They say timing is everything, and they say there’s no such thing as bad publicity. We get to see this put to the test this week, as Nike dives into the deep end of the controversy pool by adding Colin Kaepernick to its fall advertising campaign. Kaepernick appears at the 1:17 mark of the full 2:05 video, just as the narrator says “Believe in something. Even if means sacrificing everything,” and again at 1:49, where he says “Don’t ask if your dreams are crazy, ask if they’re crazy enough.”

The ad’s slogan is “It’s only crazy until you do it. Just do it.”

Kaepernick should send Donald Trump a gift basket, because without Trump’s wading into the now-infamous kneeling controversy, there’s no way he’d be in this ad. But, today, I’m more interested in Nike’s decision to take this controversial path.

Already, the decision to associate itself with Kaepernick has drawn enormous ire from the Trump crowd and the broader Right, who consider his kneeling during the National Anthem an affront. And, almost as quickly, the ire, outrage, and threats of boycott have evolved into irony and mockery, with the “believe in something” tag line being superimposed over countless other photos (some examples here).

My first thought when I heard about this was that Nike was joining the ranks of corporate virtue signalers such as Dick’s Sporting Goods and their decision to stop selling “assault weapons” and WeWork’s decision to impose vegetarianism on its employees. Upon further review, and especially given the timing of this ad (the NFL regular season opens this weekend), I’d say this is a calculated gamble on Nike’s part. They know their core customer base, they know the mystique of the brand to that base, and they know that controversy garners mountains of free publicity. Thus, this campaign isn’t quite the virtue-signal that some might think, at least in my estimation.

As such, it does fit with a “libertarian” business ethic, succinctly summarized by the great Milton Friedman:

There is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.

Marketing, brand establishment, product placement, good will, and countless other intangibles are part and parcel of running a business, and the people in charge of that business make decisions every day with the intent of bettering the business and improving profits. If Nike’s brass feels that using Kaepernick in an ad campaign offers the possibility of increased profit, it’s well within the fiduciary duty they have to do so. They may be right, or they may be wrong, but risk is inherent in any business decision, and the C-suite crowd gets paid the big bucks to make the big decisions. If a virtue-signal stands a decent chance of improving the bottom line, it’s as fair to engage in it as it is to create, manufacture, and market the next hot item or the better mousetrap.

On the other hand, some corporate virtue signals don’t seem to fit into a “profit decision” mold. Dick’s Sporting Goods’ decision to discontinue selling modern sporting rifles seems like one of those, given its market niche, although it is possible they did the same calculus as Nike and figured the controversy would be good for their bottom line. My rather lightly-informed opinion in this case, however, leans away from virtue-signal-as-marketing-strategy and toward some vague “higher responsibility” notion, as if not selling such firearms to the millions of people who’ve owned them responsibly, who’ve never done anything wrong with them, and who never will, is somehow for their own good. Ditto for WeWork. Both actions appear more about coaxing people into behavior modification than about serving the company’s bottom line, and both seem to fit Elizabeth Warren’s (fascistic) “corporate accountability” mold more than they do the Friedman rule.

Therein lies the distinction. Nike’s campaign certainly created controversy, and it certainly advanced a particular agenda, but we make a mistake in conflating a profit obligation with the idea that a company best serves its shareholders by being agenda-free. Agendas, political slants, and virtue-signaling can sell, if done right. Consider, Chick-Fil-A’s “closed Sundays” policy. Its origin – the faith of its founders/owners – is secondary to its benefit as an image-booster, and goodwill/loyalty is fostered with practicing Christians and people of faith.

This line of reasoning might be argued regarding Dick’s, and only time will tell how the company’s decision will impact its bottom line. It’s harder to fit the virtue-signal-for-profit motive to WeWorks’ action, though, given that all they’ve done is make their compensation package less attractive to all but a niche of employment candidates. It may or may not be lost in the noise, but at least in theory, the WeWorks action will harm productivity by driving up labor costs and/or attracting a less capable workforce. This sort of action more clearly breaks the Friedman rule.

There are a lot of ways to make money in a free market, and playing the social justice game for profit is certainly one of them. Any one of us can decry or denounce any particular decision, and many do, across social media and elsewhere, but that doesn’t make a decision wrong. Companies are under no obligation to sell to us under our terms, just as we are under no obligation to buy from them under their terms. Nike took a risk, but risk can translate to reward, and I wouldn’t be surprised if Nike’s risk works out well for company and its shareholders. Some made hay of the initial stock price drop after the word hit the street, but that drop merely offset the gain of the previous couple weeks. Nike is currently trading at where it was a month ago, and well above two months ago.

Am I going to buy any stock in the company? Nope, nor am I going to short it. It is possible to acknowledge a virtue signal as capitalistic and profit-motivated, while reserving judgment as to its wisdom. But, even a failed business decision is still a business decision, and while it’s easy to call a failed decision wrong-headed in hindsight, it’s a mistake to assign non-business motives to it.

Peter Venetoklis

About Peter Venetoklis

I am twice-retired, a former rocket engineer and a former small business owner. At the very least, it makes for interesting party conversation. I'm also a life-long libertarian, I engage in an expanse of entertainments, and I squabble for sport.

Nowadays, I spend a good bit of my time arguing politics and editing this website.

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