Source: Politics<\/p>\n
When a marriage falls apart, the fights are never really about what they appear to be. Another late night at the office isn\u2019t about the workload; it\u2019s a statement about your priorities. Anger over the takeout order isn\u2019t about the food; it\u2019s about the fact that you don\u2019t understand what your spouse actually likes.<\/p>\n
So it is with the crumbling, century-long marriage of the Republican Party and the business community. <\/p>\n
The recent spat between leading Republicans and major corporations like Delta, Coca-Cola and Major League Baseball criticizing Georgia\u2019s restrictive new voting law isn\u2019t just about voting rights; it\u2019s the sign of a deeper breakup that has been years in the making. For anyone confused about how Senate Republican Leader Mitch McConnell could admonish big companies to \u201cstay out of politics,\u201d after building a career on corporate donations and business-friendly policies, this deeper breakup tells the story.<\/p>\n
Jeffrey Sonnenfeld, a legendary business professor and associate dean at the Yale School of Management, has watched this split grow in recent years, and has heard it from CEOs he knows and works with. What the GOP cares about and what major businesses care about are, increasingly incompatible, he says.<\/p>\n
\u201cThe political desire to use wedge issues to divide\u2014which used to be fringe in the GOP\u2014has become mainstream,\u201d Sonnenfeld says. \u201cThat is 100 percent at variance with what the business community wants. And that is a million times<\/i> more important to them than how many dollars of taxes are paid here or there.\u201d<\/p>\n
Over the weekend, Sonnenfeld hastily organized a Zoom conference<\/a> with roughly 100 major corporate executives to talk through the voter restrictions being considered by state legislatures throughout the country, and about the way top Republicans like McConnell and Ted Cruz are responding with attacks on businesses that speak up in opposition.<\/p>\n Most of the CEOs on the call were Republicans; Sonnenfeld himself has been an informal adviser to Republican and Democratic presidents, but he has a longstanding relationship with McConnell, and spoke at the senator\u2019s wedding to Elaine Chao. The CEOs \u201cranged from amused to outraged\u201d in their reaction to the GOP attacks on businesses, says Sonnenfeld. \u201cTheir comments ranged from talk about \u2018taxation without representation\u2019 to the paradox of \u2018cancel culture\u2019: It\u2019s OK if they speak out, but only as long as they stay on script?\u201d<\/p>\n As the GOP tries to position itself as the home of \u201cworking-class values,\u201d capturing loyalty with a steady campaign against the perceived excesses of progressive culture, it\u2019s running afoul of a business community that can\u2019t simply silo off \u201cculture war\u201d topics. In the eyes of major corporations, issues like voting rights, immigration and transgender-inclusive restrooms have economic impact, too. The millions of people alienated by those fights aren\u2019t just their future customers, many of whom expect to support brands they believe in, they\u2019re the companies\u2019 employees. <\/p>\n \u201cThe bad news for Republicans is that they seem to have a 1920s view of who Big Business\u2019 workforce is,\u201d says Sonnenfeld. \u201cThat workforce is, at a minimum, highly diverse\u2014and they get along. Trying to stir that up is misguided.\u201d<\/p>\n The new Republican penchant for mocking corporations for being too socially aware\u2014for instance, Sen. Ted Cruz\u2019s Twitter threat to use the power of the state to harm Major League Baseball\u2019s business, signing the message off with \u201cgo woke, go broke<\/a>\u201d\u2014fundamentally misunderstands what matters to business in the 21st century, says Sonnenfeld. \u201cBasically, business leaders believe that it\u2019s in the interest of society to have social harmony. … Divisiveness in society is not in their interest, short term or long term.\u201d<\/p>\n If the marriage between the Republican Party and the business community is on the rocks, what does that mean for politics? What do we misunderstand about what really matters to CEOs? And why aren\u2019t business executives more afraid of boycott threats from the right?<\/p>\n For answers to all of that and more, POLITICO Magazine spoke with Sonnenfeld this week. A condensed transcript of that conversation follows, edited for length and clarity.