Jacob Hacker, a political scientist at Yale, and Paul Pierson, a political scientist at the University of California Berkeley, recently provided a thor-ough analysis of the political and policy developments that increased poverty and inequality in the United States over the last forty years (Hacker and Pierson 2010a). They credit a 1971 memo from Lewis F.
Powell for inspiring a massive redesign of corporate America’s advocacy for business- friendly policies. Powell wrote the memo for his friend and neighbor Eugene Sydnor, Jr., the chairman of the US Chamber of Commerce Education Committee. The memo, dated August 23, 1971, argued that there was a growing attack on the free enterprise system (1971, 2– 3):
The most disquieting voices joining the chorus of criticism come from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians. In most of these groups the movement against the system is participated in only by
minorities. Yet, these often are the most articulate, the most vocal, the most prolific in their writing and speaking.
Moreover, much of the media— for varying motives and in varying degrees— either voluntarily accord unique publicity to these
“attackers,” or at least allow them to exploit the media for their purposes. This is especially true of television, which now plays such a predominant role in shaping the thinking, attitudes, and emotions of our people.
The business community’s concerns were well justified. During the 1960s and early 1970s, many people were highly suspicious of business.
Young people were loath to pursue careers in business, and the public strongly favored policies that were hostile to business. Powell was simply describing, in a dispassionate way, some of the reasons that business was viewed so negatively.
Powell said that the business community’s response to the problem involved “appeasement, ineptitude, and ignoring the problem” (1971, 8).
Rather than each company simply pursuing its own business interests, Powell argued that companies needed to be “equally concerned with pro-tecting and preserving the system itself” (10). He called for an effort to accrue political power through “united action and national organizations [that would engage in] careful long- range planning and implementation [and] consistency of action over an indefinite period of years, [with a]
scale of financing available only through joint effort” (11).
In the memo Powell proposed specific steps the business community could take. The first was to increase support on college campuses for con-servative intellectual efforts. He argued that top colleges were producing graduates who held strong antibusiness views and were moving into influ-ential roles in the media. If the business community could strengthen support for conservative points of view on college campuses, they could create a cadre of well- trained advocates of conservative viewpoints who would increase public support for conservative values when they gradu-ated and moved into leadership positions in society.
Second, Powell recommended creation of a group of “eminent schol-ars, writers, and speakers, who will do the thinking, the analysis, the writing, and the speaking” (21), as well as personnel “who are thoroughly familiar with the media, and how most effectively to communicate with the public” (21). Third, he recommended that conservative scholars be encouraged to publish in scholarly journals, popular magazines, and books.
Fourth, he proposed that businesses be encouraged to devote some of their advertising budgets to advocacy of the free enterprise system, rather than
simply promotion of their products or company. Fifth, he urged more vig-orous pursuit of political power (25– 26):
Business must learn the lesson, long ago learned by Labor and other self- interest groups. This is the lesson that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination— without embarrassment and without the reluc-tance which has been so characteristic of American business.
The sixth thing Powell advocated was to develop organizations that would litigate on behalf of the interests of conservatives. He cited the American Civil Liberties Union as a model for well- organized efforts to influence judicial decisions on behalf of a point of view. Seventh, he sug-gested that the business community help stockholders organize and advo-cate for the free enterprise system.
Powell noted that the strategy he outlined would require substantial investment from the business community. The money was forthcoming.
Through their foundations, a number of very wealthy individuals and fam-ilies have funded the development of a network of organizations that support all of the conservative efforts that Powell proposed. These backers include Richard Mellon Scaife, the Coors family, Smith Richardson, and John Merrill Olin. Lewis Lapham, writing in Harper’s in 2004, estimated that the resulting foundations were worth about two billion dollars. He cited Rob Stein as estimating that these foundations had contributed more than three billion dollars to conservative advocacy efforts over the previous three decades.
All of the things Powell advocated are now in place. A system of scholarships supports conservative scholars at America’s elite universities.
