WEBVTT - Voternomics: Why Endorsing Candidates Has Become ‘Terrible’ for Business 0:00:03.160 --> 0:00:17.840 Bloomberg Audio Studios, Podcasts, Radio News. Welcome back to voter Nomics, 0:00:17.880 --> 0:00:21.880 where politics and markets collide. This year, voters around the 0:00:21.920 --> 0:00:26.000 world have the ability to affect markets, countries, and economies 0:00:26.239 --> 0:00:29.600 like never before, so we've created this series to help 0:00:29.680 --> 0:00:30.640 you make sense of it all. 0:00:30.960 --> 0:00:32.360 I'm Alegri Stratton. 0:00:32.280 --> 0:00:34.839 And I'm Stephanie Flanders, So Steph. 0:00:35.320 --> 0:00:38.280 This week are tackling an issue that I think we 0:00:38.320 --> 0:00:40.680 all think goes to the heart of what voteronomics is 0:00:40.720 --> 0:00:45.200 all about, which is basically boardrooms colliding with election results. 0:00:45.640 --> 0:00:50.040 And the reason it's particularly acute this week is probably 0:00:50.600 --> 0:00:54.440 there's two examples of it. One is what happened at 0:00:54.480 --> 0:00:57.800 the Washington Post over their decision not to endure well, 0:00:57.880 --> 0:01:00.360 their decision not to endorse a candidates at all, and 0:01:00.400 --> 0:01:04.080 whether or not that was complicated by their proprietors business interests. 0:01:04.080 --> 0:01:07.360 And then the second is Elon Musk and his appearance 0:01:07.600 --> 0:01:09.600 not just once on stage for Trump. 0:01:09.560 --> 0:01:12.280 And we had one president who couldn't climb a flight 0:01:12.319 --> 0:01:13.319 of stairs. 0:01:14.400 --> 0:01:20.800 And another who was fist pumping after getting shot, fight 0:01:21.000 --> 0:01:21.720 fight fight. 0:01:22.959 --> 0:01:26.200 Many times over the last last few months. Now, his 0:01:26.319 --> 0:01:30.720 metamorphosis to sort of want to be politician continues to pace. 0:01:31.120 --> 0:01:34.399 Your money is being wasted, and the Apartment of Government 0:01:34.400 --> 0:01:38.920 Divisions is going to fix that make the margin of 0:01:39.040 --> 0:01:41.240 victory so big. 0:01:42.480 --> 0:01:44.560 That you know what can't happen. 0:01:46.720 --> 0:01:48.760 So it's really quite acute this week, isn't it. Steph. 0:01:48.840 --> 0:01:49.000 Yeah. 0:01:49.040 --> 0:01:51.160 I mean we're used to there being lots of big 0:01:51.200 --> 0:01:54.400 corporate money involved in US elections, particularly since twenty ten, 0:01:54.440 --> 0:01:56.160 where there was a sort of big legal ruling that 0:01:56.200 --> 0:01:59.760 made it easier for that to happen, and for just 0:02:00.120 --> 0:02:03.560 asked amounts to go into these campaigns over the years. 0:02:03.600 --> 0:02:06.400 It always makes anyone outside the US there's sort of 0:02:06.440 --> 0:02:10.120 head spin that the billions involved. But I think what 0:02:10.360 --> 0:02:13.320 is obviously distinctive about this season is, on the one hand, 0:02:13.320 --> 0:02:16.120 you have, as you say, the boardroom sort of chief 0:02:16.120 --> 0:02:22.959 executive level people very nervous of engaging even to say 0:02:23.000 --> 0:02:25.720 they support a peaceful transfer of power, which you would 0:02:25.720 --> 0:02:28.920 have thought would not be controversial, and at the same 0:02:29.000 --> 0:02:32.120 time a number of very high prive four billionaires being 0:02:32.320 --> 0:02:36.280 quite you know, quite closely associated with the Trump campaign. 