<\/p>\n In the last couple of weeks, we’ve seen major business come out in strong opposition to changes to election law in Georgia and other states. Over the weekend, you helped organize a phone call with around 100 corporate leaders to discuss it all. Tell me about that. <\/b><\/p>\n Yes. As anxiety was rising, I invited 120 CEOs on 48 hours\u2019 notice. I thought that if I was lucky\u2014on such short notice, and on a Saturday competing with the Masters [golf tournament]\u2014we\u2019d get maybe 10 to show up, thanks to my personal relationships. But 90 actual CEOs and business leaders showed up, and 120 people were on the call, including the various election and legal experts.<\/p>\n There were some who are interested in trying to find out what happened in Georgia. There was an explanation by the Georgia business leaders of how, in fact, they were working assiduously backstage [on the Republican bills to overhaul election laws in the state] and thought they\u2019d taken out 95 percent of the bad stuff. It turned out they’d gotten 80 percent out; they didn\u2019t realize that left in there was the [legislature having the ability to suspend<\/a>] county officials who are elected to be in charge of voting. As was pointed out, the Carter Center in Atlanta certifies elections around the world as being democratic or undemocratic on just that basis; they have poll watchers around the world to prevent this kind of thing.<\/p>\n But Georgia was not the focus; that was just the warning shot. The volley over the bow is that we had business leaders from Texas saying, \u201cYou don\u2019t know what bad is,\u201d and looking at this spread [of voting rights restrictions] to 47 state legislatures. Michael Waldman, the head of the Brennan Center, gave an analysis of how bad [the proposals are] in these different states. <\/p>\n This November, for the first time in American history, [major business leaders] worked to guarantee millions of workers paid time off to vote. We’ve never had that before\u2014and that’s a bypass around government, with its inability to make Election Day a national holiday. So they created their own workarounds. But on top of that, they were really proud that they managed to have\u2014these particular companies\u2014over a million workers with a full day off not only to vote, but to help fortify elderly voting-site volunteers who were at risk for Covid and [had to handle] the tidal wave of ballots. They did so much, and they were so proud that this was the largest, fairest, most secure election in U.S. history. And to have [the election] condemned [by Republicans] after the companies put so much into ensuring that, they’re pretty upset. <\/p>\n What was the reaction among CEOs to all the recent criticism from Republicans?<\/b><\/p>\n Well, they ranged from amused to outraged. Their comments ranged from talk about \u201ctaxation without representation\u201d to the paradox of \u201ccancel culture\u201d: It\u2019s OK if they speak out, but only as long as they stay on script?<\/p>\n I think the clarion call that actually got this ridiculously high participation rate on such short notice was, in fact, Senator Mitch McConnell\u2019s paradoxical call to action for CEOs. [Last week, McConnell gave a speech<\/a> in which he told corporations to \u201cstay out of politics,\u201d with the caveat that he did not mean that they should stop making campaign contributions.]<\/i> <\/p>\n Despite your extraordinary range of Washington contacts, I bet I\u2019m the only person you\u2019ve interviewed that actually spoke at Mitch McConnell\u2019s wedding. Only three of us spoke: It was the ambassador to the People\u2019s Republic of China, the ambassador to Taiwan, me\u2014and maybe Elaine [Chao\u2019s] father. I have a nice relationship with Mitch. I admire him, and I\u2019m glad he walked back his statement<\/a>. It missed the mark.<\/p>\n The CEOs were across the political spectrum. But one thing they were unified about was their right to have a voice, and the importance of fortifying each other when they get out in front on an issue. <\/p>\n It is kind of like 2017 after Charlottesville, when Merck CEO Kenneth Frazier spoke out against President Trump\u2019s failure to condemn white supremacist hate groups and left Trump\u2019s American Manufacturing Council. At first, the business community wasn\u2019t sure if they were all going to leave [Trump\u2019s various business advisory councils]. But some, like Dave Abney, the chairman of UPS, said Trump\u2019s attack on the character of Ken Frazier<\/a> [after Frazier resigned] was unjustified. And the Business Roundtable came out with a statement from more than 200 business leaders. They rallied around one another. That was remarkable. It was a clarifying moment, and they came out to make a unified statement\u2014and that\u2019s why we\u2019re here right now. <\/p>\n Earlier you told me something that I can\u2019t let pass by: You spoke at Mitch McConnell\u2019s wedding?