Two Sides of the System: Clifford Garvin and Bernard Sanders

By Brad Edmondson/ Originally published in the Ithaca Times on October 21, 1982

Diverse points of view are commonplace at Cornell, but last week a particularly interesting juxtaposition took place. On Thursday the 14th, Clifford Garvin, chairman of the board and chief executive officer of Exxon, spent the day on campus, doing conferences with the press, classes with students, and meetings with university brass. That afternoon, Bernard Sanders, socialist mayor of Burlington, Vermont (one of only two socialist mayors in the U.S. today), visited Cornell, gave a speech, and answered questions. His political aspirations, he freely admits, involve a “revolution in American consciousness” that would put Garvin and other top corporate managers out of a job.

Garvin was unaware of Sanders’s presence. On campus as the University’s third Hatfield Fellow (a program that brings an upper echelon corporate executive to the campus each year), he had a busy day: breakfast and lunch with planned guests, two press conferences, five classroom appearances, a speech for the public, and a reception/dinner at the Johnson Art Museum before boarding a plane back to New York. Red carpet treatment. But certainly a low-rent visit for Sanders. Arriving by car from a speech in Canandaigua in the afternoon, he exchanged opinions with one reporter and some graduate students over coffee at the Green Dragon cafe in Sibley Hall, delivered his speech, took questions, and was on the road again three hours later with two take-out pizzas for his dinner.

Clifton_backgroundAt 8 am, Garvin held his first press conference before a dozing group of reporters. University officials escorted him in and out and stood by during the conference to make sure everything was polite. How did Garvin assess President Reagan’s performance so far? “We have a president who advocates something I believe in very strongly,” he responded. “That is laissez-faire government. I believe in that principle very strongly. If a fellow sees something that needs to be done, and he can figure out the most efficient way to do it, then he should be encouraged to do it.”

What was his assessment of the’ country’s current economic malaise? “I’m optimistic about the future,” he said. “I’m not optimistic about the short term, though. I think we’ll be experiencing a period of very slow growth for some time to come.”

How did Garvin respond to the frequent assertions that his company, which is the largest industrial organization in the world, is not doing enough to promote the growth of alternative forms of energy?

“Oil companies do take a long-term view of things.” he said, “but we have a responsibility to our shareholders to make the best returns on our investment. The difficult aspect of the energy business is that it takes a long time and a lot of planning to substitute energy sources.”

Garvin used the Colony shale oil project in Colorado, which was scrapped earlier this year by Exxon, as an example of the corporation’s policies toward alternative energy sources. “We had eight years and $6 billion invested in that plant,” he said. “And I believe that the time will come when the plant will be re-activated. But in the interest of our shareholders, we had to pull out because there was no potential for a return on our investment. It’s disturbing, in a way.”

In what way? Asked if the interests of Exxon stockholders always coincide with the interests of the public at large, Garvin indicated that they did not. Asked if the interests of Exxon stockholders must come first in every case, he indicated that they did.

”Our primary role must be to maintain our position as an efficient supplier of energy,” he explained. “I was disappointed when the Colony project had to be abandoned, but I still think it was the right decision. One company, acting alone, cannot make an uneconomic commitment, because one company cannot change the entire market all at once. If we had stayed involved in Colony, we could have lost our ability to survive in the market. And if we did that, we couldn’t do the country any good at all. I couldn’t come to make visits to Cornell, and there wouldn’t be any funds for research and development.

“But the side issue you’ve touched on is troublesome,” he continued. Explaining that a crucial element in the success of free enterprise is the presence of open competition, he said, “If you become dissatisfied with the performance of an oil company, you’re sort of stuck because there aren’t any alternatives readily available. Oil companies must be structured on a large scale, and along similar lines, to survive. Your only alternative would be to do without them. Now, there are those who say you can get along without oil companies, of course—thank goodness there aren’t many of them, and thank goodness they’re wrong.”

