In New Political Status Quo, Big Business Bucks The Right
Trump’s schism with corporate leaders isn’t an outlier.
By Greg Ip
The Wall Street Journal
August 17, 2017
The dramatic schism that opened up between Corporate America and President Donald Trump this week might look like an outlier, of reputational risk coming to outweigh any benefit business hoped to get from forging a good relationship with an administration that could help them on tax and regulatory policy.
But it isn’t an outlier, and to understand why, look to Austin, Texas, not Washington, D.C. There, a seven-month effort by social conservatives, backed by Republican Gov. Greg Abbott, to regulate transgender access to public facilities such as bathrooms was defeated Tuesday when a special legislative session adjourned. The principal authors of the defeat were businesses. More than 700 companies and business groups, including many of the state’s largest employers, came together to attack the bill as discriminatory and bad for the state’s economy.
It was a stunning rebuke to the Republicans who control what they boast is the nation’s most business-friendly state. But it illustrates how business has increasingly parted ways with Republicans, including Mr. Trump, on noneconomic issues, becoming, in the process, a check on their policy agenda.
That was apparent not just in the decision of many CEOs to quit advisory councils to Mr. Trump over his failure to immediately blame white supremacists for weekend violence in Charlottesville, Va., but in their earlier condemnation of his proposed travel ban from several Muslim-majority countries deemed terrorism risks.
On politics, business leaders are risk-averse. They prioritize stability and the status quo. What has changed is the definition of the status quo. Gay and transgender rights, and action on climate change, were once liberal causes. They are now largely mainstream, particularly in big cities that are home to corporate head offices and the educated workers they covet. Businesses have adapted their own plans, policies and attitudes to this new mainstream. White supremacy, of course, has long been rejected across the political spectrum, but for some companies, merely being associated with a president who didn’t clearly condemn it poses risks.
This changes their cost-benefit calculus: Speak up and embroil yourself in unwelcome controversy, or stay silent and invite the opprobrium of customers, employees, social media, foreign governments, and, for some, their own families and consciences.
Increasingly, they have concluded that inaction is the riskier path.Merck & Co. CEO Kenneth Frazier quit Mr. Trump’s manufacturing council despite his company’s exposure to federal decisions on drug approvals and prices. Google fired an engineer who asserted biological reasons for why women are less suited than men for tech careers (drawing accusations of liberal intolerance).
Typically, business has been a follower on social issues. In the 1960s, Southern hotels, lunch counters, restaurants and other businesses didn’t back desegregation until the cost of sit-ins, protests and bad publicity came to surpass any potential loss of white customers. Once they opened themselves to black customers, sales boomed, Stanford University historian Gavin Wright wrote in 2008: “It is small wonder that so many Southern businessmen began to change their tune on the race issue at this time.”
Business opposition to the Texas bathroom bill was in great part driven by fear of the boycotts North Carolina experienced after passing a similar bill in 2016. (That measure was watered down earlier this year.) But their motives go beyond fear of bad publicity. Many companies were actually on the vanguard of extending equality to gay, and more recently transgender people, partly to attract employees or customers. Half of Fortune 500 companies provide transgender-inclusive health benefits—up from none in 2002—and 61% offer domestic-partner benefits to gay couples, according to the Human Rights Campaign, which advocates for gay and transgender people. Restrictive legislation conflicts with those policies.
Similarly, nearly half the Fortune 500 has some sort of internal target for greenhouse-gas emissions, renewable energy or efficiency, according to the Carbon Disclosure Project, which advocates for climate action. Mr. Trump’s decision to withdraw the U.S. from the Paris climate accord ran counter to their adoption of low-carbon technology.
For some executives, the considerations go beyond the economic. The bathroom bill “is not just going to hurt our business and our employees, it’s a moral imperative not to discriminate against this already marginalized group of people,” says Jim Reinhart, the head of Tekvox Inc., an Austin-based audiovisual technology startup that is part of the coalition that opposed the Texas measure. He told the state senate it exposed Texas to ridicule: “It makes us look like backward, bucktooth hillbillies.”
This pushback against the right on many issues means Mr. Trump and Republicans can’t count on reflexive support from business simply because they promise to cut taxes and regulations. That Merck’s stock initially rose after Mr. Trump lashed out at Mr. Frazier for quitting the council won’t go unnoticed by other CEOs.
This offers Democrats an opening to grab business’s support, although that could be difficult to reconcile with internal pressures tomove left on economic issues. Business could find itself a counterweight to both parties, its loyalty up for grabs.