0:02:36.280 --> 0:02:38.440 And we should say there's also been money going on 0:02:38.440 --> 0:02:41.240 the other side, our own founder of Michael Bloomberg and 0:02:41.240 --> 0:02:44.880 also Bill Gates, it turns out, very quietly have given 0:02:45.880 --> 0:02:48.760 up to fifty million dollars to Kamala Harris campaign in 0:02:48.800 --> 0:02:52.400 the last recent weeks. But you know that's sort of 0:02:52.680 --> 0:02:55.320 that's been quite low key in their very large amounts. 0:02:55.320 --> 0:02:57.440 And then you have, as you say, Elon Must very 0:02:57.600 --> 0:03:02.680 publicly not just supporting Donald Trump and amplifying some of 0:03:02.760 --> 0:03:08.200 the rhetoric and misinformation that is associated with the Trump campaign, 0:03:08.680 --> 0:03:14.520 but I think also seeming to specifically have corporate interest 0:03:14.720 --> 0:03:18.639 in Trump winning and potentially a future role in a 0:03:18.680 --> 0:03:21.959 Trump administration. I think that is a whole new ball game. 0:03:22.560 --> 0:03:23.800 It does feel like something's changed. 0:03:23.840 --> 0:03:26.680 Warren Buffett back to Barbara in eight, twelve and twelve 0:03:26.720 --> 0:03:29.360 and then Clinton in sixteen and this time staying out 0:03:29.360 --> 0:03:31.320 of the race. There's more examples of that that we 0:03:31.360 --> 0:03:33.959 could cherry pick, but that feels a particularly striking one. 0:03:34.600 --> 0:03:36.400 I think the question for later in the podcast is 0:03:36.480 --> 0:03:38.760 has something changed or is this a reversion to what 0:03:38.840 --> 0:03:41.840 should be normal? In a moment, you'll hear our conversation 0:03:41.920 --> 0:03:45.320 with Charles Elson. He's a leading authority on corporate governance 0:03:45.360 --> 0:03:48.680 issues and the founding director of the John L. Weinberg 0:03:48.840 --> 0:03:52.040 Center for Corporate Governance. But before we hear from Charles, 0:03:52.040 --> 0:03:54.920 we're going to chat about one CEO who has zero 0:03:55.040 --> 0:03:59.600 qualms about sharing his thoughts and feelings. Elon Musk, our 0:03:59.640 --> 0:04:02.680 colleague exit the podcast eat On Inc. Have created a 0:04:02.680 --> 0:04:05.960 special series about, you know, Musk's meddling in politics. It 0:04:06.040 --> 0:04:08.360 is called Citizen Elon, and we are not going to 0:04:08.360 --> 0:04:13.120 speak with the host, Max Chafkin. Max, did you see 0:04:13.120 --> 0:04:16.480 this coming, the role that Musk is playing in politics? 0:04:16.920 --> 0:04:17.760 Kind of yeah? 0:04:17.880 --> 0:04:21.719 I mean I've been paying very close attention to Elon's 0:04:21.760 --> 0:04:25.320 political evolution over the last couple of years, and with 0:04:25.560 --> 0:04:29.679 the purchase of Twitter now x, he has been trending 0:04:29.680 --> 0:04:33.360 in this direction. I think the surprise to me anyway, 0:04:33.560 --> 0:04:36.360 is just the amount of money that he's spending. You know, 0:04:36.680 --> 0:04:39.360 the latest filings, you know, it's above one hundred and 0:04:39.400 --> 0:04:41.599 thirty million, when when you sort of look at like 0:04:41.680 --> 0:04:43.880 what his pack has spent, the fact that there have 0:04:43.880 --> 0:04:46.159 been some dark money spending as well, that there's other 0:04:46.400 --> 0:04:49.479 potential races, and that there's still time between the last 0:04:49.480 --> 0:04:50.520 filing and election day. 0:04:50.680 --> 0:04:52.760 You know, we're looking at probably. 0:04:52.360 --> 0:04:55.000 Close to two hundred million dollars and that is an 0:04:55.160 --> 0:04:56.640 enormous amount of money. He's going to be one of 0:04:56.680 --> 0:05:00.000 the biggest all time political contributors. And I haven't even 0:05:00.120 --> 0:05:02.839 mentioned the fact that he spent forty four billion dollars 0:05:03.000 --> 0:05:05.880 to buy Twitter now X and that he has essentially 0:05:05.920 --> 0:05:09.760 turned that into a right leaning a sort of campaign 0:05:09.880 --> 0:05:11.880 mechanism for Foreign President Trump. 