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AS AMERICA’S presidential election approaches the country’s business class is in its weakest political position for decades. Twenty years ago both parties competed to be the most pro-business. Today they compete to denounce the malefactors of great wealth. The most startling change is that business has lost control of its ancestral party, the Republicans. Donald Trump may well embody many an American business type: somebody who inherits a fortune and goes on to make it even bigger. But he has taken over the Republican Party by channelling blue-collar anger against all elites.
Mr Trump has trashed free trade, liberal immigration rules and other corporate non-negotiables. Big companies have shied away from donating to his campaign. Meg Whitman, the boss of Hewlett Packard Enterprise, has called him “reckless and uninformed”. Tom Donohue, head of the United States Chamber of Commerce, has described his policies as “pretty sort of stupid”.
All this has driven lots of business people to cross the political aisle: an Ipsos poll shows that 53% of those earning $250,000 or more (the top 5% of households) plan to vote for Hillary Clinton, compared with 25% who intend to vote for Mr Trump. Yet the Democratic Party is hardly a comfortable home. Mrs Clinton may share her husband’s enthusiasm for business, but her party has shifted sharply leftward since the 1990s. She has abandoned her former support for the Trans-Pacific Partnership trade deal and unveiled a slate of policies for micromanaging the business world, such as “nudging” companies to invest long-term.
There are big structural reasons why business finds itself homeless. The financial crisis of 2008 and the prolonged stagnation that followed have poisoned the well of pro-business feeling. The political system has become more hostile to liberal Republicans (a near-extinct breed anyway, most of them from the north-east) and conservative Democrats (many of them from the South) who supported pro-business policies.
That said, business has also contributed to its own problems. The elite is increasingly divided between big businesses (which have done relatively well in recent years) and small business (which has suffered), and between knowledge-based industries (which like to flaunt their cultural liberalism) and Main Street firms (which are more traditional). Business has also lost its old claim to bipartisan respect. Companies have focused on campaigning for their narrow commercial interests. Washington is packed full of lobbying shops and industry groups that concentrate on stuffing legislation with titbits or creating special privileges. Those business groups that have continued to dwell on broader problems have thrown in their lot with the radical right. This made sense in the 1970s, when America needed to undo the New Deal economic model to cope with competition from Japan and the Asian tigers. But it has become counter-productive as the conservative movement has turned increasingly doctrinaire. After the presidential race of 2008 many leaders of small businesses supported Tea Party activists, who want to destroy the state despite the fact that the real challenge lies in reinventing it; Michael Porter of Harvard Business School points out that America’s public investment in transport infrastructure is a lower proportion of its GDP than either Europe or China.
What should business do about its newly homeless state? One argument is that it should just wait for the inevitable return to normality. This is short-sighted. The populist wing of the Republican Party is probably here to stay (and Mr Trump is likely to keep stoking its anger with a new television channel). Mrs Clinton will face formidable opposition from new liberal lions, such as Bernie Sanders and Elizabeth Warren, if she tries to move to the right (ironically, the fact that she has spent so much time giving highly paid speeches and hobnobbing with billionaires will make it harder for her to move to the centre).
The current anti-business mood is more than a local squall. Messrs Trump and Sanders have their counterparts across the world: Britain voted for Brexit despite vigorous opposition from business leaders. The millennials increasingly associate business with crookery rather than prosperity. One poll, conducted by Frank Luntz, a Republican, found that only 2% of his respondents in the 18-26 age group respected bankers and only 6% admired business people. For a striking number of young people the business of America is not business, but atoning for past sins.
Back to basics
Business elites need to recover their sense of collective mission and collective responsibility to fight these deeply rooted changes. They must improve the image of business; the majority of ordinary people own America’s giant corporations through their pensions, so “they” are actually “we”. Business needs to rethink support for anti-government radicals and look at fixing America’s most obvious problems: its deteriorating infrastructure, a labyrinthine tax code, a second-rate education system, stagnant wages for average workers, and poor productivity growth. Such pragmatism would align business with the broad mass of Americans who worry that a polarised political system is contributing to the country’s woes: there are substantially more Americans who identify themselves as independents (42%) than either Democrats (28%) or Republicans (28%).
The American businesses have an impressive record of helping the country address its deepest political problems. In the mid-19th century the northern business elite embraced “internal improvements” and opposed slavery. During the second world war, business leaders helped turn the country into an arsenal of democracy. In the 1970s and 1980s they embraced deregulation and tax reform. It is time for American business to recover its public spirit—or it will enter the next presidential election in an even weaker position than it is in today.
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