THERE USED to be an iron rule for any American boss tempted to talk about politics: don’t. Recently, this rule has been discarded as chief executives have been drawn into taking stands on inequality, the culture wars and climate. So far they have had an easy ride: it is more fun to outline your vision for humanity than for increasing EBITDA margins. But in 2020 this new breed of activist CEOs will face three problems that politicians know well: the charge of hypocrisy, the risk of a recession and destabilising ideological shifts.
Corporate America’s drift away from political neutrality and inactivity began after the financial crisis in 2008-09. Banks gave displays of contrition. A new generation of woke consumers and workers grew up during the crisis. Some were preoccupied by cultural injustices; others attacked capitalism, too. Climate change became an urgent problem and economic nationalism meant firms had to demonstrate their patriotism.
Bosses have responded to these signals. Jamie Dimon, of JPMorgan Chase, pens 50-page letters, ostensibly to its shareholders: the latest touches on education, and military procurement and demands “CEOs: your country needs you!” Silicon Valley chiefs humour a minority of radicalised employees. Bosses like to claim their firms are leading the fight against carbon emissions. In 2017 bosses joined flag-waving summits in the White House. And over 180 CEOs have signed a declaration by the Business Roundtable that their objective is not just to serve shareholders, but customers and workers, too.
Business folk are motivated by idealism, vanity and calculated self-interest. But it also helps that, so far, CEO activism has been cost-free. Like some politicians, some bosses gladly take credit for things they do not control. Most of the CEOs who pledge to fight climate change do not run firms that are responsible for it. Take the biggest 200 Western firms that disclose emission figures. Of these, the top 20 are responsible for 70% of all emissions: the other 180 don’t matter much. And like some politicians, some CEOs make promises they don’t keep. Despite the Roundtable’s concern for workers, executive pay is rising and there is no sign of a rethink on how the spoils are split between labour and shareholders. Profits for the S&P 500 index are forecast to rise by 8% in 2020.
By then the three downsides of CEO activism will have become more apparent. First, the accusations of hypocrisy: it is not hard to find. Nike, which has pushed virtuous branding, has been embroiled in a doping scandal. BlackRock, a fund manager that pushes other firms to invest more, spent over 100% of its own cashflow on buybacks in the past 12 months. Visa signed the Roundtable letter championing customers, but is part of a payments oligopoly. If the inconsistency between bosses’ words and actions becomes too glaring, reputations can suffer, as Mark Zuckerberg of Facebook knows.
Second, if there is a recession, CEO activists will struggle to reconcile the interests of employees and their fiduciary duty to shareholders. In the past two downturns American firms cut their wage bill by 6%; if they had not, profits would have been 24% lower. This flexibility is a hallmark of American capitalism. The conflict between business logic and political posturing is already evident at firms facing technological disruption. Consider Mary Barra of General Motors, a prominent Roundtable signatory. In September 2019 she faced a strike by 46,000 workers who complained of unfair pay and factory closures as she tries to shift GM to electric vehicles.
And third, as any member of Congress will tell you, the ideological ground can shift quickly. CEOs hope that by adopting social and political causes they will defuse more radical sentiments. Dream on. The presidential campaign in 2020 will feature lots of criticism of big business, some of it legitimate. Democrats’ proposals include workers on boards, beating up health-care firms and tackling monopolies, most obviously in big tech.
No such thing as a free declaration
By the end of 2020 the leaders of America Inc will realise that political posturing is no free lunch. Many will worry that it is a gimmick that elicits a backlash. Prudent firms will adopt a simpler vision: it is the job of government to set the rules, and the job of companies to maximise value within these rules. That means delighting customers (including socially conscious ones), investing in profitable innovation (including in green technologies), and attracting workers (sometimes by paying them more). It doesn’t mean standing on a soap box. That is what politicians are paid (much less) to do.
This article appears in “The World in 2020”, our annual edition that looks at the year ahead. See more at worldin.economist.com.
Covid: How the coronavirus pandemic is redefining Scottish politics – BBC News
The pandemic has probably done more than anything to define Scottish devolution in 21 years of Holyrood decision making.
Before coronavirus, the Scottish Parliament’s policy choices – from free personal care for the elderly to minimum pricing of alcohol – made it distinctive.
Now, Scottish ministers are making life and death decisions affecting everybody almost every day.
The exercise of emergency powers to combat Covid-19 commands public attention like nothing before.
We’ve had six months of lockdown restrictions and after a recent period of relaxation, they are tightening again as coronavirus cases rise.
Paying attention is essential to knowing whether or not you can go to work, visit your granny or have friends round for dinner.
It is First Minister Nicola Sturgeon rather than the prime minister, Boris Johnson, who is deciding for Scotland because public health is devolved.
Many of her decisions so far have matched those by the UK government for England and the devolved administrations for Wales and Northern Ireland.
That was especially true in the early stages of the crisis when there was much talk of a four nations approach – but differences have emerged over time.
The Scottish government has generally been more cautious about lifting restrictions than the UK government.
