Taking On Federal Bullies - Companies can fight legislation by influencing public opinion directly - Brief Article

Chief Executive, The, Sept, 2000 by Deroy Murdock

Nice guys get chopped in half. Just ask Bill Gates. "We've been writing great software for the past 25 years," Microsoft's sweater-clad chairman smiled in a TV ad launched June 8. "It's our passion and it will always be. The best is yet to come."

Gates never mentioned that the Justice Department persuaded federal judge Thomas Penfield Jackson to rule a day earlier that Gates' creation should be split in two like firewood.

Indeed, the day after Jackson announced that Microsoft had violated antitrust laws, Gates attended an April 5 White House Conference on the New Economy. He grinned beside President Clinton, the man whose aggressive antitrust bureaucrats are trying to dismember Microsoft.

While Gates deserves credit for vigorously defending his company in a court of law, he and Microsoft have failed in the court of public opinion. Had they initially criticized the government's anti-Microsoft crusade, they could have made allies of the American people and either slowed or derailed the Justice Department's case.

Bill Gates could have said on TV: "Since I founded Microsoft in 1975, the software my colleagues and I produce has strengthened and simplified the computers you use at work and at home. Even the Justice Department has some 58,000 PCs that use Windows. And yet Washington bureaucrats want to bust up Microsoft. Yes, we succeeded far beyond our dreams, but that's no crime. Please call President Clinton at 202-456-1414 and tell him that it's not the American way to prosecute rather than reward those who produce. On behalf of Microsoft's 38,000 men and women, we've just begun to fight."

Now that would be refreshing. And rare.

Too many companies duck and hide when the authorities knock. Corporations almost never resist the government outside courtrooms or rally the American people--many already distrustful of Washington--to their side.

Smith & Wesson's recent government-induced decision to modify its firearms designs and marketing practices illustrates this phenomenon, as does the U.S. tobacco companies' 1998 surrender of their First Amendment rights to advertise and promote their products through such things as sports sponsorships, logo-clad T-shirts, and cartoon characters.

This is unfortunate but unsurprising. Most companies "will not take a principled stand for the market," laments one former steel industry representative who largely blames lawyers and lobbyists in Washington, D.C. "Usually they don't want to win. They want to cut a little hole in the law just big enough for their client to slip through and in the process, some dollars get scraped off."

CEOs "are usually too busy creating wealth to be bothered by politics," observes Cato Institute President Ed Crane. "So when they enter the theater, they get their asses handed to them on a platter."

Some companies and industries, however, have stared down government and won. While Hooters is no Fortune 500 company, it could teach the big boys plenty. When the Equal Employment Opportunity Commission demanded that the restaurant chain replace 40 percent of its waitresses with men, executives hooted. The company's overwhelmingly male customers visit specifically to meet the buxom "Hooters Girls." Hooters arranged a press conference and advertisements in November 1995 featuring a hairy-chested waiter dressed in hot pants and a blond wig. He held a plate of chicken wings in one hand and a sign in the other that read: "Washington--get a grip!" A humiliated EEOC dropped the case. "Stand up for your rights and don't be afraid to fight," urges Hooters President Rick Akam.

When Congress tried raising tobacco taxes in 1998, tobacco companies took a cigarette break from their pow-wows with attorneys general. In TV ads broadcast in 70 markets, the industry blasted the proposed tax hikes. Congress quickly extinguished the idea.

The Clinton Administration's attempted nationalization of medicine in 1993 smacked into health insurance industry TV ads featuring "Harry and Louise," a middleclass couple that outlined the plan's drawbacks. Well-briefed and energized constituents pressured their congressmen who soon flatlined the measure.

"The collectivism that big government espouses undermines capitalism," Cypress Semiconductor CEO T.J. Rodgers notes. Rather than yield to pesky federal regulators and tax-hungry congressmen, corporate America should confront Uncle Sam openly. Enlisting Americans skeptical of government actually works. While flight is attractive, the best way to handle bullies often is to fight them head-on.

New York commentator Deroy Murdock is a senior fellow with the Atlas Economic Research Foundation in Fairfax, VA, and a media fellow with the Hoover Institution at Stanford University.