On Dec. 30, the US government expanded its multi-billion dollar bail-out of the auto industry with a $6 billion capital extension to General Motors’ finance division. It did this with the underlying fear that the company and its counterparts, Chrysler and Ford, may not survive the year and with the knowledge that a majority of Americans (6 in 10 according to a CNN/Opinion Research Poll conducted on December 3, 2008) are opposed to using taxpayer money to fuel a turnaround. 2008 was, no doubt, one that will remain etched in history as a year of reckoning. But, what real change will transpire in the New Year? Will 2009 be a turning point?
Indeed, a sea change may be on the way. Some influencers, like John McLaughlin, political commentator and host of The McLaughlin Group, have gone as far as to predict the rise of a new era of socialism, saying:
“Capitalism… will be the ultimate casualty of the global economic crisis of 2008. Governments everywhere are implementing socialist measures. The golden age of capitalism is kaput. Managed capitalism is what rules.”
Others, like President-elect Obama have proposed solutions to the culmination of events in 2008 via government-led regulatory reforms for business, as well as increased public and private social responsibility. Whether it be in the form of increased assistance to the underprivileged through tax relief, improved health care access and making universal early childhood education available, or the call for new personal engagement in local civic programs, charitable giving and volunteerism – the focus on the greater good for the incoming administration is unmistakable.
If changes like these take place, we might expect to see the role of corporations in cause-related activities to be diminished as government and individual involvement increase in caring for communities. However, as Ed Moed points out in his blog Measuring Up, brand reputation is a critical driver in purchase decisioning and consumer confidence. Certainly, companies that have acted unethically, are associated with failures as massive as the Big Three and are not perceived to be giving their fair share back to the communities and consumers that support them are likely to continue to be punished. In a down economy, price and quality will undoubtedly rule. But in fact, Cone’s recent research shows that most Americans (78%) believe companies should maintain or even increase their financial support of causes during a down economy, proving that significant consideration will be given to those that act in accordance with the newly re-birthed American commitment to the greater good.
How this is defined remains to be seen. Will it be manifested in greater compliance with environmental standards, increased fair wage and benefits offers, more transparency in financial and business reporting, new focus areas for strategic philanthropy, etc.? Will consumer expectations change? Will government be effective in incentivizing reform? The true answers will reveal themselves in the months and years to come. Since it’s a perfect time to make resolutions, I am going to resolve to hope and prepare for the best.