America's bosses will be dragged into politics

Chief executives will find it hard to escape politics


In early 2017 America’s bosses took a deep breath and waded into the political fray. By joining the White House’s business councils, most felt that they were doing their patriotic duty. By August they regretted it. The councils imploded after President Donald Trump wobbled over condemning white supremacists who had marched in Charlottesville, Virginia. For these bosses, and their peers watching abroad, the experience confirmed a golden rule: if you run a big public company never get involved in politics.

Yet in 2018 business leaders will be sucked back into the political arena. Many will feel like Michael Corleone in “The Godfather”: “Just when I thought I was out, they pull me back in.”

The financial crisis of 2008-09 demolished the credibility of big business in the West. Afterwards executives kept out of the public eye. Instead of holding their annual meetings in grand buildings in Manhattan, Wall Street banks shifted them to smaller cities where fewer people would turn up—Jersey City for Goldman Sachs and New Orleans for JPMorgan Chase. Bosses kept schtum during congressional and parliamentary roastings. Those who spoke their mind paid a price. In 2011 Bob Diamond, the boss of Barclays, told Britons that the time for remorse was over. By 2012 he was fired. When Mitt Romney ran for president that year his business career was a liability.

The years of penitence ended in early 2017. After being shunned by the Obama administration, most executives were flattered when they were asked to break bread at the Trump White House, and to share ideas about how to reform the tax code and cut red tape. Elon Musk of Tesla, Jeff Immelt of General Electric and others joined advisory councils aimed at boosting the economy. Accusations of cronyism circulated from the start, however, and by August any proximity to Mr Trump became toxic. Most executives were relieved when the circus came to an end. 

Still, global firms will find it impossible to avoid politics in 2018, for three reasons. First, around the world the state has got bossier and is trying to tame the power of shareholders. China has ended the charade that its state firms are run for investors. Over 30 firms listed in Hong Kong have altered their constitutions to make it explicit that the Communist Party calls the shots. Jean-Claude Junker, the EU’s president, plans new rules to screen inbound foreign investment. France’s new finance minister has vowed to protect firms from “predators” and Australia has promised that bhp Billiton, a mining giant, will remain in Aussie hands. The White House, meanwhile, will try to micromanage where tyre factories and semiconductor plants are built. In 2018 global firms will have to deal with political leaders who feel licensed to meddle.

Second, many legislatures and political parties no longer think that having a business-friendly environment is a priority. As a result companies will have to state their cases to ordinary Joes. David Farr, the boss of Emerson Electric, an industrial firm, is leading a public campaign for corporate-tax reform in America, which he argues will help workers. As worries about tech monopolies build, Silicon Valley’s secretive tycoons will have to persuade citizens in America and Europe that their firms should not be broken up or heavily regulated. Faced with a political shambles, Britain’s multinationals will speak up more loudly in favour of a soft Brexit.

Last, even as the business world tries to adapt to populist politicians, it will face a new storm. The rows about race, gender and free speech that burn on America’s university campuses will spread into global companies’ offices and boardrooms. The furore around Alphabet in 2017, after the firm sacked an employee who had written a treatise on sexism that was deemed offensive, points to a future in which firms are cultural battlegrounds. Most big Western companies are less diverse than the population is.

It’s not business, it’s just personal

The idea of having to engage with, resist and persuade the public terrifies most chief executives. Running a company is hard enough; trying to tackle the agonies of Western societies is impossible. Still, in 2018 a few bosses will hear a higher calling. Jamie Dimon at JPMorgan Chase, Howard Schultz at Starbucks and Bob Iger at Disney all have political leanings and will have to make their minds up whether to run for president in 2020. So will Mark Zuckerberg, if he is not too busy defending Face­book’s role in the last election. Politics is hell, but in 2018 a few bosses will decide to make voters an offer they can’t refuse.

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