0:05:12.240 --> 0:05:15.159 Even with those numbers, when you consider the stakes for Tesla, 0:05:15.200 --> 0:05:17.200 for SpaceX and so on, people have called this the 0:05:17.240 --> 0:05:19.080 business opportunity of the century for him. 0:05:19.680 --> 0:05:21.719 That is business, yes, for sure. 0:05:21.839 --> 0:05:24.560 And we've seen this with Foreign President Trump, you know, 0:05:24.640 --> 0:05:27.960 kind of the last go around, like various CEOs attempting 0:05:28.000 --> 0:05:30.960 to kind of leverage the fact that Trump is sort 0:05:30.960 --> 0:05:34.320 of ideologically pretty flexible and that he seems to like 0:05:34.680 --> 0:05:37.640 these sort of CEO types. But you're right, I mean, 0:05:37.680 --> 0:05:40.120 Elon Musk is kind of unique in his position to 0:05:40.120 --> 0:05:43.680 sort of benefit from an association with the former president, 0:05:43.720 --> 0:05:47.159 but also the risks that he faces in terms of regulation, 0:05:47.680 --> 0:05:50.560 you know, from a potential Harris administration. Right he is 0:05:50.680 --> 0:05:54.200 a major defense contractor in SpaceX. He would very much 0:05:54.360 --> 0:05:57.880 like some additional contracts to launch rockets and perhaps develop 0:05:57.960 --> 0:06:02.480 weapons systems or whatever. You have have potential security concerns 0:06:02.520 --> 0:06:05.320 that have been raised at various times. I'm sure he 0:06:05.320 --> 0:06:07.680 would very much like those to go away. You also 0:06:07.800 --> 0:06:11.360 have just like a host of regulatory agencies over the 0:06:11.440 --> 0:06:14.560 last five or so years that have opened investigations or 0:06:14.600 --> 0:06:17.920 have have had investigations, who have been looking into various 0:06:17.920 --> 0:06:21.039 parts of Musk's empire. He would of course like to 0:06:21.080 --> 0:06:24.919 continue to ignore those. And then Tesla, his car company, 0:06:24.960 --> 0:06:27.000 which is, you know, the biggest source of his wealth, 0:06:27.560 --> 0:06:32.159 is very much dependent on regulatory structure that of course 0:06:32.200 --> 0:06:37.039 could change, and is also vuying to launch robotaxis, you know, 0:06:37.080 --> 0:06:40.880 autonomous vehicles, and is hoping to have friendly regulations there. 0:06:41.080 --> 0:06:43.360 So there are all sorts of ways that he's already 0:06:43.360 --> 0:06:45.760 the world's richest person, but that he could become even 0:06:45.839 --> 0:06:47.719 richer if Donald Trump wins in a week. 0:06:48.000 --> 0:06:50.839 Do you think he's expecting a concrete role in the administration? 0:06:51.279 --> 0:06:54.400 I mean, obviously that the President Trump has talked about 0:06:54.520 --> 0:06:59.440 him leading a group to find efficiencies in government, and 0:06:59.480 --> 0:07:02.800 this potential conflict of interests all over that, given the 0:07:02.920 --> 0:07:05.080 amount of contracts he has with the government. But you 0:07:05.080 --> 0:07:07.480 think he's actually expecting to have a role in the government. 0:07:07.640 --> 0:07:10.080 For this is more of a defensive position. 0:07:10.560 --> 0:07:13.640 It's hard to imagine Elon Musk is like a civil servant, 0:07:13.800 --> 0:07:15.240 right Like, I don't know that this is going to 0:07:15.280 --> 0:07:16.760 be a five days a week. 0:07:16.600 --> 0:07:18.520 You can say the saying about Donald Trump being here. 0:07:19.400 --> 0:07:20.760 I don't know that he's going to be you know, 0:07:20.840 --> 0:07:21.720 I don't know if he's gonna. 