Jeffrey Sonnenfeld, a legendary economics professor and assistant dean at the Yale School of Management, has watched this split over the past few years and has heard from CEOs he knows and works with. What interests the GOP and what interests the big companies is becoming increasingly incompatible, he says.
“The political desire to use wedge problems for division – what used to be a fringe area of the GOP – has become mainstream,” says Sonnenfeld. “That is 100 percent contrary to the wishes of the business world. And this is a million times To them, it matters more than how many dollars in taxes are paid here or there. “
Sonnenfeld hastily organized himself over the weekend a Zoom conference Around 100 great corporate leaders talk about the election restrictions being considered by state lawmakers across the country and how top Republicans like McConnell and Ted Cruz are responding by attacking companies speaking out against the opposition.
Most of the CEOs were Republicans; Sonnenfeld himself has been an informal adviser to both Republican and Democratic presidents, but has a longstanding relationship with McConnell and spoke to Elaine Chao at the senator’s wedding. The CEOs reacted “amused to indignant” to the GOP attacks on companies, says Sonnenfeld. “Their comments ranged from talking about ‘taxing without representation’ to the paradox of ‘breaking culture’: is it okay for you to speak up, but only as long as you stay in the script?”
While the GOP tries to position itself as the home of “working class values” and to win loyalty with a constant campaign against the perceived excesses of progressive culture, it runs counter to a business world that cannot simply seal off the “culture war”. Subjects. In the eyes of large corporations, issues such as voting rights, immigration and toilets that involve transgender people also have economic implications. The millions of people alienated from these struggles are not just their future customers, many expect to support brands they believe in, but the employees of the companies.
“The bad news for Republicans is that they seem to have some idea from the 1920s about who the big corporation’s workforce is,” says Sonnenfeld. “This workforce is at least very diverse – and they get along well. It is wrong to attempt to stir this up. “
Republicans’ new penchant for mocking corporations for being too socially conscious – for example, Senator Ted Cruz’s Twitter threat to use state power to harm Major League Baseball’s business, and the embassy with “Go woke up, go broke“- fundamentally misunderstands what matters in the 21st century,” says Sonnenfeld. “Basically, business leaders believe that it is in society’s interest to have social harmony … division in society is not in their interest, either in the short or long term.”
If the marriage between the Republican Party and the business community is in jeopardy, what does that mean for politics? What do we get wrong about what’s really important for CEOs? And why aren’t executives more afraid of boycott threats from the right?
For answers to all of that and more, POLITICO Magazine spoke to Sonnenfeld this week. The following is a condensed copy of this conversation, edited for length and clarity.
In the last few weeks we have seen that large companies have spoken out strongly against changes to the electoral law in Georgia and other countries. Over the weekend you organized a phone call with around 100 company executives to discuss everything. Tell me about it.
Yes. As the fear increased, I invited 120 CEOs in 48 hours. I thought if I was lucky – on such short notice and on a Saturday in competition with the Masters [golf tournament] – Thanks to my personal relationships, maybe 10 of us could show up. But 90 actual CEOs and business leaders had turned up, and 120 people were on the job, including the various electoral and legal experts.
There have been some interested in finding out what happened in Georgia. Georgia business leaders explained how they actually worked hard behind the scenes [on the Republican bills to overhaul election laws in the state] and thought they took out 95 percent of the bad stuff. It turned out they got 80 percent out; They didn’t notice that there was any left there[[[[Legislators with the ability to suspend]]District officials who are elected to be responsible for voting. As mentioned earlier, the Carter Center in Atlanta certifies elections around the world as democratic or undemocratic on this basis. They have election monitors all over the world to prevent this from happening.
But Georgia was not the focus; That was just the warning shot. The volley over the bow is that we had Texas businessmen who said, “You don’t know what’s bad,” and watched that spread [of voting rights restrictions] to 47 state legislators. Michael Waldman, the director of the Brennan Center, analyzed how bad it was [the proposals are] in these different states.
