Cerberus’ Exit From the Gun Industry Shows How Public Pressure Can Shame Companies To Do Right

How to Make Government Work
Dec. 18 2012 1:54 PM

Cerberus’ Exit From the Gun Industry Shows How Public Pressure Can Shame Companies To Do Right

157896418
A hand gun and an AR-15 rifle

Photo by Brendan Smialowski/AFP/Getty Images.

Perhaps it is not a surprise that Cerberus quickly decided to sell the Freedom Group, its collection of gun companies, including Bushmaster, the firm that made one of the weapons used in the Newtown, Conn., massacre. Cerberus has been notoriously secretive about its finances, and the adverse press it has attracted in the aftermath of Newtown forced a hasty retreat. This should be very encouraging to those of us who wish to shift the debate about guns: A few critical articles, some whispers from major investors questioning their investment in Cerberus, and decisions were instantly made that could cost the company hundreds of millions of dollars.

Advertisement

So there is a significant message here: Ownership matters. Ownership can be more powerful than regulation. The capacity of pension funds and endowments to act collectively and use their rightful interest in having their funds invested in a way that reflects their core values is something we have largely forgotten. It is too easy when things go fundamentally awry to call for more legislation or blame failed regulators. And surely we shouldn’t diminish the pressure we apply to Congress now to enact real gun control. But at the end of the day, it is those who own the shares and invest the dollars who can and must be held to account. And if those investors awoke to this responsibility and possibility, they could make enormous improvements in American life.

Imagine if investors in Wal-Mart really cared about bribery at that company’s overseas operations or safety standards at its overseas manufacturing plants. If investors pulled their capital, corporate leaders would have to respond.

Imagine if the pension funds and endowments that own much of the equity in our financial services companies demanded that those companies revisit the way mortgages were marketed to those without adequate skills to understand the products they were being sold. Management would have to change the way things were done.

And to return to guns, imagine if the shareholders pressured large retailers to cease the sale of certain semi-automatic weapons or risk having their shares sold? You can bet that those retailers would reconsider their gun sales.

Shareholders have the right and obligation to set the parameters of corporate behavior within which management pursues profit. The speed with which Cerberus said it was getting out of the gun business shows how easy it could be to change corporate behavior, if only shareholders set their minds to it.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

Florida State’s New President Is Underqualified and Mistrusted. He Just Might Save the University.

  News & Politics
Jurisprudence
Sept. 30 2014 2:36 PM This Court Erred The Supreme Court has almost always sided with the wealthy, the privileged, and the powerful, a new book argues.
  Business
Moneybox
Sept. 30 2014 7:02 PM At Long Last, eBay Sets PayPal Free
  Life
Lexicon Valley
Sept. 30 2014 1:23 PM What Can Linguistics Tell Us About Writing Better? An Interview with Steven Pinker.
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Sept. 30 2014 8:54 PM Bette Davis Talks Gender Roles in a Delightful, Animated Interview From 1963
  Technology
Future Tense
Sept. 30 2014 7:00 PM There’s Going to Be a Live-Action Tetris Movie for Some Reason
  Health & Science
Medical Examiner
Sept. 30 2014 6:44 PM Ebola Was Already Here How the United States contains deadly hemorrhagic fevers.
  Sports
Sports Nut
Sept. 28 2014 8:30 PM NFL Players Die Young. Or Maybe They Live Long Lives. Why it’s so hard to pin down the effects of football on players’ lives.