Mugged by Reality

A naive neocon sets out to save American business, only to discover that its virtues have been greatly exaggerated.

Paul Weaver | From the March 1988 issue

I went to the Ford Motor Co. to defend it. And not only it: I went to Ford to defend American capitalism.

I was a young neoconservative. With my fellow neocons, as members of our then-tiny political movement were sometimes called, I believed that the American political and economic system—democratic capitalism, we called it, or liberal capitalist democracy—was a good system. We liked its values: individual rights, reasonably free markets, representative government, economic growth, and a well-tempered welfare state. We also liked the fact that, in the real world, it outstripped the competition, providing more freedom, more opportunity, and more material well-being than any other system. In practice, it even provided more equality than socialism.

The system was under attack, we believed. It was being run down by a barrage of news, advocacy, and legislation that stood the truth about capitalist democracy on its head. Far from being the best system in the world, the attackers implied, capitalist democracy was beset by failure and crisis.

The private economy wasn't an engine of prosperity, growth, and opportunity, but a source of death, inflation, unemployment, and deception, the critics said. The political system wasn't the world's most open and responsive, they argued, it was under the thumb of the rich and powerful. As a result, problems from malnutrition to noise pollution were being ignored, the critics complained—whereas the reality, we neocons believed, was that the powers of government and incomes of taxpayers were being deployed aggressively against a long and growing list of problems, real and imagined.

This attack was coming, we neocons thought, from the professional classes, which were exercising growing power over American society through the media and universities. Led by Naderites, environmentalists, adversary journalists, and the other ites and ists who flourished in the 1960s and '70s, the attacking forces presented themselves as moderates trying to make the system work. But we neoconservatives believed they were in fact radicals—they didn't like capitalist democracy and were trying to destroy it.

And we believed they were succeeding. Democracy was giving way to manipulative media politics, big government was subjugating the private sector, the public was being robbed of respect for decent institutions. If business and other private institutions didn't wake up and start defending themselves, we neocons believed, capitalist democracy would soon be a fading memory.

But we also believed that supporters of the American system had a golden opportunity to reverse the tide. Our strategy for defending democratic capitalism was simple: Tell the truth. Tell the truth about the radicalism of the adversarial movements. Tell the truth about their policies' bad effects. Tell the truth about what thoughtful, pro-capitalist policy solutions to public problems would be like. Tell the truth about how business works to the benefit of customers, shareholders, workers, and the public as a whole. In short, seize the high ground of public policy debate, put the liberals and Naderites on the defensive, and trust the truth to discredit these movements with the unradical American public.

I had become convinced of these views as a writer for Fortune magazine, for which I covered government regulation of business. Each new story I wrote deepened my belief that business and government were badly mishandling economic issues, so when an executive search firm contacted me in behalf of "a large industrial client in the Midwest" that was looking for talent to beef up its public affairs staff, I was interested. The auto industry offered a textbook example of regulatory excess, and my idea of telling the truth seemed the answer to its problems. Two interview trips to Dearborn later, the Ford Motor Co. offered me a job at a salary that made it easy to say yes.

I was on a fool's errand. My idea of defending business was based, not on knowledge of the corporation, but on the ideology of some brilliant but insular New York intellectuals. I imagined that Ford would be an orderly place where I would be allowed to develop information, arguments, positions, and texts that reflected my strategic ideas. I imagined Ford executives would be delighted with the results and would quickly seize the opportunity to go public with spellbinding new rhetoric that would rise to the defense of the company by telling truth to power.

My first week in Dearborn, I could see something was wrong. I was immediately put on a task force that would be handling Ford's announcement of a decision by Henry Ford II to locate a new plant in Canada, rather than Ohio, in the face of Carter administration opposition to nation-states bidding for plants. But the pitch we scripted for Ford spokesmen was mostly a tissue of fictions. In a series of little and not-so-little white lies of corporate diplomacy, we said a final decision was still pending, omitted any mention of a crucial agreement between Ford of Canada and the Canadian government, indicated the decision would be made by Ford of Canada, and insisted we had no view on plant-location inducements.

On none of these points was the truth really embarrassing or damaging. So why did we speak as if it were? Why were we telling lies to no apparent benefit to ourselves? I was mystified.

A few weeks later the mystery deepened. Under mounting pressure from the press, product liability lawsuits, and the government's auto-safety regulators, Ford recalled 1.5 million early-model Pintos and Mercury Bobcats for modifications to make their fuel tanks less likely to leak or rupture and catch fire in rear-end collisions. Weeks later Ford Motor Co. was indicted by a grand jury in Indiana on charges of criminal manslaughter for the deaths of three girls killed when the Pinto they were in caught fire after being rear-ended by a van.

