Jeffrey Sonnenfeld, a legendary business professor and associate dean at the Yale School of Management, has watched this split grow in recent years, and has heard it from CEOs he knows and works with. What the GOP cares about and what major businesses care about are, increasingly incompatible, he says.
“The political desire to use wedge issues to divide—which used to be fringe in the GOP—has become mainstream,” Sonnenfeld says. “That is 100 percent at variance with what the business community wants. And that is a million times more important to them than how many dollars of taxes are paid here or there.”
Over the weekend, Sonnenfeld hastily organized a Zoom conference with roughly 100 major corporate executives to talk through the voter restrictions being considered by state legislatures throughout the country, and about the way top Republicans like McConnell and Ted Cruz are responding with attacks on businesses that speak up in opposition.
Most of the CEOs on the call were Republicans; Sonnenfeld himself has been an informal adviser to Republican and Democratic presidents, but he has a longstanding relationship with McConnell, and spoke at the senator’s wedding to Elaine Chao. The CEOs “ranged from amused to outraged” in their reaction to the GOP attacks on businesses, says Sonnenfeld. “Their comments ranged from talk about ‘taxation without representation’ to the paradox of ‘cancel culture’: It’s OK if they speak out, but only as long as they stay on script?”
As the GOP tries to position itself as the home of “working-class values,” capturing loyalty with a steady campaign against the perceived excesses of progressive culture, it’s running afoul of a business community that can’t simply silo off “culture war” topics. In the eyes of major corporations, issues like voting rights, immigration and transgender-inclusive restrooms have economic impact, too. The millions of people alienated by those fights aren’t just their future customers, many of whom expect to support brands they believe in, they’re the companies’ employees.
“The bad news for Republicans is that they seem to have a 1920s view of who Big Business’ workforce is,” says Sonnenfeld. “That workforce is, at a minimum, highly diverse—and they get along. Trying to stir that up is misguided.”
The new Republican penchant for mocking corporations for being too socially aware—for instance, Sen. Ted Cruz’s Twitter threat to use the power of the state to harm Major League Baseball’s business, signing the message off with “go woke, go broke”—fundamentally misunderstands what matters to business in the 21st century, says Sonnenfeld. “Basically, business leaders believe that it’s in the interest of society to have social harmony. … Divisiveness in society is not in their interest, short term or long term.”
If the marriage between the Republican Party and the business community is on the rocks, what does that mean for politics? What do we misunderstand about what really matters to CEOs? And why aren’t business executives more afraid of boycott threats from the right?
For answers to all of that and more, POLITICO Magazine spoke with Sonnenfeld this week. A condensed transcript of that conversation follows, edited for length and clarity.
In the last couple of weeks, we’ve seen major business come out in strong opposition to changes to election law in Georgia and other states. Over the weekend, you helped organize a phone call with around 100 corporate leaders to discuss it all. Tell me about that.
Yes. As anxiety was rising, I invited 120 CEOs on 48 hours’ notice. I thought that if I was lucky—on such short notice, and on a Saturday competing with the Masters [golf tournament]—we’d get maybe 10 to show up, thanks to my personal relationships. But 90 actual CEOs and business leaders showed up, and 120 people were on the call, including the various election and legal experts.
There were some who are interested in trying to find out what happened in Georgia. There was an explanation by the Georgia business leaders of how, in fact, they were working assiduously backstage [on the Republican bills to overhaul election laws in the state] and thought they’d taken out 95 percent of the bad stuff. It turned out they’d gotten 80 percent out; they didn’t realize that left in there was the [legislature having the ability to suspend] county officials who are elected to be in charge of voting. As was pointed out, the Carter Center in Atlanta certifies elections around the world as being democratic or undemocratic on just that basis; they have poll watchers around the world to prevent this kind of thing.
But Georgia was not the focus; that was just the warning shot. The volley over the bow is that we had business leaders from Texas saying, “You don’t know what bad is,” and looking at this spread [of voting rights restrictions] to 47 state legislatures. Michael Waldman, the head of the Brennan Center, gave an analysis of how bad [the proposals are] in these different states.
