Fascinated as to how the political football of raising the debt ceiling ($28.43 trillion) is being played between Democrats and Republicans, a recurrent annual issue that eventually gets resolved, I wondered how the economic power of corporate America generates political power, and how it uses it. Sen. Bernie Sanders and other progressives bemoan that Big Business does not pay its fair share of taxes, which of course is true; but they don’t often question its political power.
Consider this: Bloomberg reported recently that Treasury Secretary Janet Yellen appealed to the CEOs of Wall Street’s biggest financial firms, including JPMorgan Chase, Citigroup, Wells Fargo, Bank of America and Goldman Sachs, “to enlist their help in her campaign to pressure Republicans to support raising or suspending the debt ceiling.” One might say that Yellen is using all the available means of political persuasion; nonetheless, it seems that corporate America has become an autonomous center of political power, an unelected fourth branch of government, the role earlier played by the press. Yellen would know that although Wall Street and corporate America fund both political parties, ideologically they have greater affinity with Republicans.
It’s also true that corporate America cannot afford to be content to feed only the stockholders’ bellies; that their responsibilities go beyond profit-making; that they are political actors.
Hardly anyone, and rightfully so, pays heed to what Chicago economist Milton Friedman argued in a 1970 New York Times column, which was headlined: “The Social Responsibility of Business Is to Increase Its Profits.” The Gordon Gekko character (played by Michael Douglas) in the 1987 movie Wall Street took this to the extreme: “Greed,” Gekko argued, “for lack of a better word, is good. … Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge, has marked the upward surge of mankind. …”
Gekko might have foreshadowed the ascent of Donald Trump. Addressing stockholders, Gekko likened the United States to a “malfunctioning corporation” and warned, “America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions.”
Gekko may not have foreseen the rise of the power of corporate China, but President Xi Jinping did, and he soon realized that the growing might of Chinese tech giants, including Alibaba, Tencent, Baidu, Xiaomi and others, could be a challenge to his absolute power. So he plucked their wings to keep them grounded.
As a horrified world watched the catastrophic but nonetheless spectacular Jan. 6 assault on the Capitol, guided by Trump and aimed at overturning the presidential election that the Senate had met to certify, Americans also saw the immense political power of Big Business and Silicon Valley. Both soon went into action and not only shut off the financial spigot to Trump and the politicians who voted against the certification, but also choked their voices. Trump was banned from Twitter and Facebook; Apple and Google removed the conservative Parler platform app; and Amazon refused to host Parler anymore.
Big Tech had deplatformed the once mighty Trump. Without Twitter — which Trump had brilliantly weaponized to advance his political agenda and browbeat his political opponents — he sounded like a village idiot.
This, however, raised serious First Amendment issues. Should Big Tech, which controls channels of information, be able to deny — without due process — access to social media outlets through which we exercise our free speech rights as citizens in a democracy?
The European Union might seem to be a collection of sovereign states, but when it comes to dealing with global corporations like Google, Microsoft, Apple and Facebook, for example, or a technological juggernaut like China’s Huawei, the EU does not underestimate their political and economic power and takes a united stand. Nonetheless, EU countries cannot ignore the political power of their own domestic corporations.
Consider this, for example: Germany’s politically powerful automobile and precision machine industries, as William Galston commented in The Wall Street Journal, exercised tremendous influence on Angela Merkel’s trade and foreign policy with China. Big Business does the same in the United States in its dealings with China.
Instead of depending on Washington, major corporations have their own political affairs experts, who use the same tools and talents as diplomats do in dealing with national and international affairs. Many of them are retired ambassadors, state department officials and military officers, and they know how to negotiate with global and national stakeholders, including senators and House members, Republicans and Democrats.
Building social and political capital is essential because corporate America, in distressing times, may need help — as in 2008, when the Obama administration bailed out some Wall Street firms euphemistically dubbed “too big to fail.”
Therefore, helping a powerful politician in need — Treasury Secretary Yellen’s debt ceiling conundrum, for example — can make political sense.
But we cannot ignore professor Jerry Davis of the University of Michigan’s Ross School of Business, who asked whether the “exercise of such overt political influence on the workings of U.S. democracy — with almost no room for oversight, by shareholders or anyone else — requires a new set of regulatory tools for a new form of corporate power.”
Narain Batra, of Hartford, is a professor of communications and corporate diplomacy at Norwich University and the author of The First Freedoms and America’s Culture of Innovation and the forthcoming India In A New Key.
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