The myth of the apolitical CEO

The myth of the apolitical CEO

ShutterstockBy Kiselev Andrey Valerevich

Is the current surge of political activism on the part of U.S. CEOs a repackaging of business-as-usual policy advocacy? Acts of moral rectitude? Or a blend of both?

Amidst the rancorous U.S. political climate, dozens of CEOs expressed public positions on a wide range of policy debates, including climate, immigration and education. Some appear driven by bottom-line concerns. Other pronouncements reject President Donald Trump’s racial, ethnic and gender biases, arguing that fundamental American values are under assault by the administration’s executive orders and regulatory rollback.

Early in 2017, a coalition of 13 U.S. and European multinationals, including BP, DuPont and Google, urged Trump to reaffirm U.S. commitment to the Paris climate agreement. About the same time, Google, Apple and Intel and some 90 other firms supported the U.S. federal court’s reversal of the administration’s immigration ban from seven predominantly Muslim countries.

The more recent spate of corporate displeasure began last month with the resignation of Kenneth Frazier of Merck from the president’s Manufacturing Council in the wake of Trump’s now-infamous remarks following the violent Charlottesville clash between white supremacists and opposition protestors. Within days, the president disbanded the Manufacturing Council and the Strategy and Policy Forum, both comprising CEOs from leading American corporations, as multiple CEOs broke ranks with the White House.

The dissent continues. Tim Cook of Apple recently noted government’s failure to address the nation’s pressing education needs. Former Exelon CEO John Rowe spearheaded a letter co-signed by 132 CEOs urging retention of the immigrant-friendly DACA program that allows minors brought to the U.S. illegally to remain in the country. Meanwhile, amidst the CEO exodus, Starbucks CEO Howard Schultz urged companies to define their "core purpose for being" as greater than "just making money."

High-profile controversies

This wave of political pronouncements is unlikely to abate. But to ascribe this solely to estrangement from Trump’s regressive policies is to lose sight of the longstanding readiness of CEOs to influence political discourse and policymaking.

Indeed, U.S. history is replete with examples of corporate heads engaging in high-profile controversies. The political views of late 19th- and early 20th-century industry titans — Rockefeller, Carnegie, Ford — were no secret. Their positions on worker unions, minimum wage, working hours and the social responsibility of the wealthy helped define the American political landscape throughout the early industrial period and Gilded Age.

As the size and influence of large corporations have expanded in the postwar era, so too has the presence of corporate influence in the policy process. The seeds of the modern corporatist culture in Washington were planted decades ago, most notably beginning the 1980s, led by the Reagan-Thatcher ideology rooted in limited government and deregulation.

Meanwhile, the presence of corporate-sponsored advocacy steadily has become less bashful and more prolific. Spending on lobbying has grown from $1.45 billion in 1998 to $3.15 billion in 2016, slightly lower than the earlier peak of $3.52 billion in the wake of the financial crisis. Meanwhile, the corporate voice is amplified by the dark money "Super PACs" enabled by the Supreme Court’s seminal 2010 Citizens United decision granting First Amendment right of free speech to corporate affiliated organizations. By last month, such groups already had spent more than double what they spent at a comparable point in the 2016 presidential election.

One can safely assume that CEOs have both instigated or acquiesced to this growing level of political activism.

Of course, such activism is not unique to the United States. During the heated run-up and aftermath of the Brexit vote, numerous U.K. corporate leaders expressed alarm over the deleterious effect of their country’s withdrawal from the European Commission.

More recently In Germany, Harald Krüger, CEO of BMW, publicly opposed the country’s — and more generally the European Commission's — rush to phase out diesel automobiles, a mainstay of the German auto manufacturing. In South Korea, the heads of industrial conglomerates ("Chaebols") have deep and enduring entanglements with government, akin to Russian’s industrial oligarchs who assumed control of formerly large government-controlled enterprises after the breakup of the Soviet Union.

Given the unpredictability, disruptiveness and incoherence of the Trump administration, the conditions in the United States for continued CEO political activism are evident and show no signs of abating. Uncertainty is the bane of all enterprise. While some CEOs may opt to remain below Trump’s radar and avoid becoming the target of a midnight tweet, the past six months have demonstrated a willingness to incur such risks as a matter of moral conviction, business self-interest or a combination thereof.

CEOs never will be at the vanguard of opposition to Trumpism. After all, many administration proposals — reduced corporate tax rates, dilution of Obama-era environmental regulations, easing of financial market regulations — hold broad appeal to business leaders. But offsetting these promised perks is the larger reality of an administration that consistently demonstrates an absence of moral fiber and policy consistency valued by virtually all CEOs of large corporations.

For these reasons, CEOs owe it to their customers, employees, shareholders — and themselves — to not only sustain but intensify the recent political activism at a moment of deepening social divisiveness that is corroding the American body politic. 

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