<\/b><\/p>\n Yeah. I\u2019ve known them for a long time. And I\u2019ve been friends with Elaine for some 40 years. [Pause]<\/i> It\u2019s never been mentioned anywhere before. I thought I owed you that. [Laughter]<\/i> <\/p>\n I appreciate it. You mentioned this wide range of political beliefs among the business leaders on the call. I imagine that many of those CEOs are somewhat conservative. Are they alienated from the GOP? How would you characterize their politics right now?<\/b><\/p>\n Yes, this group was about 70 percent Republican and easily 60 percent conservative, even if they are Democrats. It was a clear act of defiance just to be on the call. But that doesn\u2019t mean that they all agree with each other on the different options available for corporate response. <\/p>\n What we’re seeing right now from business leaders is sort of this gangly return to adolescence to say, \u201cWe’re not going to be defined by the parentage of either political party.\u201d Lord knows who misclassified very honorable, legitimate social democrats as \u201cprogressives.\u201d Bernie Sanders, Elizabeth Warren, AOC\u2014[it’s] great what they do, but they\u2019re social democrats; not \u201cprogressives.\u201d Progressives\u2014Teddy Roosevelt ran on that ticket. So did \u201cFighting Bob\u201d LaFollette, a Republican senator [and 1924 Progressive Party presidential nominee], with Burton Wheeler, a Democratic senator, as his running mate. They were fighting for bridges and dams and immigration, for urban beautification, the settlement houses of Jane Addams, safe workplaces. <\/p>\n That\u2019s what \u201cprogressivism\u201d is and was. And that\u2019s the theory [that animates] Joe Biden and Mayor Pete [Buttigieg] and Amy Klobuchar and maybe Mitt Romney. That\u2019s<\/i> who progressives are. And that\u2019s where the business community is: They\u2019re pretty much somewhere between Mitt Romney and Joe Biden.<\/p>\n Are there other issues where business leaders feel alienated from the GOP, or is it mainly around these questions of having a basic functioning democracy?<\/b><\/p>\n The business leaders, to a person, were trying to explain: They don\u2019t like being politicians. They\u2019re not public officials. But trying to create and fortify social harmony is absolutely directly in the strategic context of what CEOs do\u2014although the Wall Street Journal<\/i> editorial board [which has been critical of business leaders<\/a> for speaking out against the Georgia law] doesn\u2019t seem to understand that. <\/p>\n Since [Herbert] Hoover, the Republican Party has been identified as the party of Big Business. Well, the bad news for Republicans is that they seem to have a 1920s view of who Big Business\u2019 workforce is. Whatever they have in mind when they think of \u201cJoe Six-Pack,\u201d the reality is really different. That workforce is, at a minimum, highly diverse \u2014 and they get along. Trying to stir that up [in a \u201cculture war\u201d] is misguided. The business community\u2019s interests are not to be xenophobic. It\u2019s not in their interests to be isolationist. It\u2019s not in their interests to be protectionist. And the GOP, those haven\u2019t been their positions, at least since the 1950s. But now they are.<\/p>\n Basically, business leaders believe that it\u2019s in the interest of society to have social harmony. The CEOs really care about these issues. Divisiveness in society is not in their interest\u2014short term or long term. They don\u2019t want angry communities; they don\u2019t want fractious, finger-pointing workforces; they don\u2019t want hostile customers; they don\u2019t want confused and angry shareholders. <\/p>\n The political desire to use wedge issues to divide\u2014which used to be fringe in the GOP\u2014has become mainstream. State by state, party has taken that path. That is 100 percent at variance with what the business community wants. And that is a million times<\/i> more important to them than how many dollars of taxes are paid here or there. <\/p>\n If [corporate tax rates] go from 34 percent to 27 percent instead of 22 percent, they\u2019re way less concerned about that. There\u2019s too much focus on taxes. On taxes, what we\u2019re seeing is, in fact, CEOs are willing to concede. There\u2019s a lot of ground there. You\u2019ll get anywhere from [JPMorgan Chase CEO] Jamie Dimon and Bill Gates to Jeff Bezos saying, \u201cWe’ll give a couple of dollars on tax.