Can Business Do the Job Ahead?

ON AMERICA’S FUTURE

SPEAKER: HENRY C. FLOWER

Vice President, J. Walter Thompson Company

We are fighting a war for democracy and freedom. Yet to win it, we have had to forgo much democracy and curtail many freedoms. This necessity of war is recognized as such by even the most rugged of individualists. History shows, however, that a nation’s central government usually tries to retain emergency powers long after the need has ceased to exist.

During an emergency, power is necessarily assumed by relatively few individuals — and it is human nature for them to want to keep that power. At the present time there are many who sincerely believe that the state should increasingly take over the organization of society and that a strong central government offers the only hope of avoiding social and economic chaos after the war.

Existing public attitudes aid and abet this tendency. People have lived through the depression of the thirties. They have been told that uncontrolled business enterprise was the cause — will continue to be the cause —of mass unemployment. They saw the need for strong governmental measures in 1932. They have seen more recently that it was necessary for our government to step in and organize production to provide the required war material. They have seen unemployment diminish to the vanishing point.

It is unrealistic to believe that the government will, or should, summarily divest itself of all the “extra” powers that are assumed during the war. We know there are natural and inevitable difficulties in the transition period between the end of war and the return to a normal economy. The change-over of industry from implements of war to consumer goods and the placement of millions of soldiers and sailors in civilian jobs both present problems in which the help of government is necessary.

But it is crucial to the future of America that such government help be recognized as of a temporary and diminishing nature; it is important to know that it is the intent of those in government to withdraw into the role of referee as soon as possible, leaving to private enterprise the task of making goods and creating jobs.

Watch out for reaction

Undoubtedly there will be a reaction, after the war, from regimentation of all kinds — army discipline, rationing, price control, and other restrictions. That reaction may possibly sweep out of power those who have directed our war effort. But such action will not guarantee a return to democracy. If people fear another depression; if the 10,000,000 men in our armed forces find no jobs waiting for them when they are demobilized; if there is resentment against those “who have grown rich by staying home” — farmers, laborers, capitalists — there is every likelihood that people will gladly accept a “state of continued emergency.” A popular hero might be called upon to direct the country under emergency powers.

In the final analysis, whatever comes about will depend on what people think and feel — on the ideas they absorb between now and the end of the war. People, in the mass, do not think things through; they cannot understand abstract theories of government or economics. They listen to what is said ; their conclusions are affected by all the little things close to their personal lives.

The fourth freedom

What are America’s basic wants? First, to beat the Axis powers and make sure that the threat of future wars is removed; second, to enable men to go back to the kind of life they have known before — with one fundamental difference: they want a far greater degree of economic security than democracy has given them in the past. They want the specter of mass unemployment removed. They have no fear that their right to live where they choose, to select the work they want to perform, or to worship and speak as they please is endangered. In other words, of the “Four Freedoms,” Americans have no concern over three; freedom of religion, freedom of speech, and freedom from fear are taken for granted in this country. But they are very much concerned about the fourth freedom — freedom from want.

“Freedom from want” is a shining phrase, expressing an ideal that all must endorse. But the rub comes in the practical achieving of this objective. It can be used as a glittering catch-phrase to gain instantaneous popular support. It is easy and pleasant to tell the people that just by sanctioning a planned economy they can achieve security. It is infinitely more difficult and requires real courage to interpret “freedom from want” realistically — to tell the people that there is no easy short-cut to this objective, that they must be willing to work and save to bring it about.

What kind of security?

That “freedom from want” will be the key factor in the thinking of post-war America is an inescapable conclusion. Everyone sympathizes with the ideal. The nub of the question becomes the interpretation which the American people are led to place upon it. So it is up to business leaders, in large measure, to project to the public a realistic interpretation of this concept — to point out that, if the American people stop to think, they really do not want a dull security that inhibits initiative and opportunity for progress. That kind of security can only make for a static instead of a dynamic America.

Fundamentally, the American people believe in the future of America and in their own individual ability to succeed. (The average American believes he has more opportunity than his father.) They want no ceiling on individual opportunity. They want a higher standard of living. But they want these things within the framework of a greater security. They want no dole, but they do want assurance of a good, steady job. And their support will go to the men and the form of government that they are convinced will give this to them.

Greater economic security to most people means greater continuity of employment. They are too literal-minded to understand economic theories or the complex factors upon which prosperity depends. Business makes things; business gives them jobs; so they look to business first.

Confidence in the ability of our business leaders to go on producing new products and better values —the elements of a higher standard of living — is little in question. But confidence in their intent and ability to lick the problem of unemployment and to give greater economic security is very much in question. It is far more important to remove doubt in peoples’ minds on this score than to establish by logic the case of private enterprise versus government planning. What people are interested in are the answers to such practical questions as these: Am I going to have a job when the war is over? Will that be a steady job? Will I be taken care of if the plant shuts down? Is management willing to put continuity of employment on a par with continuity of dividends?

How can greater economic security be achieved?

Continuity of employment, along with a higher standard of living, obviously can be achieved only under an economy that keeps our productive machine operating at capacity. There must be provided: —

1. The opportunity to sell the output of that machine not to the government (and have it paid for out of money borrowed from the public) but to millions of consumers who can pay for it out of current earnings.

2. Jobs for 55,000,000 men, so that they will have the money to buy, and so that those demobilized will not face unemployment and constitute a further threat to a democratic form of government.

To this end we need laws and a tax structure which will provide business with the incentive to do the job ahead. Business must be given the incentive to take risks that will lead to new products and more jobs, and to solve the problems of unemployment (seasonal and cyclical), perhaps to set up its own reserve funds to tide over the periods of depression.

The public is going to ask one question: Which men can we trust to deliver the goods — which ones will give us more security and a higher standard of living?