0:07:21.520 --> 0:07:23.320 Get a badge and show up every day to work. 0:07:23.600 --> 0:07:27.920 But I do think that this role that he has 0:07:27.960 --> 0:07:31.240 announced for himself and that Donald Trump has repeatedly on 0:07:31.280 --> 0:07:34.120 the stump. I was at Madison Square Garden on Sunday 0:07:34.120 --> 0:07:36.280 in New York where Trump had this massive rally. Elon 0:07:36.320 --> 0:07:38.840 played a big role. They were both talking about it. 0:07:39.000 --> 0:07:41.040 Other people were talking about it was getting. 0:07:40.840 --> 0:07:41.920 Huge applause lines. 0:07:42.160 --> 0:07:45.200 The way I interpret this is that Elon Musk will 0:07:45.240 --> 0:07:48.760 have a big voice in how Donald Trump seeks to 0:07:48.920 --> 0:07:52.080 reform the executive branch. He's made that a huge part 0:07:52.200 --> 0:07:55.800 of house, of his campaign and his kind of political project. 0:07:56.040 --> 0:07:58.440 So I don't know that we should expect Elon to 0:07:58.480 --> 0:08:00.880 have cabinet post or something like that. I think it's 0:08:01.000 --> 0:08:04.640 much more likely that he will be effectively a senior advisor, 0:08:04.920 --> 0:08:08.920 maybe the most important senior advisor to the former president. 0:08:09.320 --> 0:08:13.640 Unlike many business people, part of His sort of demeanor 0:08:13.680 --> 0:08:16.000 has often been that you get the sense that these 0:08:16.000 --> 0:08:19.720 companies are like train sets for them, toys, you know, 0:08:19.800 --> 0:08:21.760 that he gets to play with. He kind of has 0:08:21.880 --> 0:08:24.040 that air about him, And I just wondered, does he 0:08:24.040 --> 0:08:25.800 think the US government is now going to just be 0:08:25.800 --> 0:08:27.720 another train set for him to play with? Now that 0:08:27.760 --> 0:08:30.400 he's bought his brought his way in with this support 0:08:30.400 --> 0:08:33.480 for Donald Trump and this particular candidate, he might have 0:08:33.480 --> 0:08:35.040 the scope to do that in a way he wouldn't 0:08:35.040 --> 0:08:35.960 with another candidate. 0:08:36.679 --> 0:08:39.560 It seems like he definitely sees it that way now. 0:08:39.720 --> 0:08:42.560 Almost ten years ago or so, SpaceX began selling this 0:08:42.640 --> 0:08:46.160 flamethrower as a kind of a marketing stunt. They and 0:08:46.520 --> 0:08:49.120 when it became clear that you're not supposed to sell 0:08:49.120 --> 0:08:51.960 a flamethrower, he changed the name to not a Flamethrower. 0:08:52.080 --> 0:08:53.600 Was a sort of jab at regulators. 0:08:53.840 --> 0:08:56.920 When people brought up recently that, you know, him being 0:08:56.960 --> 0:09:00.400 the CEO of Tesla and directing federal policy might be 0:09:00.480 --> 0:09:03.240 a conflict of interest, he said, Oh, don't worry, We'll 0:09:03.280 --> 0:09:05.800 just change the name of the Department of Government Efficiency 0:09:05.840 --> 0:09:07.599 to not the Department of Government Efficiency. 0:09:07.600 --> 0:09:09.200 He clearly thinks that. 0:09:09.160 --> 0:09:12.480 He can essentially approach government the same way that he's 0:09:12.520 --> 0:09:15.400 approached business, which is by the seat of his pants, 0:09:15.600 --> 0:09:20.080 ignoring norms and regulations and like being very productive. And 0:09:20.160 --> 0:09:23.600 I think that is the optimistic story that you would tell. 0:09:23.640 --> 0:09:26.360 Like that is part of why Donald Trump is excited 0:09:26.400 --> 0:09:29.040 about it, Why the voters, and why that the crowds 0:09:29.080 --> 0:09:31.800 at Madison Square Garden and other Trump rallies have given 0:09:31.840 --> 0:09:32.800 him huge rounds of plause. 