\u201d<\/p>\n They\u2019re interested in free markets\u2014whether or not that\u2019s product markets, financial markets or labor markets. It\u2019s about the image and reality of America: \u201cGive us your tired, your poor, your huddled masses,\u201d Emma Lazarus\u2019 poem<\/a> on the Statue of Liberty. That\u2019s the spirit of it. But it\u2019s also this: If the U.S. is not seen as a comfortable, attractive magnet for the world\u2019s best talent, we\u2019re in trouble. We don\u2019t want all this technological expertise to be siphoned away to our trading partners, and that\u2019s starting to happen. <\/p>\n [Business leaders] are upset about immigration policies. Around this time last year and into the summer, the universities were somewhat inept in their lobbying efforts [on the issue], and even the immigration attorneys were underperforming. They were kind of relying on the same K Street nomadic lobbyists who hop around from place to place, shun controversy, don\u2019t want to create waves, who were kind of checking boxes but not having a meaningful impact. It was the business leaders, four major tech companies in particular, who went off to see Jared Kushner\u2014and I know this point blank; I was in the middle of it, and this has not been out there, by the way\u2014and say, \u201cYou can\u2019t condemn us for outsourcing this work to China or India if we can\u2019t bring these highly skilled workers here. We\u2019re already now leasing space in Vancouver and Toronto, and we\u2019re working on wiring the infrastructure so this will be on U.S. time zones. If we can\u2019t get [these skilled workers] into the U.S., we\u2019re still going to function as a North American company with the talent we need.\u201d<\/p>\n They have different priorities [than the Republican Party seems to think]. They\u2019re upset about the [anti-LGBTQ] \u201cbathroom bills.\u201d They\u2019re upset about gun violence; hundreds of companies severed ties with the NRA or stopped dealing in semiautomatic weapons\u2014from Walmart to Dick\u2019s Sporting Goods. As we talk about \u201cregulatory rollbacks\u201d during the Trump administration, they were almost entirely EPA-directed; nobody was lobbying for that in corporate America. With the automakers, it became the entire industry fighting the [Trump-era] EPA, saying, \u201cWe like working with California. We think that in addition to what we\u2019re doing with hybrids and [electric vehicles], we are pretty sure that we can get a 50-mile per gallon efficiency in the old-fashioned internal combustion engine. Don\u2019t stop us.\u201d So [Attorney General Bill] Barr was told to unleash the antitrust division to sue the auto industry for conspiring in [agreeing to stricter environmental standards]. It was ridiculous.<\/p>\n You\u2019ve spent a lot of your time at Yale working with business leaders and studying how they think. I\u2019m curious how a CEO makes the calculation of whether or not it makes sense to speak out about an issue. Can you walk me through that? <\/b><\/p>\n Yeah, there are five parts, really. <\/p>\n First, they have to know what is in the strategic interests of the business. As a steward of other people\u2019s resources, they have to be mindful that it can\u2019t just be their personal values alone\u2014and when it is, then they have to be willing to put their job on the line, as Ken Frazier did at Merck [following Trump\u2019s comments after Charlottesville]. <\/p>\n Second: Is it a defining element of their brand? How does it reinforce their brand and their brand values? Google retreated from China because of invasions of privacy and theft of intellectual property. They drew a line in the sand about what their brand is. Frankly, Apple did not. <\/p>\n Third: If the issue itself is divisive, who else is involved and why? With these [anti-transgender] \u201cbathroom bills,\u201d the companies that led the charge against the euphemistic \u201creligious freedom\u201d acts in Arkansas, Indiana, North Carolina and Texas \u2014 amazingly \u2014 were AT&T, UPS and Doug McMillon [the CEO] of Walmart. They were out front. I mean, Patagonia was there, Howard Schultz of Starbucks was there, Nike was there, Tim Cook of Apple was there, but they joined later. It had such force because these were not considered political extremists or edgier companies; this was coming from the heartland. When companies like that get involved, it has an effect.