Trump Has Called Bluff on the Era of Good Corporate Citizen

0:00They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. The thing about AI for business, it may not automatically fit the way your business works.

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1:14unknown:But when somebody wonders, what's the next steps? AI helps you finish the rest. Bolts are tight. Now your plans are fine. Run a smoother business when you're all aligned. Do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Businessweek with Carol Masser and Tim Stenevek on Bloomberg Radio. Well, once President Trump was inaugurated a little over a year ago, it became clear. Only a year. Yeah? Just saying. Okay. It's been a full year, everybody. It feels like, it doesn't feel like a year. No. Like yesterday.

1:58That went quite quick. But it was a lot of stuff. Yeah, I mean, you remember the image of all those executives standing up there. Totally. Inside, it was so cold they didn't do this outside. But it was tech executives. And a lot of other executives, too. But a lot of tech. A lot of very visible, very wealthy people. Felt like the Mag 7 right there. As Bloomberg Businessweek senior reporter Amanda Muller writes, quote, The Trump administration's actions on a whole host of issues, but especially its brutal treatment of suspected immigrants, have the general public looking for prominent people and institutions to use their power or influence like they did just a few years ago.

2:31This time, though, the country has been met with near total silence and has been left to speculate about why. We've got Amanda Moll with us. She's senior reporter for Bloomberg Businessweek. She joins us here in the Bloomberg Interactive Brokers Studio. I want to start with with sort of that passage, because if we think about like the history of the corporation as a citizen, and we'll get to the Supreme Court case that you write about Citizens United. But if we think back to just a few years ago, the pride floats, diversity and training initiatives, the ESG stuff, investing, hiring. That was that was kind of a blip I learned from your story in the history of of the role of a corporation in life.

3:11That's not really what corporations have done in American history. Right. It's easy to have like a bit of recency bias about like how corporations act relative to society. But when you look at sort of like the long sweep of corporate history, and I talked to an economic historian about this for the column, you know, companies generally try to advance their own interests, which like, you know, it sounds obvious to say, but it can be hard to remember that because companies have gotten, have worked to have a louder and louder voice in culture, in politics, in like all these areas of our lives that are not like so centrally focused on their own business.

3:52whatever that business might be, depending on the company. So, you know, before, relatively recently, companies just sort of sought to stay out of politics in general because it was bad for business, but to quietly, privately sort of advance their own interests politically through lobbying and all the ways that we're used to. So it's kind of like, you know, it's funny, I think that... They're all your tech executives, by the way, Carol. No, but I think about the Gilded Age, right, and the robber barons and so on and so forth. And I think we have this romantic notion of the company town and the executives taking care of everybody.

4:27And I'm sure that was the case in some places. But I think maybe we are being a little bit naive about how it used to be or no. Well, the robber barons are actually an interesting case because this is where a lot of these sort of battles were worked out. Because during the time of the robber barons, you also had the rise of the labor movement. You had really active, really powerful, really militant unions in the United States. So the robber barons not only, you know, adopted the 40-hour work week and things like that in order to, in response to fight from labor, but they also did things like establish libraries and museums and do all of these, you know, get into the creation of the public good in order to sort of burnish their reputations.

5:12because there was like an active, organized counterpart that was trying to reveal them to be something other than, you know, entirely pro-social. So they did this thing because of public, all of those things because of public outcry. Well, it's interesting because I think, you know, some folks would say some of these billionaires and successful, you know, executives, they certainly donate, they do philanthropy, and they're doing good things for society. I think, though, and I want to get into your story, and we started talking before we even went on air, It's just this idea of go to Minneapolis.

5:46And what is it that finally gets executives to kind of band together? Is it the first death or shooting by ICE agents? Is it the second one? Is it the third one? It's just like, what's the bar for making people react? And even when the reactions happen, it's maybe not as strong as we think it should be. Right. Right. Historically, we see a pretty high bar for companies to weigh in on politics. Like one of the classic examples is that during World War II, American companies were pretty happy to do business with both sides of the war until Pearl Harbor. And then it was, you know, our interests are with the allies.

6:25And then it was, you know, all hands on deck for the American side of the war because there was an American side of the war at that point. And you also saw this during the civil rights movement, that companies sort of stayed quiet on this until TV coverage of police brutality in the South was so horrific and the country was so horrified that they couldn't sit on the sidelines anymore. So you have that sort of happening again now, but people in roles of corporate influence are even more shy than they were, I think, in those eras to weigh in on either side. because we had two videotaped killings that everybody in the country probably saw as part of, at least.

7:07And only then did we get a very tepid statement from the Minnesota Chamber of Commerce with 60 local companies signing on to it. We haven't had much national conversation from people of enormous influence in the business community about any of this. Like you think about Davos, right? Everybody was gathered there. Like there's a place, but I don't know that there was like things that came out. Not about this. No. Not at all. You know, you mentioned you talk about World War II, the civil rights movement. You also write about apartheid and what happened with the jailing of Nelson Mandela in South Africa.

