Jesse Jackson's latest victim is Toyota. Rather than risk bad publicity and a Jackson-led boycott, the company announced on Aug. 9 that it will spend a whopping $7.8 billion over the next decade in order to meet Jackson's demands. Toyota spokespeople have stated that the company is not responding to Jackson's threats, an assertion that is laughable.
The money will be spent on hiring minority-run suppliers and advertising firms, granting more dealerships to minorities and increasing so-called "diversity training." If the past is any guide, it is a fair assumption that Jackson's friends and associates are slated to financially benefit from the $7.8 billion.
Jackson's pretext for going after Toyota was a postcard advertisement, geared to younger people, that displayed a close-up of a black person's smile, with "tooth jewelry" in the form of a gold Toyota RAV4. Tooth jewelry is a current fad among today's youth. The advertisement was innocuous, but it was enough to give Jackson an opening.
Toyota should not have given in to Jackson's threats. Toyota's minority-owned dealership rate is already the second highest among automakers. Perhaps because of its foreign link, Toyota apparently does not understand that Jackson is not the representative of African-Americans. Plenty of blacks are appalled by his hardball tactics. Several black Wall Street businessmen, for example, fear a backlash against him and against the beneficiaries of these corporate shakedowns.
Toyota could be under the erroneous impression that this is the way business gets done in this country, since a similar phenomenon takes place in Japan. There, suppliers often get contracts not based on merit but based on coercion or sweetheart deals. A big player is the yakuza, Japan's notorious organized-crime rings.
Jackson's approach is akin to that of yakuza and other classic protection rackets: You hand over money, or we'll carry out our threat. His method of retaliation? Playing the race card. In our society, where race relations have become such a supercharged issue, companies are so fearful of the dreaded "racist" label that they will do anything to avoid being tagged with it, regardless of whether they did anything wrong. Jackson has discovered that exploiting this sentiment translates into a bottomless pit of money for himself, his family, his friends and his organizations.
The difference between Jackson and the rackets is that Jackson's tactics have so far been regarded as legal. Earlier this year, the National Legal and Policy Center, an organization on which I serve as president, filed a formal complaint with the Internal Revenue Service alleging that Jackson's largest nonprofit group, the Citizenship Education Fund, operates outside of its tax-exempt status.
According to the tax code, there can be no private benefit, either direct or indirect, from the operation of a nonprofit group. (Allegations that the CEF made improper payments to the mother of Jackson's child are trivial compared with this.) One of the more egregious examples of private benefit cited in our complaint is Jackson's relationship with Anheuser-Busch. For years, Jackson complained about its alleged lack of minority-owned distributors and other issues. The noise stopped after two of Jackson's sons, who had no previous experience in the beer business, were awarded a lucrative Budweiser distributorship in Chicago.
If Jackson is clever enough to make Toyota buy the dubious proposition that he can affect the consumer behavior of African-American car buyers, why should the rest of us care? We should care because society is harmed in a way that is just as bad as if it were done by the criminal underworld. Criminals force a company to award contracts to people who would not have won the contract under normal competitive conditions. The contract goes not to the most able or lowest-cost bidder but to the party favored by those doing the extortion. Society's resources, in effect, are getting redirected to those running the protection racket. The losers are not only the company but consumers. Wouldn't we all be better off if Toyota would lower prices or invest in making safer cars, rather than Jesse Jackson's version of "diversity training."
Peter Flaherty is President of the National Legal and Policy Center, a nonpartisan foundation promoting ethics and accountability in government and based in Washington, D.C. Web site: www.nlpc.org