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A Public Service Message from the American Income Life Insurance Co.Waco, TexasBernard Rapoport, Chairman of the Board and Chief Executive Officer CORPORATE REALITY By Bernard Rapoport Text of a speech delivered before the Rotary Club, Waco, Texas, in June, 1982. To tell you the truth, I’m just a little bit nervous. I’ve spoken to groups all over this country, but to come back home and talk to the Rotarians which include some of this community’s most distinguished citizens is an exciting challenge. I relish it, and I’m going to do the very best I can to articulate my ideas on this all-important subject of corporate responsibility and hope that in so doing it will stimulate your thinking and result in more dialogue within the community among those of us who run the business of Waco. Most of us are executives. I am reminded of the query of a youngster who said to his father: “Daddy, what is executive ability?” And the father’s retort was: “Executive ability, my son, is the art of getting the credit for all the hard work that somebody else does.” Getting down to this serious business of corporate responsibility, I’m not one who is a great advocate of principles because I’m persuaded that good business executives ought to be guided more by situational ethics. And let me tell you why I feel this way. What we need in our country are idealists rather than ideologues. The latter are intransigent, inflexible, immovable. The idealist, on the other hand, has balance and considers problems in terms of the short term gains as well as the long term requirements. A couple of examples: corporate responsibility necessitates a commitment to the free market and free enterprise system. An idealist who subscribes to this philosophy recognizes that this necessitates an economic system that has access for those who wish to enter into the market system. For too many ideologues, they express a verbal commitment to the free market system and then insist on that particular kind of regulation that restricts entrance of others to compete. A few examples will sufice, whether we are talking about professional associations or highly-regulated businesses. There are just numerous examples to confirm the premise that too many of us in positions of responsibility give lip service to free enterprise, but in practice, want monopoly when it comes to our own particular interests. This, to me, is irresponsible and antithetical to any concept of corporate responsibility. We give lip service to the fact that we want a competitive society, and yet we have an antitrust policy that is farcical. We are confronted with the highest interest rates that we’ve experienced in a hundred years, and monopolistic corporations tie up billions and billions of dollars in seeking acquisitions that are nonproductive, non-job producing, noncontributing so far as our economy is concerned. The ideologue says that’s free enterprise and the reality is, it not only stifles it, but if it continues at the rate that it’s going, there are going to be very, very few independent businesses that survive. I remember when I moved to Waco in the early forties. From the old square all the way to 8th Street on Austin Avenue, there was business alter business after business; and to the best of my recollection, I don’t think there were over 4 or 5 that were owned by chains. They were all independent Waco business people. Today, Waco is in the same situation as the other communities of our nation virtually everything is chain operated and chain dominated. Well, you might ask, what has this got to do with corporate responsibility? It is my firm conviction that corporate responsibility necessitates a community involvement and commitment on the part of those who run the businesses and corporations of this nation to being sensitized and to encourage that kind of legislation that will provide access for those who want to enter into the business world and which will be restrictive toward this trend toward mergers and monopoly in our nation. The idealist to which 1 allude has this kind of flexibility and understanding that a free market society means that there has to be a realistic and pragmatic approach to this tendency in our society to increasingly narrow the parameters which permit entrance of those who possess entrepreneurial spirit into the business world. Too many ideologues say, we don’t want regulation, we have too much regulation. And let me say this: I couldn’t agree more. But we need to recognize that too many businesses scream about regulation and yet they want it when it preserves the status quo in their particular industry. The airlines squealed when they deregulated. The same for the trucking companies. We can’t have it both ways. We are either for free enterprise and for prices being determined in the market place, or we’re not. On the other hand, when it comes to the public safety, that isn’t a matter to be decided in the market place. There are certain areas that determine the decency and the spirituality of a nation how it takes care of its young and its aged, its handicapped and its mentally retarded, areas of education and culture. Our commitment in these areas will determine how future generations will evaluate us. You might question at this point why I am making reference to the importance of a free market system, regulation and antitrust policies in a speech the subject of which is corporate responsibility. I believe very firmly in the organic nature of this society and that everything is interrelated. It is difficult to talk about ethics and morality without taking into account economics. It is when we become single issue oriented that our society begins to get into serious and sometimes unresolvable problems. We need to always keep in mind the organic nature of things of which f just spoke. For example, it should never be the attitude of any business that “We’ve got so many problems in our own business, we don’t have time to be concerned about anything other than those matters relating to our company.” It is this type of attitude that leads to the decay of any civilization. American Income Life Insurance Company EXECUTIVE OFFICES: P.O. BOX 208. WACO. TEXAS 78703, 817-772-3050 BERNARD RAPOPORT Chairman of the Board and Chief Executive Officer 16 JULY 9, 1982