A contradiction became apparent in Garvin’s statements. A champion of free enterprise, he nevertheless indicated that the free market, with its relentless emphasis on maximum return to its shareholders, does not allow oil companies like Exxon to plan for the future by developing alternative sources such as the Colony plant. Did this mean he saw government involvement in energy policy as legitimate? How far, in his estimation, could government involvement in corporate affairs legitimately go?

“You’re doing a lot of extrapolation from my comments,” Garvin said. “What I indicated was troubling was the synthetics question, and the fact that we spent eight years developing a pilot plant for an alternative energy source and then we had to scrap it to stay alive in the market. The troublesome point is that if someone pulled the plug in the Middle East, a laissez-faire economic situation might not allow us to develop alternative energy sources in advance, or quick enough, to avert a national crisis.

“That doesn’t at all suggest that I think government is entitled to regulate oil or any other business. There is an aspect of government involvement, from a standpoint of national security, and I think the government ought to have a role in matters of preserving national interest, in the matter of having enough oil.

“I have mixed emotions on this. I’ve explained the problem. I’m chagrined that our own solution didn’t work, that we couldn’t afford to develop an oil shale plant. But I draw up short of recommending that the government go out and spend millions of taxpayer dollars on a bunch of inefficient facilities. So I’ve got a dilemma. I’ll be very candid with you. Smarter people than me are wrestling with it.”

Bernard’s Retort

“It’s very clear to me, it’s no dilemma,” Bernard Sanders said in the Green Dragon. “The concentration of oil companies, and the way they get out of each other’s way and stake out their turf, makes any argument based on competition absurd. The oil companies cannot do what’s in the country’s best interest as long as they are dedicated to quick profits. There’s no doubt in my mind that they must be nationalized. Government should be motivated to provide the cheapest, safest form of energy for its citizens, instead of a private corporation being motivated by profits to sell energy for what the market will bear.

“But to me, there is no solution to the oil industry without a solution that goes to the root of our government and our culture. What you have to talk about is a change in consciousness in the American people which will cause our resources to be managed for everyone’s benefit, instead of the benefit of Clifford Garvin and his friends.”

Sanders was elected mayor of Burlington on March 4, 1981 by what he calls a “landslide margin” of ten votes. “The fact that I could beat the Republicans and Democrats simply infuriated them,” he said. “And the people who ran against me continue to be upset. They’re very upset that I can come to Cornell and state that I am the mayor of Burlington, Vermont, because that statement lends legitimacy to my views.”

A former social activist and labor organizer from Brooklyn, Sanders knew virtually nothing about the day-to-day aspects of city management when he took the job. “The feeling I had right after being elected was something like the feeling of being a new parent,” he said. “Intellectually, I was prepared, but emotionally I was very surprised. It’s one thing to think about being mayor, or think about having a kid, and it’s quite another to run a city or change your kid’s diapers.”

Sanders reacted by surrounding himself with bright young advisors and administrators, and the result was an influx of new ideas that have succeeded in making Burlington’s government more cost effective. “The Republicrat administrations were acting just like a big corporation,” he explained. “They were sluggish, without motivation or ideas. We had the good fortune to inherit that moribund system and revamp it, using plain common sense.” Such non-radical tactics as opening up the city’s insurance to competitive bidding, changing the phone system, and centralizing buying procedures resulted in substantial savings.

“The press had a lot of fun with that angle,” Sanders said. “You know, ‘free enterprise used by socialist mayor to save money.’ But I was elected, first and foremost, to be an efficient manager and to cut waste when I found it. To me, that meant searching for the best deals available. Those decisions weren’t political ideology, they were common sense.

“But those decisions had an important side benefit. By saving money, we have placated a lot of traditionally minded people in town. Socialism hasn’t got such a ‘dirty word’ label to them any more.