This November, for the first time in American history, [major business leaders] worked to ensure that millions of workers were given paid time off to vote. We’ve never had that before – and that’s a government circumvention that can’t make Election Day a national holiday. So they created their own workarounds. In addition, they were really proud that they – these particular companies – managed to not only get over a million workers with a full day off to vote, but also to help empower senior volunteers at polling stations who work for Covid and Covid were at risk [had to handle] the tidal wave of ballots. They did so much and were so proud that this was the biggest, fairest, and safest election in US history. And to have [the election] sentenced [by Republicans] After doing so much for it, companies get pretty upset.
How have CEOs reacted to recent Republican criticism?
Well, they ranged from amused to indignant. Their comments ranged from talking about “taxing without representation” to the paradox of “breaking culture”: is it okay for them to speak up, but only as long as they stay in the script?
I think the call for awareness that led to this ridiculously high attendance rate at such short notice was indeed Senator Mitch McConnell’s paradoxical call to act on behalf of CEOs. [LastweekMcConnell[LastweekMcConnell[LetzteWocheMcConnell[LastweekMcConnellTo hold a talk in which he called on companies to “stay out of politics” with the caveat that he did not mean that they should stop contributing to the campaign.]
I bet I’m the only person you interviewed who actually spoke at Mitch McConnell’s wedding. Only three of us spoke: it was the ambassador to the People’s Republic of China, the ambassador to Taiwan, me – and maybe Elaine [Chao’s] Father. I have a nice relationship with Mitch. I admire him and I am happy he went back his testimony. It missed the mark.
The CEOs were represented across the political spectrum. But one thing they agreed on was their right to have a voice and the importance of empowering each other when they were up on a topic.
It’s like 2017 after Charlottesville, when Kenneth Frazier, CEO of Merck, spoke out against President Trump’s failure to condemn supremacist white hate groups and left Trump’s American Manufacturing Council. At first, the business community wasn’t sure they were all going to leave [Trump’s various business advisory councils]. But some, like Dave Abney, UPS chairman, said Trump’s attack on the character of Ken Frazier [after Frazier resigned] was unjustified. And Business Roundtable issued a statement from more than 200 business leaders. They gathered around each other. That was remarkable. It was a clear moment and they came out to make a unified statement – and that’s why we are here right now.
You told me something earlier that I can’t miss: You spoke at Mitch McConnell’s wedding?
Yes. I know them for a long time. And I’ve been friends with Elaine for about 40 years. [Pause] It’s never been mentioned before. I thought I owed you this. [Laughter]
I really appreciate it. You mentioned this wide range of political beliefs among the business executives in the call. I imagine a lot of these CEOs are a bit conservative. Are you alienated from the GOP? How would you characterize your policy now?
Yes, that group was about 70 percent Republican and 60 percent Conservative, even if they’re Democrats. It was a clear act of defiance just to be on call. However, this does not mean that everyone agrees on the various options for the company’s response.
What we are seeing now from business leaders is a kind of lanky return to youth to say, “We are not defined by the ancestry of any of the political parties.” Lord knows who has classified very honorable, legitimate social democrats as “progressive”. Bernie Sanders, Elizabeth Warren, AOC – [it’s] great what they do but they are social democrats; not “progressive”. Progressive – Teddy Roosevelt ran on this ticket. So did “Fighting Bob” LaFollette, a Republican Senator [and 1924 Progressive presidential nominee]with Burton Wheeler, a Democratic Senator, as his colleague. They fought for bridges and dams and immigration, for the beautification of the city, the housing of Jane Addams and secure jobs.
That is and was “progressivism”. And that’s the theory [that animates] Joe Biden and Mayor Pete [Buttigieg] and Amy Klobuchar and maybe Mitt Romney. This is Who are progressives. And here’s the business world: you’re pretty much somewhere between Mitt Romney and Joe Biden.
Are there other issues that make business leaders feel alienated from the GOP, or is it mainly about these issues of a fundamentally functioning democracy?
Business leaders tried to explain to one person: They don’t like being politicians. They are not civil servants. Trying to create and strengthen social harmony, however, is absolutely right in the strategic context of what CEOs do – even though the Wall Street Journal editorial staff[whichwas[whichhasbeen[welcheswar[whichhasbeencritical of managing directors for speaking out against Georgian law]doesn’t seem to understand.