Lapham estimated that scholarships amounting to $39 million were avail-able to support conservative students in 2001, $16 million of that at Harvard, Yale, and the University of Chicago. There is financial support for writing, publishing, and promoting books, magazine articles, op- ed pieces, and scholarly articles that advocate conservative viewpoints. A network of think tanks supports conservative scholarship and advocacy and produces reports, newsletters, briefing papers, and op- ed pieces that dominate public discussion. The network includes the Heritage
Foundation, the American Enterprise Institute, the Cato Institute, the Hoover Institution, the Hudson Institute, the Manhattan Institute for Policy Research, Citizens for a Sound Economy, the National Center for Policy Analysis, the Competitive Enterprise Institute, the Free Congress Foundation, and the Business Roundtable. Lapham estimated that the 2001 annual budgets of the major think tanks totaled $136 million. These organizations supply a steady stream of conservative opinion leaders who regularly appear on television news and talk shows. This system of organi-zations exerts considerable influence on public opinion, making it more favorable to the needs and interests of business.
Leftist discussions of the Powell memo often characterize it as sinister.
But, in truth, it is a fairly balanced and dispassionate analysis of the reasons why, in 1971, public support for policies favoring business was at a low point (15):
Few things are more sanctified in American life than academic freedom. It would be fatal to attack this as a principle. But if academic freedom is to retain the qualities of “openness,” “fairness,”
and “balance”— which are essential to its intellectual significance—
there is a great opportunity for constructive action. The thrust of such action must be to restore the qualities just mentioned to the academic communities.
Powell simply laid out the avenues that are available in a free society to promote policies favorable to business. These interests had huge amounts of money available to them, but the basic principles they employed are applicable to any group’s efforts to influence public policy making.
The results of these efforts have been remarkable. Compare the politi-cal landscape of 1964 with that of 2014. In 1964, both the federal govern-ment and public opinion were decidedly liberal. Lyndon Johnson won the election with 61 percent of the vote. Democrats picked up two Senate seats and thirty- six House seats and had a two- thirds majority in both houses of Congress. Indeed, from 1933, at the height of the great depres-sion, through 1995, a period of sixty- two years, the Democrats controlled the House of Representatives for all but two years. For fourteen of the eighteen years after 1995, the Republicans were in control. In 2014 Republicans controlled the House of Representatives, with 233 Republicans to 199 Democrats. They also controlled 45 Senate seats. Although the
latter isn’t a majority, it is sufficient to allow them to block legislation and appointments by threatening filibusters.
There have also been huge changes in the nature of public discussion and in public policy making since 1964. Whereas the majority of Democrats considered themselves liberals in 1964, only about one- third of Democrats do so now, and the term “liberal” has become an epithet. The Republicans in leadership positions are all conservatives, and the party is far more con-servative than it was in 1964. Furthermore, a Democrat, Bill Clinton—
whose policies included welfare reform, balancing the budget, and reducing the federal workforce by about 350,000—declared in his 1996 State of the Union address that the era of big government is over. Finally, government regulation of business has dwindled significantly since the 1960s.
In sum, recognizing that generalized advocacy for conservative points of view would serve their interests, a number of wealthy people invested in creating an infrastructure to influence public opinion and policy making.
As the benefits of these efforts became noticeable, increasing amounts of money flowed to the network of organizations working for conservative causes. Major financial instruments such as derivatives were completely unregulated, and as a result, we experienced the worst economic down-turn since the great depression (McLean and Nocera 2010).
If the evolution of these corporate and business practices was due to the economic consequences to the individuals and organizations that engaged in them, we should find that businesses benefit from the changes in policy. And indeed they did. As discussed in chapter 8, between 1970 and 2000 the top 0.1 percent of earners increased their share of total national after- tax income from 1.2 to 7.3 percent (Hacker and Pierson 2010a). Moreover, in 1980, chief executives of American corporations made forty- two times what the average blue- collar worker earned. They now make 331 times what the average blue- collar worker earns (Dill 2014).