“Right now, we’re running the city better than any administration has for the last ten years,” he continued. “But then we’ll go out and do things no city government does, like Worker’s Pride Week, or the stands I take on national and international issues. We can point to our management record as an answer to those people who say, ‘We didn’t elect you to talk about El Salvador.'” And his tactics seem to be working. In this year’s elections, Sanders supporters (“Sanderistas”) gained three more seats on the city council.

Sanders’s Speech

Sanders spoke before 100 students in Goldwin Smith Hall later that afternoon. In a speech primarily devoted to an explanation of general principles, he portrayed socialism as a system of beliefs that emphasizes cooperation over competition “for the sake of economic and human progress.” Extending the theme of cooperation to international relations, he expressed his belief in “the inevitable conflict between those who own and those who work. In our society, the bottom line is—and you don’t hear this very often, because our government spends tremendous amounts of money trying to cover it up—that owners have virtually all of the power over workers. If a worker is dissatisfied with an owner, his only recourse is to leave. But if he does that, he’s faced with the problem of finding money to buy food. What does democracy mean in such a society, where the majority of its citizns have so little control over the day-to-day aspects of their lives?”

Garvin’s Retort

As Sanders wound up his speech and began taking questions from the audience, Clifford Garvin was being introduced by Cornell President Frank Rhodes to a group of about 400 people in Uris Hall. Rhodes’ speech was full of praise for Exxon, which has made major contributions to Cornell’s writing program and its engineering school, and for Garvin, whom Rhodes said “exemplifies the broader social role demanded of the present-day executive.”

Garvin spoke on the present state of economic forecasting in America. Although disturbed by the theorists of “downward mobility,” these predictors of the future “who say that our standard of living will inevitably decline,” he said there are indications that technology will revitalize certain sectors of the economy. He cited a Rand Corporation study indicating that college graduates will begin to enjoy a “seller’s market” in jobs in about five years, and he stated his belief that individual incentive will continue to be rewarded in years to come. He also stopped frequently for jokes.

When Garvin concluded his comments and Rhodes called for questions, a young man stood up near the back of the auditorium.

“Mr. Garvin,” he said, “I’d like to ask you a question and I don’t know if you want to answer it, sir, but how much money do you make?”

‘That’s immaterial to this discussion,” Garvin answered. “I am amply rewarded for my efforts. Why do you want to know?”

“Because I have real questions about a system that allows you to make, I’m estimating, $500,000 a year, while the majority of Americans make less than one-twentieth of that amount.”

“If you want to know how much money I make, get some stock in Exxon and you’ll find out. Young man, are you a student here?”

“No sir, I’m an employee.”

“Well, it seems that you have some basic disagreements with the way we run things in this country. The point is whether you accept an economic system where people are rewarded based on what they contribute. If you’re so discontented with what we have here, then I would invite you to trot along to a few other countries and see how their systems work.” After the man sat down, Garvin added, “my hunch is that you didn’t get that raise you were looking for.”

The Mayor’s Conclusion

Back in Goldwin Smith Hall, Sanders asked: “Is it morally right for so many to have so little while so few have so much? Socialism doesn’t mean that everyone will be required to make exactly the same amount of money. What it does acknowledge is that it is not morally right to deny basic human needs like food, housing, and medical care to anyone.”

Near the end of his comments, he speculated on his chances for re-election in March of 1983. “We could lose,” he said. ”I’d say we have about a 50-50 chance. If the Republicans and Democrats combine to run one slate and try to defeat us, then we’d have trouble. But they would hate to do that. We’ve been saying that they’re really only one party for years now, and it would embarrass the hell out of them to be shown up for what they are.

“So I bring you good news from Burlington,” he concluded. “The good news is that the two-party system and the corporate establishment are not invincible. Their legitimacy is seriously compromised these days. The good news is that we’ve proven that they can be beaten. And the best news of all is that the people of Burlington saw something they called socialism, voted it in, lived with it for a year, and voted for more.”

 

 

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bradedmondson

Writing about social change and how it happens.

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