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The Myth of the Monolith

Giving Washington the Business:
The Myth of the Monolith

Fully 70% of the several hundred major CEOs we surveyed at our Yale CEO Summit this past spring said that the voice of business is not being clearly heard in Washington.

CEM_SONNENFELD_GSThe expression “What’s good for General Motors is good for the U.S.,” was attributed to President Eisenhower’s secretary of defense, Charles Wilson (formerly the CEO of General Motors) in his Senate confirmation hearings. This somewhat distorted quote, in fact reversed in meaning, was emblematic of the sense of alignment U.S. business leaders believed they enjoyed with the American public.

By contrast, among the unconventional aspects of the 2016 presidential election, politics has been the attack on mainstream business by the candidates of both parties. Political action committee funds from corporations and their employees are overshadowed with individual mega donors.

Anti-corporate backlash is registered in hostility toward federal bailouts, diluted financial system reforms, globally competitive tax reform, immigration reform, unfair trade agreements, tax base inversion and U.S. trade promotion.

These business priorities have been condemned as “crony capitalism” equally by voices on the left—such as Joseph Stiglitz, Bernie Sanders and Elizabeth Warren—and voices on the right—such as Bill Kristol, Sarah Palin and Rush Limbaugh.

Recent shareholder letters by CEOs ranging from GE’s Jeff Immelt and JPMorgan’s Jamie Dimon to Apple’s Tim Cook and Starbucks’ Howard Schultz increasingly voice open frustration over limited policy influence. In Immelt’s words, “The difficult relationship between business and government is the worst I have ever seen it.”

“The difficult relationship between business and government is the worst I have ever seen it.
—Jeff Immelt, CEO, GE

Fully 70% of the several hundred major CEOs we surveyed at our Yale CEO Summit this past spring said that the voice of business is not being clearly heard in Washington. Similarly, roughly 80% of these CEOs complain that “business trade associations do not fully represent my company’s interests in DC.”

With unprecedented business investment in trade associations and lobbying, the problem is not due to lack of resources. The research for my first book, Corporate Views of the Public Interest, in 1980 chronicled the very first corporate government affairs being opened in DC over the prior decade. In their book, Winner-Take-All Politics, Jacob Hacker and Paul Pierson report a 700% increase in corporate lobbying expenditures over the past 25 years.

Despite some favorable financial service deregulation in the 1990s and pharmaceutical pricing deals with the government in the past decade, some CEOs are questioning the effectiveness of current lobbying.

A second theory is that once-non-partisan corporate leaders draped themselves in Republican Party politics where the alignment of interests was far weaker than promised. A recent Washington Post article entitled “How Big Business Lost Washington” highlighted divergent interests, such as when the business community sought infrastructure investments while the Tea Party-sensitive politicians ushered in government shutdowns and spending sequesters.

A third theory involves the public backlash against the costly corrupt governance breakdowns and the financial industry misconduct over the past two decades. And a fourth has to do with the destabilizing effects of income inequality and underemployment at a time when CEO compensation has soared disproportionately to corporate performance.

The fifth theory, one that lobbyists often bury, is that the U.S. business community does not have uniform interests on far-ranging areas, including energy, the environment, trade, healthcare, privacy, defense and immigration.

The Business Roundtable, the U.S. Chamber of Commerce, the National Association of Manufacturers, the Committee on Economic Development, the Business Council and the National Federation of Independent Business do not find easy agreement within their own ranks, let alone across trade groups. Even within healthcare alone, providers, insurers, big pharma, biotech and device makers have very different interests.

In forest products, interests vary depending upon their reliance on federal lands, global sourcing and exposure to downstream converting versus lumber. U.S. blue chip firms, family enterprises, subsidiaries of non-U.S. firms, banks, hedge funds, entertainment, food producers, retailers, heavy industry manufacturers, biotech, infotech, fintech—each specific sector has unique key priorities that are nearly as different from one another as they are from those of non-business sectors.

Bottom line: The U.S. Business Monolith is a myth.

About Jeffrey Sonnenfeld

Jeffrey Sonnenfeld
Jeffrey Sonnenfeld is senior associate dean, leadership studies, Lester Crown professor of leadership practice, Yale School of Management, as well as president of the Yale Chief Executive Leadership Institute and author of The Hero’s Farewell and Firing Back.