7:44After all of those historical events, you have something in the U.S. in 2010 happen, Citizens United versus the Federal Election Commission. Talk about what that does and that Supreme Court case does to change the role of a corporation as a citizen. Right. So what we see both historically and right now is corporations sort of trying to, you know, wiggle out of this mess by saying we're not political. We don't have a role in politics. We are here to serve our customers, to run our business profitably for our shareholders. And that is it. But in 2010, you have the Citizens United decision. And this was like the sort of culmination of a genuine 40-year process in which, you know, corporate America decided they wanted a more active role in democracy.

8:31They wanted a more active role in politics. This started in 1971 with the Powell Memo, and the author of that memo became a Supreme Court justice just a few years later. So you have this process of the sort of like pro-business arguments being put into academia, into the intelligentsia, and pro-business judges being put on courts. And that leads to this decision where it is now pretty easy for corporations to fund in a pretty limitless way political candidates. So corporations have a really loud voice in our politics, whether or not we always realize it. And so which I think makes it extra notable that they're being quiet right now.

9:18So I love the title. So President Trump is called Bluff on the Era of Good Corporate Citizen. The president has exposed an ugly truth about corporations. They're no longer even pretending to be good citizens. So it's an important point. Like, it's like peel back or, you know, pull back the curtain, right? Right. Of not being political, yet there is so much money in politics. And we often talk about this, that who's really represented when you go to Washington? Is it the corporations who have very, very deep pockets and have this ability to certainly get the attention of lawmakers? One of the other things I want to bring up, though, is something I think about a lot, is the fiduciary responsibility, though, of a leader to not get in the crosshairs of the president.

9:58I was thinking of your comments about this as soon as, you know, when Amanda was talking earlier. Because you said, as Carol often alludes to, is there any upside to actually weighing in here as a CEO? Right, right. You've got this to protect your company and take actions that are in the best interests and protecting your shareholders and investors. And doing what somebody thinks is, quote, the right thing to do is not a metric that Wall Street judges the performance of a company on. Right, yeah. I think that right now you have a lot of executives looking at the situation, both political and sort of social in the country, and going, Do we have more of a, do I as a person even have more of a responsibility to my company's shareholders?

10:38Or do I have more of a responsibility to society as someone with influence? Right. And, you know, I think one thing that is different about now than about 2020 is that the Trump administration is willing to use the levers of power in order to cajole or punish businesses that do or do not do things that the administration prefers. I think some, you know, some executives are probably just straightforward Trump supporters and they don't speak out because they like the administration's policies. Some probably don't like the administration's policies and don't speak out because they're afraid of reprisal.

11:13And if the government acts in such a way that it harms their company, then they probably haven't done their job as they understand it according to their contract because their ultimate responsibility in their role is to their shareholders. So if they're doing things that they know could get them punished, then I think that that is the particular calculus that a lot of executives are doing right now. You know, I'm just thinking if someone's listening, we're running out of time, but it's like, oh, you know, I can just see the emails or whether we're being political and so on and so forth. But it's, why is this, before we wrap up 40 seconds, like important to point out?

11:53And is it that companies spend a lot of money in lobbying? Like what is your big takeaway you think here? Well, I think that it's important to understand companies as institutions of power and influence in American society. business journalism is interesting and is worthwhile because these companies are important in the country. And discussing them like they're important means being serious about the types of influence they wield, even if it's political influence. We're so lucky that we get to sit here around a table and talk to Amanda Moll about stuff like this. And she can go anywhere. You really can.

12:34It's pretty remarkable. Whether it's talking about squeeze bottle olive oil or the role of a corporate citizen. She goes there. A makeup company. Like, you go everywhere. I have many curiosities. Many sides, many facets. Amanda Mott, thank you so much.

12:52They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. Life MD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit lifemd.com slash goodlife. Hello, hello, I'm Malcolm Gladwell, host of the podcast Smart Talks with IBM. I recently sat down with IBM's chairman and CEO, Arvind Krishna, and I asked him, how can companies use AI to its fullest potential to create smarter business.

13:38My one advice to them, pick areas you can scale. Don't pick the shiny little toys on the side. For example? If anybody has more than 10 % of what they had for customer service 10 years ago, they're already five years behind it. If anybody is not using AI to make their developers who write software 30 % more productive today with the goal of being 70 % more productive. Yeah. So we are not asking our clients to be the first experiment on it. We say, you can leverage what we did. We're happy to bring out all our learnings, including what needs to change in the process, because the biggest change is not technology.

14:24It's getting people to accept that there's a different way to do things. To listen to the full conversation, visit ibm.com slash smarttalks.

14:55unknown:We'll see you next time.

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