Since [Herbert] Hoover, the Republican Party was identified as the big business party. The bad news for Republicans is that they seem to have some idea from the 1920s about who the big corporation’s workforce is. Whatever you’re up to when you think of Joe Six-Pack, the reality is really different. This workforce is at least very diverse – and they get along well. I’m trying to stir that up [in a “culture war”] is misdirected. The interests of the business world should not be xenophobic. It is not in their interest to be isolationists. It is not in their interest to be protectionist. And the GOP, at least since the 1950s, that was no longer its position. But now they are.
Basically, business leaders believe that it is in society’s best interest to have social harmony. The CEOs really care about these issues. Division in society is not in their best interest – short term or long term. You don’t want angry communities; They don’t want a fragile, finger-pointing workforce. they don’t want hostile customers; You don’t want confused and angry shareholders.
The political desire to use wedge problems to divide – what used to be a fringe area of the GOP – has become mainstream. The party has taken this path state by state. This is 100 percent contrary to what the business world wants. And this is a million times More important to them than how many dollars in taxes are paid here or there.
If [corporate tax rates] go from 34 percent to 27 percent instead of 22 percent, they are much less concerned about it. The focus is too much on taxes. As for taxes, we actually see CEOs ready to admit. There is a lot of soil there. You will go anywhere [JPMorgan Chase CEO] Jamie Dimon and Bill Gates say to Jeff Bezos, “We’ll give a few dollars in taxes.”
You are interested in free markets – whether product markets, financial markets or labor markets. It’s about the image and reality of America: “Give us your tired, your poor, your huddled masses.” Emma Lazarus’ poem on the Statue of Liberty. That’s the spirit of it. But it’s also like this: if the US isn’t seen as a comfortable, attractive magnet for the world’s best talent, we’re in trouble. We don’t want all of this technological know-how to be passed on to our trading partners, and that’s starting to happen.
[Business leaders] are upset about immigration policy. By this time last year and into the summer the universities were somewhat incapable of lobbying [on the issue]and even immigration lawyers underperformed. They relied on the same nomadic K Street lobbyists hoping to hop from place to place, avoiding controversy, not wanting to create waves that were check boxes but didn’t make a significant impact. It was business leaders, especially four big tech companies, who went to Jared Kushner – and I know this point very closely. I was in the middle of it, and that wasn’t out there, by the way – and said, “You can’t judge us for moving this work to China or India if we can’t bring this highly skilled workforce here.” We are already renting space in Vancouver and Toronto and are working on cabling the infrastructure so that this happens in the US time zones. If we can’t get [these skilled workers] In the US, we will continue to function as a North American company with the talent we need. “
They have different priorities [than the Republican Party seems to think]. You’re upset about that [anti-LGBTQ] “Bathroom bills.” You are upset about gun violence. Hundreds of companies severed ties with the NRA or ceased trading in semi-automatic weapons – from Wal-Mart to Dick’s sporting goods. Since we speak of “regulatory rollbacks” during the Trump administration, they were almost exclusively EPA-directed. Nobody in American companies advocated this. With the automakers, it became the entire industry opposed to that [Trump-era] EPA says, “We love working with California. We think that in addition to what we do with hybrids and [electric vehicles]We’re pretty sure we can get 50 miles per gallon of efficiency with the old-fashioned internal combustion engine. Don’t stop us. “So [Attorney General Bill] Barr was ordered to unleash the antitrust division to sue the auto industry for conspiracy [agreeing to stricter environmental standards]. It was ridiculous.
You spent a lot of time at Yale working with business executives and studying how they think. I’m curious how a CEO calculates whether it makes sense to talk about a problem. Can you guide me through this
Yes, there are really five parts.
First of all, they need to know what is in the company’s strategic interest. As stewards of other people’s resources, you need to be aware that it can’t just be your personal values - and if so, you need to be willing to risk your job, as Ken Frazier did at Merck [following Trump’s comments after Charlottesville].
Second, is it a defining element of your brand? How does it strengthen your brand and brand values? Google pulled out of China because of privacy violations and intellectual property stolen. They drew a line in the sand, which is their brand. Frankly, Apple doesn’t.