The dramatic schism that opened up between Corporate America and President Donald Trump this week might look like an outlier, of reputational risk coming to outweigh any benefit business hoped to get from forging a good relationship with an administration that could help them on tax and regulatory policy.
But it isn’t an outlier, and to understand why, look to Austin, Texas, not Washington, D.C. There, a seven-month effort by social conservatives, backed by Republican Gov. Greg Abbott, to regulate transgender access to public facilities such as bathrooms was defeated Tuesday when a special legislative session adjourned. The principal authors of the defeat were businesses. More than 700 companies and business groups, including many of the state’s largest employers, came together to attack the bill as discriminatory and bad for the state’s economy.
It was a stunning rebuke to the Republicans who control what they boast is the nation’s most business-friendly state. But it illustrates how business has increasingly parted ways with Republicans, including Mr. Trump, on noneconomic issues, becoming, in the process, a check on their policy agenda.
That was apparent not just in the decision of many CEOs to quit advisory councils to Mr. Trump over his failure to immediately blame white supremacists for weekend violence in Charlottesville, Va., but in their earlier condemnation of his proposed travel ban from several Muslim-majority countries deemed terrorism risks.
On politics, business leaders are risk-averse. They prioritize stability and the status quo. What has changed is the definition of the status quo. Gay and transgender rights, and action on climate change, were once liberal causes. They are now largely mainstream, particularly in big cities that are home to corporate head offices and the educated workers they covet. Businesses have adapted their own plans, policies and attitudes to this new mainstream. White supremacy, of course, has long been rejected across the political spectrum, but for some companies, merely being associated with a president who didn’t clearly condemn it poses risks.
This changes their cost-benefit calculus: Speak up and embroil yourself in unwelcome controversy, or stay silent and invite the opprobrium of customers, employees, social media, foreign governments, and, for some, their own families and consciences.
Increasingly, they have concluded that inaction is the riskier path.Merck & Co. CEO Kenneth Frazier quit Mr. Trump’s manufacturing council despite his company’s exposure to federal decisions on drug approvals and prices. Google fired an engineer who asserted biological reasons for why women are less suited than men for tech careers (drawing accusations of liberal intolerance).
Typically, business has been a follower on social issues. In the 1960s, Southern hotels, lunch counters, restaurants and other businesses didn’t back desegregation until the cost of sit-ins, protests and bad publicity came to surpass any potential loss of white customers. Once they opened themselves to black customers, sales boomed, Stanford University historian Gavin Wright wrote in 2008: “It is small wonder that so many Southern businessmen began to change their tune on the race issue at this time.”
Business opposition to the Texas bathroom bill was in great part driven by fear of the boycotts North Carolina experienced after passing a similar bill in 2016. (That measure was watered down earlier this year.) But their motives go beyond fear of bad publicity. Many companies were actually on the vanguard of extending equality to gay, and more recently transgender people, partly to attract employees or customers. Half of Fortune 500 companies provide transgender-inclusive health benefits—up from none in 2002—and 61% offer domestic-partner benefits to gay couples, according to the Human Rights Campaign, which advocates for gay and transgender people. Restrictive legislation conflicts with those policies.
Similarly, nearly half the Fortune 500 has some sort of internal target for greenhouse-gas emissions, renewable energy or efficiency, according to the Carbon Disclosure Project, which advocates for climate action. Mr. Trump’s decision to withdraw the U.S. from the Paris climate accord ran counter to their adoption of low-carbon technology.
For some executives, the considerations go beyond the economic. The bathroom bill “is not just going to hurt our business and our employees, it’s a moral imperative not to discriminate against this already marginalized group of people,” says Jim Reinhart, the head of Tekvox Inc., an Austin-based audiovisual technology startup that is part of the coalition that opposed the Texas measure. He told the state senate it exposed Texas to ridicule: “It makes us look like backward, bucktooth hillbillies.”
This pushback against the right on many issues means Mr. Trump and Republicans can’t count on reflexive support from business simply because they promise to cut taxes and regulations. That Merck’s stock initially rose after Mr. Trump lashed out at Mr. Frazier for quitting the council won’t go unnoticed by other CEOs.
This offers Democrats an opening to grab business’s support, although that could be difficult to reconcile with internal pressures tomove left on economic issues. Business could find itself a counterweight to both parties, its loyalty up for grabs.
Article Link To The WSJ:
0 Response to "In New Political Status Quo, Big Business Bucks The Right"
Post a Comment