0:09:32.800 --> 0:09:33.760 That's what they're excited about. 0:09:33.760 --> 0:09:36.959 They think he's gonna bring that kind of crazy Elon Musk, 0:09:37.080 --> 0:09:40.839 you know, super productive, super weird out their business sense 0:09:40.960 --> 0:09:42.400 to politics. 0:09:42.440 --> 0:09:45.480 Going back to sort of boring policy substance for a 0:09:45.559 --> 0:09:48.280 minute and stripping out some of the more colorful aspects 0:09:48.320 --> 0:09:49.880 of this. One of the reasons why a few years 0:09:49.920 --> 0:09:51.720 ago you would have said that this was an unlikely 0:09:51.760 --> 0:09:56.199 combination was that the one thing that Elon was kind 0:09:56.240 --> 0:10:01.240 of politically identified with was action to combat climate change, 0:10:01.559 --> 0:10:05.440 and indeed is put that into action with Tesla with 0:10:06.360 --> 0:10:09.280 a huge investment in electric card That is one of 0:10:09.280 --> 0:10:13.080 the things that one would both the support for electric 0:10:13.160 --> 0:10:19.160 vehicles and the entire stance towards climate change would be 0:10:19.200 --> 0:10:21.840 one of the big changes under a Trump administration that 0:10:21.880 --> 0:10:24.640 we'd expect. How does that work? How is he bridging 0:10:24.679 --> 0:10:25.280 that gulf? 0:10:25.600 --> 0:10:25.880 Yeah? 0:10:25.960 --> 0:10:27.800 I mean, as somebody who's followed Elon Musk for a 0:10:27.800 --> 0:10:29.360 long time, and you know, I first met him in 0:10:29.360 --> 0:10:31.800 two thousand and six. The thing that's weirdest about this 0:10:32.240 --> 0:10:35.720 is watching Donald Trump get on the stump and essentially 0:10:35.800 --> 0:10:38.839 deny that climate change is a real problem, and then 0:10:38.960 --> 0:10:41.400 watching Elon Musk agree with it, Because for such a 0:10:41.440 --> 0:10:45.800 long time that was impossible to imagine. Elon has been 0:10:45.920 --> 0:10:49.280 very closely defined with like sort of green capitalism and 0:10:49.320 --> 0:10:52.800 so on, but he's been pretty ideologically flexible. And that 0:10:53.280 --> 0:10:56.200 definition of Elon as this green capitalist it really started 0:10:56.280 --> 0:10:59.040 during the Obama years, right. He kind of embraced it 0:10:59.200 --> 0:11:02.840 when it was most politically advantageous and has been walking 0:11:02.920 --> 0:11:05.600 away from it as it has become sort of maybe 0:11:05.679 --> 0:11:09.520 less politically advantageous. The other thing is Elon Musk at 0:11:09.520 --> 0:11:12.880 this point has a dominant position in electric vehicles. So 0:11:13.040 --> 0:11:15.720 if Trump were to sort of get rid of all 0:11:15.840 --> 0:11:19.520 subsidies for evs, which would be a problem for Tesla, 0:11:19.640 --> 0:11:22.720 and make no mistake, it would arguably hurt Tesla a 0:11:22.760 --> 0:11:25.920 lot less than a lot of these other automakers who 0:11:25.960 --> 0:11:28.040 are not selling tons of electric cars right now. 0:11:28.440 --> 0:11:28.760 Max. 0:11:29.040 --> 0:11:31.839 The other thing that you, as you've known, been following 0:11:31.880 --> 0:11:33.440 him since twenty or six, then you will have the 0:11:33.480 --> 0:11:37.040 Bui bel or certainly the kind of almanac on his 0:11:37.120 --> 0:11:39.760 flip flops and his change in positions. For instance, Donald 0:11:39.760 --> 0:11:42.600 Trump in the Wilter Isaacson biography, it's very clear that 0:11:42.640 --> 0:11:45.360 when Musk first meets him, he doesn't think much of him. 0:11:45.400 --> 0:11:47.719 And now we