Like my fellow public affairs staffers, I began following the Pinto case, and, as I got up to speed on it, it dawned on me that here, too, we weren't telling the truth. Not only that, but we were lying about a truth that helped us. We were lying against our interest!

The charge that the Pinto was particularly susceptible to fuel-tank rupture or fire in rear-end collisions was a bum rap. The design of the car's fuel system was essentially the same as that of other cars of its size and generation. Unsurprisingly, early-model Pintos had about the same rate of injury and death from fire due to rear-end collisions as other cars of their generation and size, according to data from the government's Fatal Accident Reporting System (FARS). In short, there was nothing unusual about the Pinto and no good reason for believing that Ford was significantly negligent in designing the car.

We should simply have told the truth about the car. We had nothing of substance to be ashamed of—and in product safety issues, manufacturers should always level with customers, no matter what. Failure to do so is a guarantee of disaster, and acting with a punctilious regard for customers' safety is the honorable and effective thing to do, as Johnson & Johnson later showed with its Tylenol product. The minute it appeared that someone was poisoning Tylenol capsules, J&J immediately removed the product from the market. That action made it possible for the company not merely to reintroduce Tylenol but to regain its original industry-leading market share once poisoning concerns were resolved.

But we didn't tell the truth about the Pinto. We did issue a bland denial of the charge that the fuel system was unsafe, but essentially we said nothing.

We did not explain the point about the Pinto's design. We did not tell people about the FARS data. We did not explain how the public's impression that the Pinto was unsafe was created by aggressive product liability lawyers and adversary journalists making tendentious use of internal documents and testimony by ex-Ford safety engineers who had developed a new, safer fuel-tank design.

Above all we did not act on the basis of the truth. We did not fight to vindicate ourselves, we did not go hither and yon making speeches and running issue ads explaining why we were taking a bum rap, we did not act like an innocent person who is wrongly accused.

To the contrary, we acted the part of a person who has done something wrong but can't bring himself to admit it. Under pressure from private lawsuits and government regulators, we recalled the car to rebuild a fuel system that was no different from those in millions of Ford cars we weren't recalling. We settled many lawsuits out of court on condition that the plaintiff not disclose anything about the settlement. In short, we acted guilty.

We suffered fearfully as a result. In the summer of 1978, the Pinto, previously our biggest-selling car, was selling at a rate about 40 percent off the previous year's level. Johnny Carson was peppering his monologues with Pinto jokes. The company's product reputation plummeted. It was no accident that a year later, when gasoline lines caused sales of small cars and imports to soar, General Motors's 46 percent share of car sales in the United States stayed essentially constant while Ford's 24 percent share dropped by a third.

When the grand jury handed down its criminal indictment in the case of the Indiana Pinto deaths, I had the idea of interesting a friend on the editorial page staff of the Wall Street Journal in writing an editorial on the case. The theme I would suggest: that the indictment shows how, amid the rise of the no-fault idea in torts and the erosion of the distinction between civil and criminal law, manufacturing is on the verge of being defined as a criminal enterprise.

The point was a small example of the kind of truth I thought would defend our company and put capitalism's critics to rout. The senior public-relations staff member in charge of Pinto PR nixed the idea.

Stimulating an editorial that would take our side on the Pinto was a terrible idea, he said. No matter how effectively it might argue our case, its main function would be to remind people of the original charges against the Pinto. The correct response to a damaging and unfair charge against a company is to say nothing and wait for the charge to die away. Saying anything, no matter how persuasive, only keeps the charge alive.

The weeks went by, the bad publicity didn't stop, and a feeling grew that something had to be done. It was decided to stop the public relations beating we'd been taking and stage a comeback. Each of us was to submit ideas for PR programs to accomplish this, and the executive director for public relations, an ethereal Lee Iacocca loyalist who was soon to leave the company, was put in charge of screening the proposals.

In a metaphor I have never forgotten or entirely understood, he dubbed the program "Smokestacks for White Hats." I guess the smokestacks in his image represented visible PR gestures that would remind folks that Ford people were good guys who wore white hats.

Out of the woodwork came the priority items on my colleagues' hidden agendas. The executive director for public relations, who was a member of the board of the Detroit Symphony, proposed a costly series of Public Broadcasting System (PBS) concert specials with—the Detroit Symphony. Another executive director proposed a series of issue advertisements in which we would extol the cause of auto safety and describe our contributions to it. From someone else came the thought that we should hire Jimmy Stewart to do a series of TV image ads. No one proposed that we cut out the nonsense and start telling—and acting on—the truth about the Pinto.