Bars and restaurants stayed closed in Scotland for longer and it was slower to lift quarantine for people arriving from Spain, before this was reimposed across the UK.
By contrast, the Scottish government was the first in the UK to restore full-time classroom education in schools after the summer.
Scottish ministers did coordinate with the other administrations to introduce the “rule of six” for people attending social gatherings.
However, on closer inspection, the Scottish rule differs from that for England in two key respects.
It is more restrictive in limiting the six people to two different households and more flexible in exempting children under the age of 12.
This is devolved decision making in action as never before.
Some argue divergence across the UK is confusing and undesirable, but opinion polls consistently suggest the Scottish public trust Holyrood to set the pace.
After a period in which Conservatives argued that Scotland should leave lockdown in lockstep with the rest of the UK, a multi-speed approach became accepted.
The pandemic, however unwanted, has given Ms Sturgeon an opportunity to demonstrate leadership and the public seems to appreciate that too.
An Ipsos Mori survey for BBC Scotland in May suggested 82% of people thought Ms Sturgeon was handling the pandemic either very or fairly well.
By contrast, only 30% from the same sample of around 1,000 Scottish adults gave Boris Johnson similar credit.
More recent polling has produced similar indications even although coronavirus outcomes are not profoundly different between the UK nations.
The Office for National Statistics reported that England had the highest increase in excess deaths in Europe to the end of May. At that point, Scotland had the third highest behind Spain.
While politicians of all stripes have been working to suppress coronavirus, coronavirus has suppressed much of our everyday politics.
Previous Holyrood priorities like completing an expansion of free childcare, introducing new devolved benefits and reviewing the school curriculum have been deferred.
Major controversies such as the Scottish government’s mishandling of complaints about the behaviour of the former first minister, Alex Salmond, seem less potent.
The Scottish government parked preparations for an independence referendum in 2020 to prioritise its response to the pandemic.
That has not meant opinion on the major constitutional question in Scottish politics has remained static.
As coronavirus has swept the country, a trend has emerged in opinion polls suggesting there is now majority support in Scotland for independence.
Some analysts suggest this could be directly linked to the focus on devolved leadership in the crisis.
The trend has worried Conservatives enough to change their Scottish party leader and some in Scottish Labour have unsuccessfully tried to change theirs.
Those who favour the union point out that Scotland has been supported by what they call the “broad shoulders” of the UK economy throughout the pandemic.
Lockdown is largely underwritten by the Treasury with huge funding for furlough and other schemes to support business.
Nationalists say this help would be replicated by Holyrood if it had the economic powers of independence.
Unionists question the scope for doing so in a country which, as a devolved part of the UK, had a notional deficit of £15bn before the pandemic took full effect.
Economics will always be important in the debate over independence as will the public’s sense of identity.
In the 2014 referendum, Scotland voted 55%-45% for continued union. If indyref2 was held tomorrow, the polls suggest the result would go the other way.
There is much that could sway opinion further – both for and against independence – in the coming months.
The economic crisis the pandemic brings, the impact of Brexit and the efforts of politicians to overcome the continuing health emergency could all have a bearing.
The public could weary of politicians telling them what they can and can’t do especially if their livelihoods are on the line.
Arguments over all this and more will find expression in the campaign for next May’s Holyrood elections.
Together with elections to the Welsh Assembly and local government in England, these will be the first major votes of the pandemic.
A pandemic that has already given new definition to devolved power and could be playing a role in shaping opinion on the future of the Union
The two most divisive events in US politics are about to take place at the same time – CNN
‘What was then a hypothetical is now a reality’
‘Nobody’s buying this’
Vaughn Palmer: 'The best way forward is to put politics behind us,' says Horgan – Vancouver Sun
Article content continued
“This has not been a time of instability in government,” she told reporters in blasting Horgan for calling an election that was as unnecessary as it was irresponsible. “This has been a time of unbelievable co-operation and collaboration for the people of B.C.”
The Greens (including Weaver) provided the NDP with the necessary support on every confidence measure over three years and counting.
“We have adhered to every part of that (CASA) agreement,” insisted Furstenau. “But what that agreement didn’t stipulate was absolute total obedience to the NDP.”
Absolute total obedience to the NDP.
There, I suggest, is what Horgan actually seeks with this election call: an obedient legislative majority that he can bend to his will, as surely as he has already stifled those skeptics in the party and government who questioned the wisdom of an early election.
“The final decision rests with me and me alone,” Horgan told reporters Monday. “I take full responsibility for it.”
In one breath, he insisted that he wasn’t presuming he would win the landslide suggested by the opinion polls: “I am not taking anything for granted.”
In another breath, he made it sound as if victory was already in the bag: “I have never been more confident that this is the time to ask British Columbians where they want to go.”
Then came a real thigh-slapper: “The best way forward is to put politics behind us,” said Horgan.
Right. Nothing like double-crossing your allies and springing an unnecessary election in the midst of a global pandemic to put politics behind us.
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