Why CEOs are Now Questioning the Republican Party
May 10, 2021
The CEOs of our major companies are exceptionally smart and able persons. Boards of Directors search hard for the best management leader whose decisions will affect thousands of lives of consumers, employees, suppliers, distributors and communities.
In this century, the Republican Party has been the party of business interests. CEOs have fully supported minimum size government, lowest taxes on corporations and individuals, and fewest regulations of corporate activities. CEOs want maximum power to pursue their shareholder interests without government interference. Their cry is for “free market Capitalism.” Corporations have benefitted from neoliberalism economics articulated from University of Chicago’s Milton Friedman and Great Britain’s Margaret Thatcher. Major U.S. business schools teach and preach Capitalism’s endless “trickle down” financial benefits to all workers as well as to the wealthy. Unfortunately, these financial benefits have not been seen by the working class.
Cracks are beginning to appear in what major U.S. corporate leaders believe are in the best interests of the U.S. It first began with the growing corporate interest in taking a stand on “sustainability.” Sustainability is now viewed as an acceptable commitment. It acknowledges that climate change is occurring because of industry’s heavy reliance on fossil fuels. “Sustainability” means accepting that the nation has to shift to solar, wind, water and other energy forms if it wants to minimize pollution, global heating, and major floods.
The next break in thinking is CEOs recognition that our infrastructure is in bad shape and reduces our efficiency in moving goods to final and distant markets. Our supply chains- roads, bridges, rail, ports, air ports — all need fixing as soon as possible. Many CEOs look favorably on President’s Joe Biden’s American Rescue Plan. They don’t fully support the Democratic Party’s plan to spend $2.3 trillion on hard and soft infrastructure. Yet many CEOs know that the Republican position of spending only $600 billion to fix decaying physical infrastructure is disgraceful. Nor do many CEOs believe in the Republican Party’s exaggerated rants and warnings of socialism and inflation.
Another crack is the increased effort of the Republican Party to take stands that can hurt business. America has a growing number of people of color. Many CEOs are having a hard time finding enough employees. America is an aging society. We need to allow more young immigrants to come into the U.S. We need more consumers and more employees. Republicans in the meantime are busy legislating new laws that make voting harder for many Americans. They are conceding power to white nationalists. In Georgia, companies like Coca Cola and Delta took a public stand against new legislation that makes voting harder. These CEOs are doing “what we think is right.” The New York Times columnist Thomas B. Edsall warned that “The Marriage Between Republicans and Big Business Is on the Rocks.” There are recent reports that some CEOs want to reduce their levels of financial support they traditionally give to the Republican Party.
Another crack comes from the fresh thinking of younger people and millennials. Younger people are more progressive thinkers than their parents. They worry about social problems of hunger, inequality, homelessness, guns and drugs. Many are saddled with debt from their college education. Their digital and cognitive skills are much ahead of many older bosses. CEOs strive to make their business attractive to these younger people. There is keen competition for their talents. Many college graduates would prefer to work for Silicon Valley leaders (Facebook, Google, Microsoft,) and Amazon. Many will want a balance of work and family life. Companies that are not sufficiently forward thinking will fail to attract the best employees and are likely to fall behind.
Many CEOs see that the Republican Party is not what it was in the past. The Republican Party seems to be all about opposition of everything the Democrats want to do to improve the economy. McConnell, the Republican minority leader in the Senate, is again saying what he said about Obama, his cause is to see Biden fail. Instead of welcoming new ideas and honest debate in the Senate for and against interesting proposals, McConnell wants to bury the proposals from coming up or killing them with the filibuster. It’s a joke in other countries when they see a senator read nonsense for hours to delay a vote or kill rational discussion.
One of the biggest concerns of CEOs is the nightmarish thought that Donald Trump will again run for President in 2024. This is a President who shows no respect for science, truth, debate, or the two sides on any issue. To operate a business under Trump’s meddling and shadow is so disruptive. They worry about Trump’s dangerous followers. According to a poll conducted a week after the Capitol’s siege, “nearly a quarter of Republicans polled said violence can be acceptable to achieve political goals.” Many CEOs prefer to see new Republican leadership and policies or vote for Democrats.
Some Fresh Business Thinking
Many things have happened in the American economy and society that raise questions of party identity and public policy. A growing number of corporate leaders are questioning their traditional stands on public policy. Larry Fink, CEO of the powerful Black Rock Group, stated in January 18, 2015:
“Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.”
Klaus Schwab, CEO of the World Economic Forum, sees a Great Reset taking place in business thinking. On January 26, 2021, over 60 top business leaders, including members of the World Economic Forum and its International Business Council (IBC), committed to the core Stakeholder Capitalism Metrics. According to Schwab,
“Stakeholder capitalism becomes now really mainstream. This is stakeholder capitalism and sustainability in action.”
Jamie Dimon, CEO of JP Morgan Chase, has been a leader in urging CEOs to move from shareholder to stakeholder management. He see growing inequality as a major issue. He wants to see more progress in areas including immigration, health care and education. He stated in his 2021 annual letter:
“Our problems are neither Democratic nor Republican — nor are the solutions…Unfortunately, however, partisan politics is preventing collaborative policy from being designed and implemented, particularly at the federal level.”
However, Senate Minority Leader Mitch McConnell warned corporate leaders to refrain from taking stands on divisive political issues.
Granted, not all CEOs are moving into new thinking about their relationship to the Republican Party. Times call for a healthy debate among CEOs on what lies in the best interests of business and the nation. No doubt many CEOs still think “What is good for business is good for society.” Business leaders clearly need to rethink what’s good for business!