Kreps Flip-flops on Business Social Performance Index

After indicating early last year that she was going to be more than an ordinary sales agent for the business world, Secretary of Commerce Juanita Kreps is running for corporate cover.

In a major flip-flop, Secretary Kreps has retreated from a creative proposal to further corporate social responsibility and assumed the traditional indentured role of knee-jerk corporatism.

The statements–one public and one private–reflect the switch. On October 19, 1977, Secretary Kreps announced that the department intended to develop a Social Performance Index. The purpose was to assist companies in assessing “the ways in which their operations affect their communities, employees, consumers, the environment, other businesses and society generally.”

There was to be full “consultation” with businesses, including a major role assigned to the Business Roundtable–a lobby of chief corporate executives, to prepare the criteria for the index.

The proposal had no compulsive features. Companies could choose to measure their performance by the index voluntarily. Yet within days the baying pack of the business and trade association press raised the banners of hysterical rejection garnished with the predictable horrible hypotheticals.

More calculating corporate strategists went to the House Subcommittee on Appropriations where is rooted the power of the purse over the Commerce Department’s budget.

On January 23, 1978, Rep. John M. Slack, D-W. Va., convened a special hearing on the spending of $428,000 to carry out the program to enhance corporate social performance. Only it was not a hearing; it was a bullying by a clutch of congressman bent on terminating the program at its inception.

Rep. Mark Andrews, R-N.D., fulminated over all those federal health, safety, and disclosure requirements imposed on the Fortune 500 companies that were responsible for his state’s farmers paying so much more for tractors, trucks, fuel, herbicides and fertilizers. Take it from in humanitarian Mark Andrews, who specializes in making Uncle Sam the all-purpose scapegoat.

Take it is what the two Commerce Department witnesses did and with a good measure of groveling. Three days later, Secretary Kreps, who was unable to be at the hearing, wrote Congressman Slack about a further departmental review of the proposal in the light of the subcommittee’s “expressed concerns.” That’s bureaucratese for dropping it.

Since that experience, Secretary Kreps has decided to turn her talents more fully behind the cause of regulatory reform.

“Regulatory reform” in business circles is a code word for weakening or revoking regulations that curb the destructiveness of their operations on human health and safety. Using inflated and phony cost-benefit casuistry, companies are releasing a torrent of press releases blaming regulation for inflation, unemployment, lack of innovation, low level of exports and other assorted woes. They have financed pseudo studies designed to make the preposterous plausible.

This message has found its way to Juanita Kreps who has personally relayed it in urgent terms to President Carter. A White House aide derisively described her May 26, 1978, memorandum to Carter as a “paradigm Nixonian statement.”

Against years of evidence documenting corporate crimes, defects, pollution, violations, deceptions and empty industry standards, Secretary Kreps still urged greater attention to meeting “regulatory objectives” “without mandatory rules.” “Alternative means,” she told Jimmy Carter, “include voluntary industry-developed standards, financial incentives, and labeling…to alert workers and product users to potential risks.”

In short, don’t use the law, bribe them with taxpayers’ money, and let them merely tell workers and consumers that if they are not careful, they’ll be sorry.

Why doesn’t Secretary Kreps instead turn her attention toward developing a corporate subsidy budget–since her department is a subsidizer of business?

She could develop the cost-benefit of all those tens of billions of dollars in public funds pouring out from the federal government every year to industry and commerce. She could push for an annual review of all those subsidies, loan guarantees, tax expenditures, transfers, inflated contracts and other pillars of the corporate welfare system.

Do they decrease business efficiency? Do they discriminate against small business, retard innovation, further monopoly, increase prices, corrupt government, bolster mismanagement and gouge the small taxpayer?

These are the questions that should concern a gutsy Secretary of Commerce.