have the possibility of him having a 0:11:47.800 --> 0:11:50.920 role in a possible Trump second presidency, and there's a 0:11:50.920 --> 0:11:53.280 host of other issues aren't there where he just changes 0:11:53.360 --> 0:11:55.480 his mind, either the facts so different or he's sort 0:11:55.520 --> 0:11:58.520 of evolved. If he were to have a role in government, 0:11:58.600 --> 0:12:01.440 it might be a bit dismal constraining, and he might think, act, 0:12:01.600 --> 0:12:03.560 I don't want to do this again. But also he 0:12:03.640 --> 0:12:06.520 might decide, actually, President Trump isn't doing quite what I won't, 0:12:06.520 --> 0:12:07.200 so I'm gonna go. 0:12:07.920 --> 0:12:12.040 If Kamala Harris wins next week and and becomes a president, 0:12:12.400 --> 0:12:16.040 there are a host of these investigations, various, you know, 0:12:16.120 --> 0:12:19.640 like issues around his security clearance. Like I would expect 0:12:20.040 --> 0:12:24.000 all of those to continue, maybe to even intensify, you know, 0:12:24.040 --> 0:12:25.840 it would be it would be sort of natural to 0:12:25.920 --> 0:12:29.080 think that a new administration is gonna ask some hard 0:12:29.160 --> 0:12:32.520 questions about do we really want one of our largest 0:12:32.520 --> 0:12:35.040 defense contractors to be in regular touch with Latim Ripputin? 0:12:35.080 --> 0:12:37.760 Do we really want one of our largest defense contractors 0:12:37.880 --> 0:12:40.559 smoking pot on the Joe Rogan Show, you know, as 0:12:40.559 --> 0:12:43.640 Elon Musk has done. Now on the other side, Right, 0:12:43.640 --> 0:12:47.120 there's the upside for Elon Musk with Trump is obvious. Right, 0:12:47.400 --> 0:12:49.839 Trump has said on the stump, We're just gonna order 0:12:49.920 --> 0:12:52.000 up some rockets and take him to Mars. Right, He's 0:12:52.040 --> 0:12:54.720 He's essentially like said, we're gonna have like I'm gonna 0:12:54.760 --> 0:12:58.440 give Elon Musk a multi billion dollar contract for for 0:12:58.520 --> 0:13:00.880 a Mars program that doesn't really exist at this point. 0:13:00.960 --> 0:13:02.880 He suggested that he's going to let Elon Musk take 0:13:02.920 --> 0:13:04.520 a red pen to the government, which of course can 0:13:04.600 --> 0:13:08.600 help him. Now, the thing is, though Tesla's customer base 0:13:08.880 --> 0:13:12.200 is largely progressive is liberal, they are on the left, 0:13:12.320 --> 0:13:17.240 and I don't think the customer base has fully processed 0:13:17.440 --> 0:13:20.160 what is happening. And so if Trump is elected, there 0:13:20.200 --> 0:13:22.720 is going to be a lot of talk politically about 0:13:22.720 --> 0:13:25.440 the role that Elon Musk played this historic amount of 0:13:25.480 --> 0:13:27.600 money and support he played, and that I think is 0:13:27.640 --> 0:13:29.679 going to lead to a backlash that is going to 0:13:29.720 --> 0:13:31.400 put Tesla under pressure. There are going to be a 0:13:31.440 --> 0:13:34.080 lot of people who own Tesla's who are I think 0:13:34.080 --> 0:13:36.679 they're already not feeling awesome about them, but are going 0:13:36.720 --> 0:13:39.480 to have to think, you know, is this the political 0:13:39.480 --> 0:13:41.560 statement I want to make? And we've seen this happen 0:13:41.600 --> 0:13:44.520 with the former president before. He is a cultural force 0:13:44.800 --> 0:13:47.160 and it works in both directions and really help companies, 0:13:47.320 --> 0:13:49.840 but it can also create a lot of pressures that 0:13:49.880 --> 0:13:52.440 could put Elon Musk in a uncomfortable position, could make 0:13:52.520 --> 0:13:56.120 him want to walk away. Now, if Trump loses, I 0:13:56.160 --> 0:13:58.040 don't think Elon Musk is going to do a one 0:13:58.120 --> 0:14:01.800 to eighty. I think he is pretty committed to this 0:14:01.800 --> 0:14:02.559 this kind of like. 0:14:03.240 --> 0:14:04.480 You know, right wing positioning. 