The Man is confused. So I guess it's OK if the rest of us are too.
We tend to think of corporate America as a monolithic bloc of mostly middle-aged men with a prescribed set of views. Politically, they're moderate to conservative (though not necessarily represented these days by the angry mob the Republican Party has become). They believe in low taxes, law and order, and whatever else is good for business. The less government the better.
But suddenly, it's not easy being corporate. The most prominent rupture in big business's united front is the exodus of firms from the U.S. Chamber of Commerce, a stalwart old-establishment trade group and one of the most powerful business lobbies in Washington. The chamber opposes legislation to reduce greenhouse-gas emissions and has even suggested that global warming, now regarded as a significant problem by most scientists who have studied it, doesn't exist. The chamber probably feels it is fulfilling its historic mission to keep government out of business's way, using whatever hardball tactics are necessary.
But this time, big business doesn't necessarily agree. Apple (NASDAQ:AAPL) and three big utilities, Exelon (NYSE:EXC), PNM Resources (NYSE:PNM), and PG&E (NYSE:PCG), have resigned from the chamber in protest of its stance on global warming. Johnson & Johnson (NYSE:JNJ), General Electric (NYSE:GE), and Nike (NYSE:NKE) have said the chamber doesn't represent their views on the issue either, though they've remained as members. It's certainly true that from time to time individual firms with particular constituencies break ranks with industry at large. But Apple, J&J, GE, and Nike are weather-vane firms that reflect broader societal trends, and this feels like a pivotal shift, not a passing parochial moment. The Mad Men running the Chamber of Commerce are stuck in a time warp.
But they're no worse off than hundreds of corporate leaders trying to figure out where they stand on healthcare and financial reform. The instinctive corporate response to any government reform is to kill it. Let business handle its own problems. But big companies bear a huge burden for our broken healthcare system, since they pay the lion's share of the insurance premiums that go up by multiples of the overall inflation rate every year. CEOs of American companies see up-close how exorbitant U.S. healthcare costs create a competitive disadvantage compared with foreign firms whose employees get government-subsidized healthcare. For small businesses, healthcare is an even more acute problem, since insurance is often so expensive that they can't offer it to employees or afford to hire full-time workers.
But deciding what to do about healthcare is much tougher than agreeing there's a problem. The central question on healthcare reform isn't whether we need it. It's who will pay for it. And businesses don't want to. So industry groups like the Business Roundtable, the National Association of Manufacturers, and the National Federation of Independent Business are only tepid supporters of healthcare reform. The alphabet-soup groups acknowledge the obvious problem of backbreaking costs. But they support only reforms that will unambiguously benefit their member companies—like better information technology or more competition among insurance companies—while fighting measures that would impose costs, like a tax on the most generous insurance plans or a requirement that businesses provide health insurance. So they've become marginalized players mainly fighting against the most important proposals in Congress—the ones that would come up with ways to cover more people and eventually drive down costs.
Corporate leaders are just as tortured about how to fix the cratered financial system. The U.S. Chamber of Commerce and other industry groups fiercely oppose the new Consumer Financial Protection Agency that President Obama has proposed. The banking industry—intact thanks only to billions in taxpayer loans—is fighting pay caps, tougher regulations, and other fixes meant to rein in the banker-barons and prevent another financial collapse.
A few corporate bosses see the folly of telling politicians and their laid-off constituents, "Don't worry; trust us." Goldman Sachs (NYSE:GS) CEO Lloyd Blankfein pulled his head out of the corporate sand recently to endorse some limits on bankers' pay. JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon has called for the elimination of golden parachutes and other excessive perks, along with a few other reforms. But Blankfein and Dimon—smart cookies whose firms were among the first to return federal bailout money—know that they're likely to get whacked with new rules no matter what, and accepting modest reforms might be a way to pre-empt more onerous ones. Many of their colleagues are less enlightened, and the stage is set for a huge battle between politicians out for blood (and headlines) and bankers who believe with religious zeal that government intrusion will wreck their industry and bring Western civilization to a screeching halt.
Dissension is sometimes mistakenly viewed as a bad thing. It often indicates progress. We might have to go back as far as the 1960s to find a similar time when myriad pressing problems required fresh thinking and an assault on institutional resistance. The '60s were a messy time, but out of the froth came the Civil Rights Act, Medicare, Head Start, and the Clean Water Act of 1972, all of which faced bitter opposition at some point but are generally viewed years later as key moments of progress.
The splintering of corporate politics today could likewise indicate that important watershed moments lie ahead. Big business has logrolled many environmental initiatives over the years, but at some point it will simply be good business to line up with public sentiment and support change. Opposition to a public healthcare option or other reforms controversial now could end up looking as retrograde as opposition to the initial concept for Medicare (by groups as august as the American Medical Association, which ultimately changed its view). And it's stunning that anybody on Wall Street has the gall to oppose reforms after institutionalized greed wrecked the entire economy. But a herd mentality shifts only when a few rogues start to move in a different direction and a few others follow them. That's happening now.
Disclosure: no positions