This November, for the first time in American history, [major business leaders] worked to guarantee millions of workers paid time off to vote. We’ve never had that before—and that’s a bypass around government, with its inability to make Election Day a national holiday. So they created their own workarounds. But on top of that, they were really proud that they managed to have—these particular companies—over a million workers with a full day off not only to vote, but to help fortify elderly voting-site volunteers who were at risk for Covid and [had to handle] the tidal wave of ballots. They did so much, and they were so proud that this was the largest, fairest, most secure election in U.S. history. And to have [the election] condemned [by Republicans] after the companies put so much into ensuring that, they’re pretty upset.
What was the reaction among CEOs to all the recent criticism from Republicans?
Well, they ranged from amused to outraged. Their comments ranged from talk about “taxation without representation” to the paradox of “cancel culture”: It’s OK if they speak out, but only as long as they stay on script?
I think the clarion call that actually got this ridiculously high participation rate on such short notice was, in fact, Senator Mitch McConnell’s paradoxical call to action for CEOs. [Last week, McConnell gave a speech in which he told corporations to “stay out of politics,” with the caveat that he did not mean that they should stop making campaign contributions.]
Despite your extraordinary range of Washington contacts, I bet I’m the only person you’ve interviewed that actually spoke at Mitch McConnell’s wedding. Only three of us spoke: It was the ambassador to the People’s Republic of China, the ambassador to Taiwan, me—and maybe Elaine [Chao’s] father. I have a nice relationship with Mitch. I admire him, and I’m glad he walked back his statement. It missed the mark.
The CEOs were across the political spectrum. But one thing they were unified about was their right to have a voice, and the importance of fortifying each other when they get out in front on an issue.
It is kind of like 2017 after Charlottesville, when Merck CEO Kenneth Frazier spoke out against President Trump’s failure to condemn white supremacist hate groups and left Trump’s American Manufacturing Council. At first, the business community wasn’t sure if they were all going to leave [Trump’s various business advisory councils]. But some, like Dave Abney, the chairman of UPS, said Trump’s attack on the character of Ken Frazier [after Frazier resigned] was unjustified. And the Business Roundtable came out with a statement from more than 200 business leaders. They rallied around one another. That was remarkable. It was a clarifying moment, and they came out to make a unified statement—and that’s why we’re here right now.
Earlier you told me something that I can’t let pass by: You spoke at Mitch McConnell’s wedding?
Yeah. I’ve known them for a long time. And I’ve been friends with Elaine for some 40 years. [Pause] It’s never been mentioned anywhere before. I thought I owed you that. [Laughter]
I appreciate it. You mentioned this wide range of political beliefs among the business leaders on the call. I imagine that many of those CEOs are somewhat conservative. Are they alienated from the GOP? How would you characterize their politics right now?
Yes, this group was about 70 percent Republican and easily 60 percent conservative, even if they are Democrats. It was a clear act of defiance just to be on the call. But that doesn’t mean that they all agree with each other on the different options available for corporate response.
What we’re seeing right now from business leaders is sort of this gangly return to adolescence to say, “We’re not going to be defined by the parentage of either political party.” Lord knows who misclassified very honorable, legitimate social democrats as “progressives.” Bernie Sanders, Elizabeth Warren, AOC—[it’s] great what they do, but they’re social democrats; not “progressives.” Progressives—Teddy Roosevelt ran on that ticket. So did “Fighting Bob” LaFollette, a Republican senator [and 1924 Progressive Party presidential nominee], with Burton Wheeler, a Democratic senator, as his running mate. They were fighting for bridges and dams and immigration, for urban beautification, the settlement houses of Jane Addams, safe workplaces.
That’s what “progressivism” is and was. And that’s the theory [that animates] Joe Biden and Mayor Pete [Buttigieg] and Amy Klobuchar and maybe Mitt Romney. That’s who progressives are. And that’s where the business community is: They’re pretty much somewhere between Mitt Romney and Joe Biden.
Are there other issues where business leaders feel alienated from the GOP, or is it mainly around these questions of having a basic functioning democracy?
The business leaders, to a person, were trying to explain: They don’t like being politicians. They’re not public officials. But trying to create and fortify social harmony is absolutely directly in the strategic context of what CEOs do—although the Wall Street Journal editorial board [which has been critical of business leaders for speaking out against the Georgia law] doesn’t seem to understand that.
