Where Are the Business Patriots?

The late economist and essayist Herbert Stein used to say that if something is unsustainable, it tends to stop. Or, as one wag put it, "If your horse dies, we suggest you dismount." The only real question is whether we get off the horse of our own accord -- or stay on the horse until it stumbles and sends us flying.

Fundamental fiscal reform and, in particular, reform of Social Security and Medicare is not an option; it is a necessity. And if we want the reform to be humane, it must begin soon. This probably means foregoing scheduled revenue cuts. It certainly means foregoing scheduled benefit increases. According to the Congressional Budget Office, recent tax cuts will in the long run reduce annual federal revenues by a steady 1 percent of GDP, whereas projected growth in federal pension and health-care benefits will cause annual federal outlays to grow indefinitely -- by 10 percent of GDP and still rising by the year 2050.

Congress, for ideological and political reasons, has for many years been gridlocked on this issue and thus is failing to take the lead. But does that mean that all the rest of us can fail as well? Can those of us who own or run businesses possibly be so shortsighted as to imagine that this impending fiscal tsunami doesn't threaten us at least as much as other Americans?

Henry Kissinger once walked into the White House briefing room and asked, "Does anyone have questions for my answers?" I only have questions, no answers. Some might call them excuses.

Is it that the corporate scandals have left us in business so morally crippled that we feel we lack public credibility? Is it because business has become so hyper-competitive, so global and so focused on corporate governance that it has no time left for anything else? Have too many of us forgotten that public policy is too important to be left to the politicians?

Is it that the media are in such a "gotcha" mode that we fear that, if we stick our heads up, it will lead to a public examination of our record with no wart or secret overlooked? Do we fear such an examination might label us hypocrites? In other words, is this a good time to be anonymous? Or is it because Washington has become so relentlessly mean and vindictive that we fear retribution if we occupy a lonely but sensible centrist position? In sum, do we feel that speaking out has more downside than upside?

Is it that the great big party of the 1990s, when many of us in business were getting fat, rich and happy and upper boundaries were disappearing, left us caring less about each other or about our own standards of behavior?

Do our stock markets so discount the future that we assume we are judged largely by short-term results? Is it, "If my tenure is only for four or five years, I, too, am 'entitled' to make it while I can. Let somebody else worry about our collective future."?

Some say we need to improve "the process," others that we need more communication and cooperation. Alas, in my experience, leadership springs not from big organizations, which can often head toward the lowest common denominator -- but from inspired individuals. We desperately need business leaders who have both convictions and the courage of those convictions.

Within the rising generation of CEOs, we desperately need more like Jeff Immelt of GE, who quietly but courageously restructured his executive compensation to expense stock options and put major emphasis on long-term operating performance. To keep a true long-term alignment between shareowners and management, Immelt has decided not to sell any of his stock until he retires. That's leadership.

We also need more Warren Buffetts -- more corporate John McCains -- who speak straight and sensibly about our collective future. When they talk, we listen. That's leadership, too.

We business leaders must answer the questions that our critics are asking. We make crucial contributions to our economic system. But we also reap the greatest rewards. If we benefit so much from this democratic arrangement, don't we have to make it more accountable, more durable and more fair?

True corporate leadership is a kind of business patriotism: It requires taking an honest stand on the great questions that face us. Patriotism is taking a chance -- and not just saying, "I got mine." Patriotism is putting ourselves on the line for those policies that we believe will help the long-term interests of our economy and our country.

Right now, America is running on empty. If those of us in business don't speak up, we can only blame ourselves when our country's engine of prosperity simply runs out of gas.

Author's e-mail:

peterson@blackstone.com

Peter Peterson, a former secretary of commerce under President Richard Nixon, is chairman of the Blackstone Group, a New York investment company. His new book, "Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Can be Done About It" (Farrar, Straus and Giroux) was published last week.