<\/p>\n Fourth: Is the particular issue one where remaining silent is itself a stance? On many of these issues\u2014such as voting access, or whether the president was elected in a truly honest election\u2014there’s no middle ground; it\u2019s a dichotomous yes or no. Some companies waffle, trying not to make enemies. You can\u2019t get away with that anymore. Your silence is acquiescence; it is a decision. You\u2019re making a decision: Your silence is a decision. And when you recognize that, some of these issues are so salient and so critical that you have to take a position. <\/p>\n Fifth: We know from surveys that the CEO is the most trusted voice in society right now. That wasn\u2019t the case [years ago]. Right now, both your line of work and my line of work have lost a step [in the public eye]. Elected officials at every level\u2014city, county, state, federal\u2014have all been knocked down a peg. Clergy? Lord knows their standing has suffered. <\/p>\n Whose standing has not only been steady, but actually, weirdly, gone up in all these polls that usually agree on very little else? Business leaders and military leaders. They are the most respected pillars in society\u2014and the military can\u2019t have a political voice, so [business leaders] realize they have to<\/i> speak up. If they see a dangerous slide toward anti-democratic or tyrannical movements, they have to speak up, and it\u2019s in their own self-interest.<\/p>\n And how do they consider the potential risks of coming out with a stance, like the potential for a boycott?<\/b><\/p>\n We\u2019re seeing a courage for business leaders to speak out and not worry about being criticized as \u201cwoke\u201d or as pressured. They have learned they can take courageous stands and maybe muscle their way through it. The blowback, they\u2019ve learned to anticipate it. Boycotts? They have gotten through that. Some of them, like Nike, realized that they could wear it as a badge of honor.<\/p>\n When Matt Levatich of Harley-Davidson had to try to get product into Asia, because of retaliatory trade barriers that made it difficult to get Harley-Davidsons in Asia\u2014this was Trump\u2019s initiative\u2014he had to shut down their plant in Kansas City. They still had one Racine, Wisconsin. They still had one York, Pennsylvania. But they had to shut this one down to create products in<\/i> Asia for<\/i> Asia. President Trump said, \u201cBoycott Harley-Davidson.\u201d My gosh. That\u2019s like boycotting apple pie, baseball and Coca-Cola. I mean, the iconic symbol of Harley-Davidson is the American eagle, of all things. The president says not to buy Harley. Well, who is their only real pernicious competitor? It\u2019s Hero Honda, which has a much larger market share worldwide. This is \u201cMake America Great Again\u201d? <\/p>\n Same thing with what Trump did with Goodyear tires: Goodyear has had a long-standing, decades-old policy of not allowing [employees to wear] political campaign paraphernalia in the workplace. So Trump went after Goodyear<\/a> [in protest of them not allowing employees to wear MAGA merchandise at work], saying, \u201cDon\u2019t buy Goodyear tires,\u201d telling people to buy the competition. Well, who\u2019s that? It\u2019s not U.S.-based companies: It\u2019s Italian-owned Pirelli and French-owned Michelin in Europe; it\u2019s Japanese-owned Firestone-Bridgestone in Asia. It\u2019s counterproductive. <\/p>\n CEOs have learned to not be afraid of these boycotts. They have to take positions.<\/p>\n Even when you\u2019re really beholden to very strong individual clients [the loss of which] can hurt a professional partnership, you might think they would worry [about speaking out]. But you take a look at somebody like, say, Brad Karp of [the white-shoe law firm] Paul, Weiss: Over the last week, he has 60-some of the nation’s largest law firms banded together<\/a>, ready at a moment\u2019s notice to have SWAT teams of election law experts fanned out to any of these states considering legislation to restrict voting rights. They have the confidence to work collaboratively as problem solvers.<\/p>\n Last question: In terms of its political involvement, where do you see business going from here?<\/b><\/p>\n So the huge takeaway is that there are things that are specific to their industry that they can do that aren\u2019t just uniform policy statements\u2014as we saw with Apple and Will Smith this week [announcing they\u2019re pulling the filming of a new movie out of Georgia in protest of the state\u2019s new voting laws]. Some of my colleagues and people in the social advocacy fields want to have these grandiose policy statements and all these petitions. OK, great, fine. But there\u2019s actually a whole menu of actions available that are specific to the companies. And a lot of it\u2019ll be driven through the collective action of people who have a shared fate. <\/p>\n We see this with airline industry getting together, or companies within Georgia or Arkansas or Texas getting together\u2014wherever they have a shared fate. We\u2019re seeing business communities finding a new sense of collective civic duty. And I have the utmost enthusiasm about that.<\/p>\n