I was no exception. I tossed some neoconservative smokestacks—or were they white hats?—into the hopper. Ben Wattenberg, the spirited neoconservative publicist, was looking for corporate underwriters to back his upcoming PBS series, "Wattenberg at Large," so I submitted a copy of his prospectus and urged that Ford help Ben defend capitalism.

I also turned up a fascinating program developed by a neoconservative community activist at the American Enterprise Institute named Michael Balzano. Mike's idea was that, through appropriate agents, corporations would contribute large sums to meals-on-wheels and other local social-service programs, and in return the agents would mobilize the beneficiaries to support the donors' positions on regulatory or other issues. In effect we would create a series of neighborhood political machines to oppose Naderite regulation.

My suggestions met with horrified disapproval. No, no, no, I had it all wrong, I was made to understand. The idea of Smokestacks for White Hats wasn't to take issue with anyone or flog our corporate agenda. It was to associate ourselves with people and institutions that had no connection with our agenda—that might even be our opponents—but that were well regarded by publics whose good graces we were trying to get back into.

The winning proposal was that we put up money for a public television public-affairs program. And that is how it came to pass that Ford Motor Co. became the principal underwriter of the weekly PBS news program, "Washington Week in Review."

The established journalists who appear on the program may think that they are discussing the week's events, but that is a superficial view of their activities. The deeper reality—at least from the viewpoint of the company that has put up millions to flash its logo on the tube as the program begins and ends—is that they are acting out Ford Motor Co.'s idea of how to recover from Pinto problems. They are smokestacks for white hats.

After nine months at Ford I began to realize that I was going to quit. A promotion delayed my departure as I savored new perks such as: first-class air travel, a nicer and more competent secretary, and a reserved space in the world headquarters indoor garage, where my company car (it was replaced with a new one three times a year) was fueled and washed every day while I worked upstairs. When these entitlements lost their charm, I began looking for a job. Soon I was back in Manhattan, back at Fortune, back seeing old neoconservative friends.

But things didn't feel the same. The world to which I returned after two years in Detroit seemed uncomfortable, even alien. Something was happening between me and my neoconservative friends.

I had kept in close touch with them during my stint at Ford, and throughout the two-year period we had talked at length about the company. They had listened to my tales of life and politics inside a giant corporation with interest, shock, and sympathy, or so it seemed to me.

Now that I had quit Ford and returned to journalism, my stories took on a harder edge. Ford was a pathological institution, I argued. It was behaving in a way harmful to itself, its owners, its customers, and the larger society. It was abusing the support neoconservative intellectuals had given business over the years.

And the problem wasn't confined to Ford. Now that I knew what to look for, I could see that a lot of other big corporations were acting the same way. Business didn't need defense, I started telling my friends, it needed criticism and reform. It needed to become the capitalist institution we neoconservatives had mistakenly thought it was all along.

The neoconservatives airily dismissed all this. Ford was just a badly managed company, they said, you couldn't draw any conclusions from it. It's always a mistake to meet the people you're defending, they said. ("God knows I was happier defending Israel before I got to know the Israelis," said Norman Podhoretz, the editor of Commentary magazine.)

Anyway, what you saw in Dearborn is no big deal, the neoconservatives said; why, Adam Smith himself conceded that businessmen are always conspiring against the marketplace. And if I was right, it still didn't matter, they said. Any propensity to take self-destructive positions would automatically correct itself, as companies taking smarter positions, if in fact they were smarter, did better than companies taking dumb positions, if the positions were as dumb as I seemed to think.

Soon there was practically nothing my old friends and I were able to discuss civilly. Even casual conversations quickly disintegrated into squabbling followed by sullen silence.

But what exactly was my objection to the corporation? How did the pathologies I witnessed—the lying, self-destructiveness, etc.—fit together? What was the larger whole of which they were parts? I had a terrible time figuring out the answers to these questions.

At first I took a reformist approach to what I'd witnessed at Ford. I told myself that once upon a time American business had been a pro-market, capitalist institution; that in the post–New Deal environment, it had been captured by professional managers, the social-responsibility doctrine of management, big government, and other liberal forces; and that now it needed to return to its roots and its founders' vision. That is, I tried to account for the corporation the way neoconservatives account for most everything they object to—by assuming that existing institutions are at bottom good and by attributing everything that is objectionable about them to the accidental intrusion of liberal political ideas and liberal political power.

Then I started reading history. I began to reconnoiter the vast literature on the corporation's past, because I wanted to know more about business politics in what I supposed must have been the Golden Age, back when the people who ran big corporations were unreconstructed capitalists, back before liberalism began spreading its blight across the polity. So back I went, back to before the New Deal, back to before World War I, then back into the 19th century.

