoring history for the sake of playing divisive politics.
As for actions being taken, private companies are free to choose to implement whatever policies they see fit to expand diversity. At the same time, that doesn’t mean that such policies should not be examined and subject to criticism.
Diversity as an objective for a business is not new and can be beneficial, such as by bringing various viewpoints and perspectives to decision-making. When done thoughtfully and constructively, it can send positive messages beyond the firm as well.
At its best, corporate efforts to improve diversity and inclusion mean opening more doors, and expanding the number of chairs at the table. The point is that business is not a zero-sum game. The right decisions mean growth and expanding opportunities, hopefully, for all.
But that is not the message behind Walden’s comment. That drips of zero-sum, us-vs.-them thinking, with diversity and inclusion efforts resulting in the exclusion of certain people. How tragically ironic.
It also clearly points to politics trumping quality. Disney is a storytelling company in the storytelling business, and that is perhaps why this statement, while not surprising in parts of the business world today, is shocking and dismaying. Disney should be welcoming to all who tell good stories. That would seem to be one of the tenets upon which Walt Disney built the company. It’s not, or should not be, a case of either diversity or quality. Why not both?
Indeed, creators should be most distressed by such declarations, along with formulas as to who effectively can and cannot create with the company. As a storyteller myself (a novelist), I create the best material I can, and work with others to bring those stories to the public. My hope is the same for other creators.
What’s nice is that technology makes statements like this from Walden, and percentage breakdowns on the “groups” that Disney will and will not work with, largely irrelevant. Technology has empowered writers and filmmakers like never before. Creators can create, and gain direct access to consumers like never before. That’s exciting for all creators, including those who have suffered due to racism and prejudice, and those who fail to align with leftist dictates from certain companies. Perhaps there is an opportunity for creators to truly unite.
__________
Ray Keating is the editor, publisher and economist for DisneyBizJournal.com, and author of the Pastor Stephen Grant novels and assorted nonfiction books. Have Ray Keating speak your group, business, school, church, or organization. Email him at raykeating@keatingreports.com.
The views expressed here are his own – after all, no one else should be held responsible for this stuff, right?
Keating has two new books out. Vatican Shadows: A Pastor Stephen Grant Novel is the 13ththriller/mystery in the Pastor Stephen Grant series. Get the paperback or Kindle edition at Amazon, or signed books at www.raykeatingonline.com. Past Lives: A Pastor Stephen Grant Short Story is the 14th book in the series. Get the paperback or Kindle edition at Amazon, or signed book at www.raykeatingonline.com. And pre-order the 15th book in the series What’s Lost? A Pastor Stephen Grant Short Story.
Also, check out Ray’s podcasts – the Daily Dose of Disney, Free Enterprise in Three Minutes, and the PRESS CLUB C Podcast.
You also can order his book Behind Enemy Lines: Conservative Communiques from Left-Wing New York from Amazon or signed books at RayKeatingOnline.com. His other recent nonfiction book is Free Trade Rocks! 10 Points on International Trade Everyone Should Know.
Please support the efforts of DisneyBizJournal.com to bring news, analysis and commentary on Disney to readers such as yourself. Make a contribution right here via PayPal. Thanks!
