In New Political Status Quo, Big Business Bucks the Right
August 16 2017 - 12:38PM
Dow Jones News
By Greg Ip
In January, conservative legislators in Texas backed by Gov.
Greg Abbott introduced a bill to regulate transgender access to
public facilities such as bathrooms. That proposal went down to
defeat Tuesday thanks in part to vociferous opposition by business
leaders who condemned it as discriminatory and bad for the state's
economy.
In a business-friendly state where Republicans control the
entire government, it's a stunning rebuke. It's also not an
outlier. On Monday, the chief executives of Merck & Co., Intel
Corp. and Under Armour Inc. all quit President Donald Trump's
manufacturing council after his failure to immediately blame white
supremacists for weekend violence in Charlottesville, Va.
These episodes show how big business has become, at least on
social policy, a check on Mr. Trump and other Republicans,
ordinarily their allies.
Politically, business leaders are risk-averse. They prioritize
stability and the status quo. What has changed is the definition of
the status quo. Gay and transgender rights, and taking action on
climate change, were once liberal causes. They are now largely
mainstream, particularly in big cities that are home to corporate
head offices and the educated workers they covet. Businesses have
adapted their own plans, policies and attitudes to this new
mainstream. White supremacy, of course, isn't in the mainstream,
but for some companies, being associated with a president who
didn't clearly condemn it poses risks.
This changes the cost-benefit calculus for corporate executives:
Speak up and embroil yourself in unwelcome controversy, or stay
silent and invite the opprobrium of customers, employees, social
media, foreign governments, and, for some, their own families and
consciences. Increasingly, they have concluded that inaction is the
riskier path. Merck Chief Kenneth Frazier quit Mr. Trump's
manufacturing council despite his company's exposure to federal
decisions on drug approvals and prices. Google fired an engineer
who asserted biological reasons for why women are less suited than
men for tech careers, drawing accusations of liberal
intolerance.
Typically, business has been a follower on social issues.
Anthony Chen, a sociologist at Northwestern University, recounts
that in the 1950s businesses resisted equal-employment ordinances
across the Northeast and Midwest until change became inevitable. In
the 1960s, Southern hotels, lunch counters, restaurants and other
businesses didn't back desegregation until the cost of sit-ins,
protests and bad publicity came to surpass any potential loss of
white customers. Once they opened themselves to black customers,
sales boomed, Stanford University historian Gavin Wright wrote in
2008: "It is small wonder that so many Southern businessmen began
to change their tune on the race issue at this time."
Business opposition to the Texas bathroom bill was in great part
driven by fear of the boycotts North Carolina experienced after
passing a similar bill in 2016. ( That measure was watered down
earlier this year.) The Texas Association of Business, the state's
main business-lobby group, gathered more than 700 signatories in
opposition, including the chief executives of Texas-based American
Airlines Group Inc., Celanese Corp. and AT&T Inc. IBM Corp.
warned the bill imperiled future hiring in the state where it now
employs more than 10,000. This apparently swayed many state
legislators, who adjourned their special session Tuesday without
acting on the bill, thus killing it.
Business motives are more complex than just fear of bad
publicity. Many companies were actually on the vanguard of
extending equality to gays, and more recently transgender people,
partly in order to attract employees or customers. Half of Fortune
500 companies provide transgender-inclusive health benefits -- up
from none in 2002 -- and 61% offer domestic-partner benefits to gay
couples, according to the Human Rights Campaign, which advocates
for gay and transgender people. Restrictive legislation conflicts
with those policies.
A similar dynamic is under way on climate. Nearly half the
Fortune 500 has some sort of internal target for greenhouse-gas
emissions, renewable energy or efficiency, according to the Carbon
Disclosure Project, which advocates for climate action. Mr. Trump's
decision to withdraw the U.S. from the Paris climate accord ran
counter to their adoption of low-carbon technology.
For some executives, the considerations go beyond the economic.
The bathroom bill "is not just going to hurt our business and our
employees, it's a moral imperative not to discriminate against this
already marginalized group of people," says Jim Reinhart, the head
of Tekvox Inc., an Austin-based audio-visual technology startup
that is part of the coalition that opposed the Texas measure. He
told the state senate it exposed Texas to ridicule: "It makes us
look like backward, bucktooth hillbillies."
The many technology companies that spoke out against Mr. Trump's
proposed travel ban earlier this year were bothered less by any
loss of foreign workers than its perceived stigmatization of
Muslims.
This pushback against the right on many issues means Mr. Trump
and Republicans can't count on reflexive support from business
simply because they promise to cut taxes and regulations. That
Merck's stock initially rose after Mr. Trump lashed out at Mr.
Frazier for quitting the council won't go unnoticed by other CEOs
contemplating a similar decision.
This offers Democrats an opening to grab business's support,
although that could be difficult to reconcile with internal
pressures to move left on economic issues. Business could find
itself a counterweight to both parties, its loyalty up for
grabs.
Write to Greg Ip at greg.ip@wsj.com
(END) Dow Jones Newswires
August 16, 2017 12:23 ET (16:23 GMT)
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