I found, to my surprise, that there was no Golden Age. According to a fascinating and fast-growing body of historical scholarship, the 19th-century corporation wasn't at all as I had imagined. It had never been for markets, limited government, private property, or the other values associated with the business cause. It had always spoken of the "social responsibilities" of business. It had always tried to derive private advantage from public policy. It had never been the rockribbed, pro-market, straight-talking institution I had imagined.

It was becoming impossible for me to continue thinking of myself as a neoconservative. If the corporation had been a manipulative, politicized institution from the start, the neoconservatives' idea that it should be defended against the left was absurd. You can't defend an institution against groups it has nothing in principle against or against views it often shares or exploits.

Moreover, if the corporation had been a manipulative, politicized institution from the start, the neoconservatives' conviction that liberal, capitalist democracy is a good system that should be systematically defended against the left is unpersuasive. A more sensible conclusion is that the corporation is a flawed institution, that democratic capitalism is a flawed system, and that both are in need of criticism and reform.

If one goes ahead, as many neoconservatives do, and defends the corporation against criticism anyway, attributing dark anti-American sentiments and illiberal values to all corporate critics, one is merely defending the corporation in its corruption and manipulativeness. One is defending an institution that collaborates with liberal groups the neoconservatives oppose and that tramples values neoconservatives support.

As these implications sank in, my political sympathies began shifting. I found myself cooling to groups I had long identified with and warming to groups I had long opposed.

I became disenchanted with the Reagan administration. While Ronald Reagan still strikes me as a sincere advocate of classical liberal ideals, it's clear that the administration he heads is cut of a different, more corporate cloth. It has not so much applied the ideology as used it as a cover story for a pattern of policy meant to advance business interests in the traditional corporate manner.

I also began to see why the neoconservatives and I had had such a falling out. Neoconservatives believe in institutions, prudential management of society's affairs, experts, social policy, a well-tempered welfare state, and the idea of the corporation as a quasi-public institution. They reject as simplistic the principles of limited government, individual rights, direct citizen participation, and the marketplace. The corporation stood for the neoconservative ideals. By becoming a critic of the corporation, I saw, I had become a critic of neoconservatism itself.

I also began to feel new sympathy for groups I had once bitterly opposed. For example, I came to have much higher regard for the New Left historians who burst upon the scene in the 1960s—much to the disgust and scorn of conservative, neoconservative, and many liberal scholars. Leaving aside their socialism and anticapitalist animus, which I found as alien as ever, the strictly historical conclusions of the New Left historians now struck me as persuasive and even revelatory.

There was something exploitative, aggressive, and constitutionally subversive about the corporation as it emerged in the 19th century, as they had argued. There clearly was something corporate about political liberalism in the 20th century, and something liberal about the corporation, as they insisted. And both the corporation and liberalism, as they had suggested, were connected with a corruption of both markets and democracy.

The New Left historians, I now believed, were definitely onto something. They clearly explained part of the broad phenomenon I had witnessed in Dearborn.

And I discovered in my heart a feeling that shocked me much more—I was starting to sympathize with Ralph Nader. His antimarket ideas and humorlessness left me as cold as ever. But the Naderites' anger at the corporation, their aggressive efforts to manipulate it into changing, their extremism in behalf of social goals when dealing with corporate adversaries—all this, which I had once thought pathological, I could suddenly sympathize with.

Above all, I felt growing sympathy with the scholars and policy analysts I began meeting at the pro-market Cato Institute in Washington, D.C. We seemed to agree about everything, in fact. Not only were they for the market and limited government, but they understood precisely what I had encountered at Ford and they shared my critique of business.* They accepted that corporations needed reforming, they wanted to submit business to the discipline of the marketplace, no ifs, ands, or buts.

As a neoconservative, I had considered the libertarian viewpoint simplistic. As someone who now had first-hand knowledge of the corporation, however, I saw profound wisdom in the market idea.

And so it slowly came to me that I was no longer a neoconservative. I had become a libertarian.

Paul H. Weaver has been an assistant managing editor of Fortune, economic communications planning director at Ford, and assistant professor of government at Harvard University.

*Just as my encounter with one of the world's biggest corporations led to painful but necessary changes in my thinking, so did the markets of the the late 1970s and early 1980s push Ford into some painful but necessary changes of its own. Most of these changes, which took place after my departure from Dearborn, fall outside the scope of a personal memoir. But they show that there is nothing inevitable about the corporate behavior I witnessed. It is possible for a company to change and renew itself. Ford did.