Since [Herbert] Hoover, the Republican Party has been identified as the party of Big Business. Well, the bad news for Republicans is that they seem to have a 1920s view of who Big Business’ workforce is. Whatever they have in mind when they think of “Joe Six-Pack,” the reality is really different. That workforce is, at a minimum, highly diverse — and they get along. Trying to stir that up [in a “culture war”] is misguided. The business community’s interests are not to be xenophobic. It’s not in their interests to be isolationist. It’s not in their interests to be protectionist. And the GOP, those haven’t been their positions, at least since the 1950s. But now they are.
Basically, business leaders believe that it’s in the interest of society to have social harmony. The CEOs really care about these issues. Divisiveness in society is not in their interest—short term or long term. They don’t want angry communities; they don’t want fractious, finger-pointing workforces; they don’t want hostile customers; they don’t want confused and angry shareholders.
The political desire to use wedge issues to divide—which used to be fringe in the GOP—has become mainstream. State by state, party has taken that path. That is 100 percent at variance with what the business community wants. And that is a million times more important to them than how many dollars of taxes are paid here or there.
If [corporate tax rates] go from 34 percent to 27 percent instead of 22 percent, they’re way less concerned about that. There’s too much focus on taxes. On taxes, what we’re seeing is, in fact, CEOs are willing to concede. There’s a lot of ground there. You’ll get anywhere from [JPMorgan Chase CEO] Jamie Dimon and Bill Gates to Jeff Bezos saying, “We’ll give a couple of dollars on tax.”
They’re interested in free markets—whether or not that’s product markets, financial markets or labor markets. It’s about the image and reality of America: “Give us your tired, your poor, your huddled masses,” Emma Lazarus’ poem on the Statue of Liberty. That’s the spirit of it. But it’s also this: If the U.S. is not seen as a comfortable, attractive magnet for the world’s best talent, we’re in trouble. We don’t want all this technological expertise to be siphoned away to our trading partners, and that’s starting to happen.
[Business leaders] are upset about immigration policies. Around this time last year and into the summer, the universities were somewhat inept in their lobbying efforts [on the issue], and even the immigration attorneys were underperforming. They were kind of relying on the same K Street nomadic lobbyists who hop around from place to place, shun controversy, don’t want to create waves, who were kind of checking boxes but not having a meaningful impact. It was the business leaders, four major tech companies in particular, who went off to see Jared Kushner—and I know this point blank; I was in the middle of it, and this has not been out there, by the way—and say, “You can’t condemn us for outsourcing this work to China or India if we can’t bring these highly skilled workers here. We’re already now leasing space in Vancouver and Toronto, and we’re working on wiring the infrastructure so this will be on U.S. time zones. If we can’t get [these skilled workers] into the U.S., we’re still going to function as a North American company with the talent we need.”
They have different priorities [than the Republican Party seems to think]. They’re upset about the [anti-LGBTQ] “bathroom bills.” They’re upset about gun violence; hundreds of companies severed ties with the NRA or stopped dealing in semiautomatic weapons—from Walmart to Dick’s Sporting Goods. As we talk about “regulatory rollbacks” during the Trump administration, they were almost entirely EPA-directed; nobody was lobbying for that in corporate America. With the automakers, it became the entire industry fighting the [Trump-era] EPA, saying, “We like working with California. We think that in addition to what we’re doing with hybrids and [electric vehicles], we are pretty sure that we can get a 50-mile per gallon efficiency in the old-fashioned internal combustion engine. Don’t stop us.” So [Attorney General Bill] Barr was told to unleash the antitrust division to sue the auto industry for conspiring in [agreeing to stricter environmental standards]. It was ridiculous.
You’ve spent a lot of your time at Yale working with business leaders and studying how they think. I’m curious how a CEO makes the calculation of whether or not it makes sense to speak out about an issue. Can you walk me through that?
Yeah, there are five parts, really.
First, they have to know what is in the strategic interests of the business. As a steward of other people’s resources, they have to be mindful that it can’t just be their personal values alone—and when it is, then they have to be willing to put their job on the line, as Ken Frazier did at Merck [following Trump’s comments after Charlottesville].
Second: Is it a defining element of their brand? How does it reinforce their brand and their brand values? Google retreated from China because of invasions of privacy and theft of intellectual property. They drew a line in the sand about what their brand is. Frankly, Apple did not.
