Companies must be prepared to explain questionable acts

The plutocrats aren't on the run yet, but they're starting to feel some serious heat. A reckoning, of sorts, may be under way on the uneven playing field known as Western capitalism.

The plutocrats aren't on the run yet, but they're starting to feel some serious heat. A reckoning, of sorts, may be under way on the uneven playing field known as Western capitalism.

This represents a major shift from recent years, when the growing inequality of wealth was baked into public policy and private action alike. The backlash is on, and it's overdue.

Corporate PR people in public companies are going to have to recognize that platitudes will no longer suffice in creating alibis for unjustifiable actions. "The board thinks he's worth it" doesn't cut it anymore, not when shareholders and other stakeholders ask why the top boss keeps extracting more and more of the profits with less and less personal risk.

Spokespeople for the burgeoning world of private equity are going to have to help explain why their bosses, who are becoming impossibly rich as they use other people's money to buy up huge swaths of the economy, deserve the tax breaks that make much of their industry so profitable.

Signs are growing that the public, as well as our representatives, is starting to ask the right questions and, when not given sufficient answers, demand changes.

Consider the case of Terry Semel, who stepped down a week ago as CEO at Yahoo. He was bowing in large part to disgruntled shareholders who correctly saw him as a poster child for excessive pay.

At the same time, Congress is asking private equity giants why they shouldn't pay the same rate of corporate taxes as other companies. This debate centers around an accounting rule too arcane to explain here, but the accounting treatment has provided an unjustified windfall for the private equity firms.

Now, there's nothing wrong with getting rich. Wealth creation, in a fair market, is good for all in the long run.

Yet the public is starting to catch onto the fact that when free markets get rigged, the main losers are the ones who aren't in on the rigging.

I suspect the most serious backlash will hit the corporate chieftains. They are the most public beneficiaries of the uneven treatment that pervades the system, where daisy chains of buddy-buddy boardroom compensation committees and consultants keep ratcheting up the "value" attached to being the top dog.

The private equity folks, whose take dwarfs typical corporate payments, will have an easier time because so much of what they do remains opaque. The exception is those who take their companies public.

Of course, the most indefensible idea of all comes courtesy of our federal lawmakers: their reckless borrowing against our children's future. The massive tax cuts for the wealthy in wartime, in contravention to previous US practice, is widely understood to have been among our most fiscally irresponsible acts ever.

PR and public affairs people are going to need to learn a new language in coming years, speaking on behalf of those who have done so much to poison capitalism. Perhaps they can start with an apology.

Dan Gillmor is the author of We the Media: Grassroots Journalism By the People, For the People. He's also director of the Center for Citizen Media (www.citmedia.org).

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