7-8 minutes - Source: NYT
The role and responsibility of businessThere has been a lot of competition, but in 2020 few issues have reshaped the business world as much as race, as a surge in support for combating racial injustice swept across the country. Corporate America has rushed to show which side it was on.
Our guest on tomorrow’s DealBook Debrief, The Times reporter Nikole Hannah-Jones, brought key ideas in the movement to the fore with the Pulitzer-winning 1619 Project, which she spearheaded.
R.S.V.P. here for the discussion with Nikole about the role for business in addressing racial inequality at 11 a.m. Eastern. If you have questions you would like to ask her beforehand, send them to firstname.lastname@example.org.
Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut and Michael J. de la Merced and Jason Karaian in London.
The contextAt its core, The 1619 Project is a re-examination of America’s national narrative, placing the pernicious consequences of slavery at the center of the story for nearly every major institution. Advocates for racial equality have long pointed out the uneven playing field in the business world, surfacing the effects of slavery throughout the American capitalist project.
• As part of The 1619 Project, Matthew Desmond, a sociology professor at Princeton, dissected the business of cotton, arguing that “enslaved Black people became America’s first modern workers, their productivity increasing at an astonishing pace.”
• Mehrsa Baradaran, a professor at U.C. Irvine School of Law, asserts in her book “The Color of Money” that Jim Crow laws and other racist policies trapped Black communities, sapping them of the capital they need to flourish.
• Jay Powell, the Fed chairman, has spoken of “financial deserts” where poorer communities, including Black ones, have suffered from a lack of access to capital.
Words and deedsAs protests across the nation have grown — sparked by George Floyd’s death, and bolstered by more outrage over incidents of police violence — big business has responded.
Corporate leaders spoke out against systemic racism. Among the most eloquent was Robert Smith, the founder of Vista Equity Partners, who is America’s wealthiest Black billionaire and who published a poignant memo to employees shortly after Mr. Floyd’s death. “Progress still feels so elusive,” he wrote, and “it’s natural to feel helpless in light of the events we’re seeing in the news.” But he implored them to look forward and put in the work: “Each of us has to choose to overcome.”
And businesses have taken action to address the issue:
• Corporations pledged millions to racial justice causes: Apple and YouTube each announced $100 million pledges, for instance.
• Several investors, including SoftBank and Andreessen Horowitz, announced new funds aimed at backing minority entrepreneurs.
• Netflix’s Reed Hastings and his wife, Patty Quillin, pledged $120 million to historically Black colleges and universities.
What more can be done?Black leaders have said progress must be made with bigger, concrete proposals and not just well-intentioned pledges, hashtag activism or one-off donations.
“Corporate America has failed Black America,” Darren Walker, the president of the Ford Foundation, told The Times’s David Gelles. “It is going to take a systemic response to sufficiently address this crisis that has been decades in the making.”
• Mr. Smith of Vista Equity called on U.S. companies to invest 2 percent of their annual profits in Black-focused lenders. Such a move, he said, would give these banks and other financial institutions the cash to help Black communities grow in the long term.
• Separately, Netflix devised a plan to deposit up to 2 percent of its cash holdings, or $100 million, with Black-focused financial institutions. Though conceived independently of Mr. Smith, the idea is the same: “You need capital to build more capital,” Professor Baradaran of U.C. Irvine, an adviser on the plan, said. The move addressed racial inequality not through charity but via a routine commercial aspect of Netflix’s business, a crucial distinction.
The speed readDeals
• The S.E.C. is investigating Kodak’s disclosure of a large government loan that sent its shares soaring, boosting the value of executives’ stock option grants. (WSJ)
• Argentina reached a deal with creditors, including BlackRock and Greylock Capital Management, to restructure $65 billion in debt. (NYT)
• People news: After three years of mixed results, Ford replaced its C.E.O., Jim Hackett, with its C.O.O., Jim Farley; Apple’s long-serving marketing chief, Phil Schiller, is stepping down, to be replaced by the product marketing head, Greg Joswiak; and the advertising group Publicis cut ties with Tom Goodwin, its head of futures and insight, because his Twitter posts about the coronavirus were “not aligned” with company values. (NYT)
Politics and policy
• Senator Mitch McConnell, Republican of Kentucky and the majority leader, signaled that he might be open to extended $600-per-week unemployment assistance payments, a sticking point in negotiations. (NYT)
• U.S. prosecutors are reportedly seeking $13 billion in penalties against the OxyContin producer Purdue Pharma to resolve investigations into its practices. (Reuters)
• Anthony Levandowski was sentenced to 18 months in prison for stealing self-driving car trade secrets from Google, which he left to found a start-up that he sold to Uber. (NYT)
• Speaking of Uber and Google, both companies have now told office-based employees that they can work from home through June 2021. (CNBC)
• “Is Microsoft Sure It Wants to Buy TikTok?” (NYT Opinion)
Best of the rest
• Disney lost nearly $5 billion in its latest quarter, but investors cheered a surge in subscriptions for its streaming services. (NYT)
• Hong Kong’s richest family has lost $8 billion over the past year, a reflection of the city’s turmoil. (Bloomberg)
• Interest rates are low, so why are loans so hard to get? (NYT)