Third: If the issue itself is divisive, who else is involved and why? With these [anti-transgender] “bathroom bills,” the companies that led the charge against the euphemistic “religious freedom” acts in Arkansas, Indiana, North Carolina and Texas — amazingly — were AT&T, UPS and Doug McMillon [the CEO] of Walmart. They were out front. I mean, Patagonia was there, Howard Schultz of Starbucks was there, Nike was there, Tim Cook of Apple was there, but they joined later. It had such force because these were not considered political extremists or edgier companies; this was coming from the heartland. When companies like that get involved, it has an effect.
Fourth: Is the particular issue one where remaining silent is itself a stance? On many of these issues—such as voting access, or whether the president was elected in a truly honest election—there’s no middle ground; it’s a dichotomous yes or no. Some companies waffle, trying not to make enemies. You can’t get away with that anymore. Your silence is acquiescence; it is a decision. You’re making a decision: Your silence is a decision. And when you recognize that, some of these issues are so salient and so critical that you have to take a position.
Fifth: We know from surveys that the CEO is the most trusted voice in society right now. That wasn’t the case [years ago]. Right now, both your line of work and my line of work have lost a step [in the public eye]. Elected officials at every level—city, county, state, federal—have all been knocked down a peg. Clergy? Lord knows their standing has suffered.
Whose standing has not only been steady, but actually, weirdly, gone up in all these polls that usually agree on very little else? Business leaders and military leaders. They are the most respected pillars in society—and the military can’t have a political voice, so [business leaders] realize they have to speak up. If they see a dangerous slide toward anti-democratic or tyrannical movements, they have to speak up, and it’s in their own self-interest.
And how do they consider the potential risks of coming out with a stance, like the potential for a boycott?
We’re seeing a courage for business leaders to speak out and not worry about being criticized as “woke” or as pressured. They have learned they can take courageous stands and maybe muscle their way through it. The blowback, they’ve learned to anticipate it. Boycotts? They have gotten through that. Some of them, like Nike, realized that they could wear it as a badge of honor.
When Matt Levatich of Harley-Davidson had to try to get product into Asia, because of retaliatory trade barriers that made it difficult to get Harley-Davidsons in Asia—this was Trump’s initiative—he had to shut down their plant in Kansas City. They still had one Racine, Wisconsin. They still had one York, Pennsylvania. But they had to shut this one down to create products in Asia for Asia. President Trump said, “Boycott Harley-Davidson.” My gosh. That’s like boycotting apple pie, baseball and Coca-Cola. I mean, the iconic symbol of Harley-Davidson is the American eagle, of all things. The president says not to buy Harley. Well, who is their only real pernicious competitor? It’s Hero Honda, which has a much larger market share worldwide. This is “Make America Great Again”?
Same thing with what Trump did with Goodyear tires: Goodyear has had a long-standing, decades-old policy of not allowing [employees to wear] political campaign paraphernalia in the workplace. So Trump went after Goodyear [in protest of them not allowing employees to wear MAGA merchandise at work], saying, “Don’t buy Goodyear tires,” telling people to buy the competition. Well, who’s that? It’s not U.S.-based companies: It’s Italian-owned Pirelli and French-owned Michelin in Europe; it’s Japanese-owned Firestone-Bridgestone in Asia. It’s counterproductive.
CEOs have learned to not be afraid of these boycotts. They have to take positions.
Even when you’re really beholden to very strong individual clients [the loss of which] can hurt a professional partnership, you might think they would worry [about speaking out]. But you take a look at somebody like, say, Brad Karp of [the white-shoe law firm] Paul, Weiss: Over the last week, he has 60-some of the nation’s largest law firms banded together, ready at a moment’s notice to have SWAT teams of election law experts fanned out to any of these states considering legislation to restrict voting rights. They have the confidence to work collaboratively as problem solvers.
Last question: In terms of its political involvement, where do you see business going from here?
So the huge takeaway is that there are things that are specific to their industry that they can do that aren’t just uniform policy statements—as we saw with Apple and Will Smith this week [announcing they’re pulling the filming of a new movie out of Georgia in protest of the state’s new voting laws]. Some of my colleagues and people in the social advocacy fields want to have these grandiose policy statements and all these petitions. OK, great, fine. But there’s actually a whole menu of actions available that are specific to the companies. And a lot of it’ll be driven through the collective action of people who have a shared fate.
We see this with airline industry getting together, or companies within Georgia or Arkansas or Texas getting together—wherever they have a shared fate. We’re seeing business communities finding a new sense of collective civic duty. And I have the utmost enthusiasm about that.