On April 10, 2021, more than 100 senior business leaders joined a “rapid response call” to “explore non-partisan actions business leaders could take to defend voting rights”. Organized by the Coalition for Inclusive Capitalism and Yale School of Management, this meeting underscored the urgency with which “corporate America is taking responsibility to protect the most fundamental pillar of our democracy”, viz., right to vote. “It is inspiring to see such an outpouring of courage and patriotism by a wide cross-section of major business leaders supporting the fundamental right of each American to vote,” said Jeffrey Sonnenfeld of Yale.
Another self-serving mutual back-slapping jamboree in smoke-filled rooms it was not; they did not even meet in person. They were not alone. NBA moved this summer’s All-Star game and amateur draft from Atlanta, Actor Will Smith and his production company moved filming of Emancipation – a slave flees Louisiana to freedom in the North – from Georgia. Major Hollywood studios are actively exploring moving big-budget blockbusters in the making from the Peach State. Coca Cola Company, a Georgia institution in more ways than one, as well as Delta Airlines, also based in Atlanta, condemned these laws.
Hand-wringing on one side of the aisle was immediate. Beyond the shrill of foul-play, a recent Op-ed in The Wall Street Journal by Harvey Golub, former CEO of American Express, chalks out key issues. CEOs are always presumed to speak on behalf of the company and staking their position on one side will always alienate the other side, including their consumers and stakeholders. Most importantly, “there is no limiting principle to this problem. If business heads can be pressured to comment on issues unrelated to their businesses, they will be compelled to weigh in on more current events and issues and will have no basis for refusing to respond.” In other words, it makes them political animals who’re not merely wedded to the pursuit of the mammon on behalf of their shareholders.
Mr. Golub is wrong. Self-preservation is precisely what they are doing.
American businesses making political statements is nothing new. For those of us born outside, we remember that a large part of US diplomatic efforts worldwide is run for the benefit of American businesses. Rightly so. Market economy and a political-social system that thrives in symbiosis is the big idea that America exports, and that creates an ecosystem of freedom of self, free speech and the rule of law. Growing up in India I knew the American diplomacy, representing American interests, was not perfect but a work in progress in search of more perfection, a mirror to the country itself.
The fact that American businesses are making political statements inside the country is destiny’s child, just not born today. Citizens United ruling of 2010 held that corporations can make unlimited donations to sway the political process, so long as they are not coordinated with a candidate or a political party, thereby nullifying any restrictions on political involvement by businesses. Like it or not, economic engines having a direct say in decisions that affect them has always been a hallmark of the American system. SuperPAC’s and other instruments of “dark money” have been overwhelmingly beneficial to the Republican party thus far, if only because of the axiom that Republicans support businesses’ interest more than Democrats.
That truism is crumbling, especially now.
First, the Republican Party of today is wedged against the story that America sells abroad. Take the parable according to Mitch McConnell, for example. A hard-nosed tactician and a lifelong solider to the cause of the Republican Party, he voted against the impeachment, then gave a stirring speech pouring his heart, then said he would vote for Trump in 2024 only to be blasted as “dumb SOB” by the Trump. Anybody who’s had any exposure to autocracies would identify these manipulations as textbook moves. You’d expect all agents of democracy to join forces to cause his political demise. Democrats are on board, exactly the opposite for the Trumplican party. No wonder corporate America feels adrift.
Second, for long the cause of American business sided with the dogma of the Republican Party, even without Trump. It was always about a version of “tax arbitrage” or “regulatory arbitrage”, a race in either or both. That has run its course. Productive resources have moved to China, or similar, whose sympathies lie with American businesses only to an extent. American businesses do not feel the compulsive need to pay the Grand Old Piper, which may be a victim of its success.
Third, American businesses have developed a new sympathy for sources of growth inside its own borders, mostly out of necessity. Naturally, businesses are following the will of their stakeholders, as they must. Voices of the millennials, already more in number as a cohort than any else, Gen Z and beyond are finding pride of place as corporations seek growth. And their sympathies most certainly lie on the progressive side, definitely when compared to Republican orthodoxy. Republican Party should not have had anything against transgender rights, but opposition to trans causes defines their platform. The party should have learned its lesson when it pooh-poohed gay rights, and lost. The Party of Lincoln should have been a forever refuge for Black Americans, it is not. Deriding Black angst in the face of presumed guilt by law-enforcement is the everyday chant of all of the Republican-leaning mouthpieces. Insistence on accountability does not silence frustrations about the legacy of racism that still perpetuates in many quarters, Republicans insist it must. America is a country of immigrants, and Republicans are hell-bent on closing the border. The list goes on.
Fourth, search for regulatory arbitrage has given way to search for innovation as the primary source of growth even amongst existing client demographics. American capital is more focused on technology and enabled business models than any time in history, at times exclusively so. American businesses, therefore, are more wont to listen to states and people who bring these innovations to bear. And these are overwhelmingly blue states and urban clusters. Corporate hierarchies, including at the very top, are filled with people who grew up, and thrived, in inclusive economic ecosystems; Republican orthodoxy of “low taxes and fewer regulations” have limited appeal.
Fifth, as the lion’s share of these innovations are carried out by people born outside of the country, Trumplican dogma of “them against us” strikes woefully out of tune. Every single immigrant in a position of influence – bar none and I have spoken to hundreds – was at the receiving end of a rare hate-fueled incident or two during their life in the United States especially if they ventured far outside of cocoons of megapolises. That does not make this country as a whole antagonistic, other 99.99%+ of our exposure was just fine, and we built our lives here – many of us would not be better off anywhere else, period. Still. We saw ghosts of our demons on the steps of the Capitol on Jan 6, and we see them every day at Trump rallies. Republican Party does not ingratiate itself by refusing to inter Trump legacy.
To its credit, the Democratic Party is increasingly proving itself to be the big-tent that American businesses like. It has Wall Street benefactors, and Occupy Wall Street rag-tags – keeping both in check. It has techies and blue-collar union workers, thus covering both ends of productive human capital. It has Hollywood flimsies and the university intelligentsia, thus covering both the message and the messenger. In its current Avatar, it even learned to speak the language of big business and make it appear as the Green dream. It is more urban than the country geographically, but the overwhelming majority of stakeholders in American businesses live there. It is a very difficult coalition to maintain sustainably, no question.
American businesses were acting in self-interest, and not stupid when they spoke against Georgia voting laws. It is great news that their interests are aligned with the societal priorities of the next generation. They are more comfortable speaking behind the scenes, and with money, but given circumstances, they needed to get the message across so their stakeholders can hear the alarm bells ringing.
I know why these caged birds sang.
[Photo courtesy: Clipart library.com]