Third, if the problem itself is controversial, who else is involved and why? With these [anti-transgender] “Bathroom bills,” the companies that charged – amazingly – the euphemistic “freedom of religion” in Arkansas, Indiana, North Carolina, and Texas were AT&T, UPS, and Doug McMillon [the CEO] from Wal-Mart. You were ahead. I mean, Patagonia was there, Howard Schultz from Starbucks was there, Nike was there, Tim Cook from Apple was there, but they joined in later. It had such power because these weren’t seen as political extremists or edgier corporations; That came from the heartland. When such companies get involved, it has an impact.
Fourth, is the particular problem one where silence is itself an attitude? There is no middle ground on many of these issues, such as access to voting or whether the president was elected in a truly honest election. It’s a dichotomous yes or no. Some companies waffle and try not to make enemies. You can’t get away with that anymore. Your silence is consent; It’s a choice. You make a decision: your silence is a decision. And when you realize that, some of these problems are so noticeable and critical that you need to take a position.
Fifth, we know from surveys that the CEO is currently the most trustworthy voice in society. That was not the case [years ago]. At the moment, both your work and my work have lost a step [in the public eye]. Elected officials at all levels – city, county, state, state – have all been crushed. Clergy? Lord knows their reputation has suffered.
Whose stand was not only stable but strangely up in all these polls that usually agree on very little else? Economic and military leaders. They are the most respected pillars of society – and the military cannot have a political voice [business leaders] recognize them have to do you speak. If they see a dangerous slide in the direction of anti-democratic or tyrannical movements, they must speak up, and it is in their own best interest.
And how do you assess the potential risks of an attitude, such as the potential of a boycott?
We see the courage of business leaders to speak up and not worry about being “woken up” or being pressured. They have learned that they can boldly take a stand and maybe assert themselves. They have learned to anticipate the setback. Boycotts? You survived that. Some of them, like Nike, realized they could wear it as a badge of honor.
When Harley-Davidson’s Matt Levatich had to try to bring products to Asia – this was Trump’s initiative – due to trade barriers making Harley-Davidsons difficult to get in Asia – he had to close his Kansas City plant. They still had a Racine, Wisconsin. They still had a York, Pennsylvania. But they had to shut it down to develop products in the Asia to the Asia. President Trump said, “Boycott Harley-Davidson.” My goodness. It’s like boycotting apple pie, baseball, and Coca-Cola. I mean, the symbol of Harley-Davidson is of all things the American eagle. The president says not to buy Harley. Well, who is their only really harmful competitor? It is Hero Honda that has a much larger market share worldwide. Is this “Make America Great Again”?
The same goes for what Trump did with Goodyear tires: Goodyear has long had a policy of not allowing this to happen for a long time [employees to wear] Utensils for political campaigns in the workplace. So Trump went after Goodyear [in protest of them not allowing employees to wear MAGA merchandise at work]and said “don’t buy Goodyear tires” and urged people to buy the competition. Well who is that? These are not US based companies: they are Italian-owned Pirelli and French-owned Michelin in Europe. It is Japanese-owned Firestone-Bridgestone in Asia. It’s counterproductive.
CEOs have learned not to be afraid of these boycotts. You have to take positions.
Even if you are really committed to very strong individual customers [the loss of which] can hurt a professional partnership, you might think they are worried [about speaking out]. But you’re looking at someone like Brad Karp von, for example [the white-shoe law firm] Paul, Weiss: In the last week he has 60 of the largest law firms in the country have joined forcesYou are always ready to send SWAT teams of electoral law experts to any of these states to consider laws to restrict voting rights. You have the confidence to work together as problem solvers.
Last question: in terms of political engagement, where do you see business from here?
So the big upside is that there are industry-specific things that they can do that aren’t just single-line policies – as we saw at Apple and Will Smith this week [announcing they’re pulling the filming of a new movie out of Georgia in protest of the state’s new voting laws]. Some of my colleagues and social advocacy people want these grandiose statements of principle and all these petitions. OK, great, good. But there are actually quite a number of promotions that are specific to the companies. And much of it is driven by the collective action of people who share a common destiny.
We see this in the aerospace industry coming together, or companies in Georgia, Arkansas or Texas coming together – wherever they have a common destiny. We see business communities finding a new sense of collective civic duty. And I’m extremely excited about it.