15 Aug The Miller, his Motorcycle, and the Ass
The following commentary/analysis is one I wrote in my capacity as a senior fellow at “the nation’s oldest consumer protection agency,” Consumers Research, where, among other things, I compile a weekly letter for public pension-fund managers. I am sharing it here today because I thought it might be useful to some of you.
Stakeholderism at Harley-Davidson
Filmmaker-turned-corporate-activist Robby Starbuck has struck again, this time exposing what he calls the radically politicized business agenda of Jochen Zeitz, the German-born president, CEO, and chairman of the board of Harley Davidson, Inc. Harley – one of the most iconic of all American brand names – has been transformed by Zeitz from a successful motorcycle company and the embodiment of personal freedom into a sanctimonious “woke” corporation that is more concerned about how well it serves Gaia than how well it serves its customers and shareholder, according to Starbuck. As is his wont, Starbuck brings the receipts:
“Of course Harley’s all about the sound and the smell of the Harley-Davidson, isn’t it? So I became the Taliban again in a sustainable way. I decided to create a sustainability committee which I’m still chairing today.”
On sustainability: “it’s not just a buzzword out there that means little, you’re translating it into the DNA of what you’re doing in business. And that’s what we’re trying to do with the other initiative which I just co-chaired with Sir Richard Branson, which is called The B Team… In order to really try and redefine the role and purpose of business. So here again, now we are trying to take on traditional capitalism and try to redefine it.”…
“It’s important that we create new leadership. That we get others to join a new thinking of a more sustainable business, of a better business that is more equitable in every respect. Socially, environmentally and financially.”
Interestingly, in his outburst here, Zeitz echoes other proponents of the politicization of capital markets and business, most notably Marc Benioff, the CEO and founder of Salesforce and a longtime devotee of the World Economic Forum’s Klaus Schwab. Five years ago, Benioff (in)famously took to the opinion pages of The New York Times to demand “a new capitalism” in which “business leaders need to embrace a broader vision of their responsibilities by looking beyond shareholder return and also measuring their stakeholder return. This requires that they focus not only on their shareholders, but also on all of their stakeholders — their employees, customers, communities and the planet.”
Funnily enough, Harley Davidson recently announced plans to move a significant chunk of its production from various parts of the United States to Thailand. Likewise, as The Daily Mail can confirm, the motorcycle enthusiasts at last week’s annual rally in Sturgis, South Dakota, 90% of whom rode into town on Harleys, are not exactly keen on Zeitz’s plans to remake capitalism and turn the iconic American brand into a social-justice program. And if the company’s employees and customers aren’t the beneficiaries of Zeitz’s new stakeholder-centric form of capitalism, then it would appear that his “reforms” are intended to please only “communities [presumably in Thailand] and the planet.”
Zeitz’s yearning for a “new” capitalism also echoes the notorious statement issued five years ago next week by the Business Roundtable redefining “the purpose of a corporation.” The BRT’s proclamation coincided with the precipitous rise of ESG, as well as Larry Fink and BlackRock’s decision to adopt “sustainability” as the primary factor in their investment decisions – all of which, taken in combination, marked the apex of the stakeholder movement.
In the five years since the achievement of that apex, opponents of ESG and stakeholderism have identified and exposed the deficiencies of that movement – its violation of the basic premises of fiduciary duties, in particular – and have, accordingly, undermined its utility as a business strategy. All of this, in turn, suggests that Zeitz’s management strategy at Harley-Davidson is anachronistic. Like the fabled World War II Japanese soldiers stranded on remote and deserted islands, he is blissfully unaware that the war is over and that his side lost.
And speaking of fables…
It is, I think, worth revisiting the wisdom of Aesop on the folly of trying to serve too many masters – the folly inherent in stakeholderism:
“The Miller, His Son, and the Ass.”
One day, a long time ago, an old Miller and his Son were on their way to market with an Ass which they hoped to sell. They drove him very slowly, for they thought they would have a better chance to sell him if they kept him in good condition. As they walked along the highway some travelers laughed loudly at them.
“What foolishness,” cried one, “to walk when they might as well ride. The most stupid of the three is not the one you would expect it to be.”
The Miller did not like to be laughed at, so he told his son to climb up and ride.
They had gone a little farther along the road, when three merchants passed by.
“Oho, what have we here?” they cried. “Respect old age, young man! Get down, and let the old man ride.”
Though the Miller was not tired, he made the boy get down and climbed up himself to ride, just to please the Merchants.
At the next turnstile they overtook some women carrying market baskets loaded with vegetables and other things to sell.
“Look at the old fool,” exclaimed one of them. “Perched on the Ass, while that poor boy has to walk.”
The Miller felt a bit vexed, but to be agreeable he told the Boy to climb up behind him.
They had no sooner started out again than a loud shout went up from another company of people on the road.
“What a crime,” cried one, “to load up a poor dumb beast like that! They look more able to carry the poor creature, than he to carry them.”
“They must be on their way to sell the poor thing’s hide,” said another.
The Miller and his Son quickly scrambled down, and a short time later, the market place was thrown into an uproar as the two came along carrying the Donkey slung from a pole. A great crowd of people ran out to get a closer look at the strange sight.
The Ass did not dislike being carried, but so many people came up to point at him and laugh and shout, that he began to kick and bray, and then, just as they were crossing a bridge, the ropes that held him gave way, and down he tumbled into the river.
The poor Miller now set out sadly for home. By trying to please everybody, he had pleased nobody, and lost his Ass besides.
As I noted almost exactly five years ago, when I first used this fable as an analogy for stakeholderism and for the BRT’s redefinition of the purpose of a corporation: when corporate executives forget their roles, when they believe that they can achieve multiple different ends with the same capital, they run the very real risk of doing nothing effectively. Jack of all trades, master of none, and all that. By trying to serve multiple masters, the proponents of stakeholderism inevitably set themselves up to serve none. And in the end, as anyone who puts his faith in fables and ancient virtues could tell you: everyone loses their asses.