That question comes down to one of confidence — confidence in the men who are to be the leaders of tomorrow. If business is to play its part, both in and outside of government, then businessmen, as the direct employers of labor, have a direct responsibility to gain the public’s confidence. This will be a battle of believability.

Business must build confidence

Nelson, Wilson, Batt, Eberstadt, and their associates are not only respected but are recognized as businessmen who have worked unselfishly and unstintingly to “deliver the goods.” Unfortunately, there are still many people who think that such leadership from business is limited to a few men. They believe that many businessmen are more concerned with making money than with the public good.

Business leaders, therefore, cannot wait until the war is over to start rebuilding public confidence. The present is vital because during the period between now and the end of the war the public mind will be made up one way or the other. And confidence comes slowly.

Greater confidence in business leadership depends not only on the public’s approval of the products offered but on the way in which the company is operated — on the ability of our business leaders to give greater economic security.

Sales create employment

No company can give continuity of employment unless its product is sold. Consequently every business must first make sure that people want to do business with it — both because of the values offered and because of the courteous, friendly service given. In the post-war period, competition will be keener than ever. New products and lower prices will be the order of the day.

Greater emphasis than ever before must be placed on research, not only to find new products but to work out new processes that will cut costs. New products and new processes will bring expansion of markets in this country and abroad, if accompanied by lower prices and salesmanship of the most aggressive kind.

The importance of new products

Important as new and better products are to the sales volume of any company, they are still more important in building public confidence. They are specific evidence of the ingenuity and resourcefulness that mean a higher standard of living — a “want" with which the public won’t let bureaucracy interfere, because the public have every confidence in the ability of business to supply better things.

Agitation for municipal ownership of the local water company always meets with much greater public favor than ownership of the other public utilities. There seems to be little opportunity for further initiative and enterprise in improving water systems. The people are therefore willing to risk static government in some domains. But the people want to give the electric company an opportunity to display its initiative and progressiveness, because they believe much is yet to be accomplished.

In the field of transportation, government ownership of the automobile companies has never been advocated — the industry is always evidencing its progressiveness by bringing out improved, cheaper models. Yet there was agitation for government ownership of the railroads until the introduction of streamlined trains and better service.

What we expect of a good company

Greater continuity of employment outranks all other “wants” of labor — and of the public in behalf of labor. Higher wages, pensions, shorter hours, better working conditions, vacations with pay, a voice in management come behind it in rapidly descending order.

Continuity of employment is not a problem that many individual businesses can solve for themselves. It involves too many factors over which business has no direct control. But that does not lessen the need for business leaders to do what they can.

For example, an annual wage or forty weeks of guaranteed work a year is already being advocated in certain quarters. And we know that the public favors further extension of social security benefits and protection. Businesses might therefore be wise to favor an annual wage for all regular employees, establish reserves for periods of depression, or publicly advocate that special unemployment taxes be passed against those industries in which high seasonal unemployment exists. Such measures, legislative or otherwise, will not solve the unemployment problem, but advocacy of them will prove that business is concerned over unemployment.

In short, if an increasing number of companies can give evidence of their determination to solve this problem even if it involves a policy, publicly announced, of “putting continuity of employment on a par with continuity of dividends,” a great stride will be made toward gaining public confidence.

Settling disputes

The public does not hold management solely responsible for the disputes that interfere with production and affect the well-being of the community in which we live. The danger of these continued disputes lies in the fact that the public is saying increasingly: “A plague on both your houses — if you can’t settle your differences amicably, let the government step in and keep the plant running.”

Even though management is often not at fault, little will be accomplished by blaming the unions, their leaders, or the government. The only solution lies in helping to develop better labor relations. This involves education of managements, personnel men, and representatives of labor.

Through personal contact , meetings, motion pictures, posters, booklets, employees’ reports, and in other ways within the provisions of the Wagner Act, it ought to be feasible to get the average workingman to understand: —

1. That the labor movement cannot progress without the support of public opinion; and that it cannot hold public support if it is undemocratic in itself — if it tolerates “racketeering” and refuses to give a public accounting of union expense, and if it puts its own interest ahead of the public interest.

2. That labor and management have an identity of interest in that they are both producers; that the product they are making must be sold in competition with other manufacturers; that the company must show a profit on its operation if there is to be any continuity of employment.

3. That the management is not only willing to talk things over, but wants labor’s help in solving such problems as accidents, health measures, absenteeism, promotion, apprentice training, and methods to improve efficiency.

The final step

The public must understand that all these measures are the true intent of business and that business leaders are already showing their ability to perform.

This means that “the story” must be told. Such a lot has been said to the discredit of business during the last ten years that every company which can tell a story of “enlightened performance” should find a way to do so. Today, when so many companies have no pressing sales problems, their constructive advertising should help to establish confidence in American business leadership. They should look to the future, and the story which they have to tell should point to the future.

The public want to see at least an artist’s sketch of the new automobile in which they are going to ride. They want to know how a new manufacturing process will so cut the cost of washing machines that there will be four million fewer backaches on Monday; how the research department’s help in improving a piece of war equipment may give doctors better surgical equipment, which will benefit all men when the war is over. They want to know all they can about this new equipment now.

Even more, they want to know what chance there is in the future for continuous employment, and what this or that specific company has done to better its labor relations. This story, particularly, needs telling because it has never been told by, or about, enough companies for the public to realize how widespread good labor policies are. They read and hear only of strikes and disputes, because there is “more news in scandal than in respectability.”

In this story, the facts must reflect performance, the tone must reflect the attitude of top management. That is why it becomes a story which the chief executives must guide and supervise — a story for which “copy” will probably originate in the industrial relations department. To tell such a story effectively, new techniques will have to be developed. They represent one of the greatest challenges to the new business leadership.