0:14:04.720 --> 0:14:06.960 If Trump were to lose very badly, like a like 0:14:07.000 --> 0:14:09.720 a sort of humiliating defeat, which doesn't seem likely based 0:14:09.720 --> 0:14:12.000 on the polls, then I don't know. Elan is a 0:14:12.280 --> 0:14:14.720 is a adaptable guy, and I would now be surprised 0:14:14.720 --> 0:14:15.720 if if he evolved again. 0:14:16.120 --> 0:14:18.040 Well, we can certainly expect to see a lot of 0:14:18.200 --> 0:14:20.480 plaid out on x Twitter. 0:14:20.960 --> 0:14:22.000 You're gonna be so busy. 0:14:22.760 --> 0:14:25.720 Absolutely, yeah, that was great, Thank you so much. 0:14:29.240 --> 0:14:32.720 Now we welcome Charles Elson. Charles is the founding director 0:14:32.800 --> 0:14:36.440 of the Weinberg Center for Corporate Governance and a leading 0:14:36.440 --> 0:14:40.240 authority on corporate governance issues. Charles, I mean this is 0:14:40.280 --> 0:14:43.440 real issues, right, This is corporate governance issues. This is 0:14:43.800 --> 0:14:47.920 CEO is trying to navigate what is a very finely 0:14:47.960 --> 0:14:48.880 balanced to your selection. 0:14:49.560 --> 0:14:52.640 Absolutely, this is sort of governance one oh one, and 0:14:52.680 --> 0:14:56.640 it's frankly bord oversight of CEO's one oh one. And 0:14:56.720 --> 0:15:02.440 it's from a CEO standpoint, it's politics one one. It's 0:15:02.440 --> 0:15:04.600 a combo of everything rankly this year. 0:15:04.840 --> 0:15:08.120 So Charles tell us, Okay, what is different this time 0:15:08.200 --> 0:15:11.000 round compared to others. Has something changed in this balance? 0:15:11.640 --> 0:15:15.720 Well, I think when had happened. Traditionally CEO stayed out 0:15:15.800 --> 0:15:18.960 of elections. It just wasn't considered a good idea. You 0:15:19.000 --> 0:15:22.800 alienated too many people by doing it. And the role 0:15:22.840 --> 0:15:25.280 of the CEO is run the company, not to be 0:15:25.960 --> 0:15:30.440 a political figure. That changed a couple of years ago, 0:15:30.720 --> 0:15:34.720 I think really basically during the Trump administration, when there 0:15:34.800 --> 0:15:39.640 was significant opposition to him in parts of the business community. 0:15:40.160 --> 0:15:44.320 And with the two thousand election, which was considered such 0:15:45.000 --> 0:15:48.120 a choice, if you will, between two dramatically ways of 0:15:48.200 --> 0:15:51.760 looking at things, and combined with the summer of George Floyd, 0:15:52.240 --> 0:15:55.600 companies became much more politically active than they had been. 0:15:56.560 --> 0:15:59.880 You saw all kinds of statements where companies were opposing 0:16:00.200 --> 0:16:04.080 changes to the voting rights laws in certain states. You 0:16:04.160 --> 0:16:06.800 heard all kinds of demands for companies to make statements 0:16:06.840 --> 0:16:09.840 on political issues, and a lot of CEOs did and 0:16:09.920 --> 0:16:13.760 felt that it was their role their obligation to do so. 0:16:13.800 --> 0:16:16.880 Some did, I think based on personal conviction. Others did 0:16:16.920 --> 0:16:19.760 it I think because they felt they were getting enormous 0:16:19.760 --> 0:16:23.720 pressure from their employees. You had the huge controversy at 0:16:23.760 --> 0:16:26.600 Disney where Disney announced it was not taking a position 0:16:26.880 --> 0:16:30.520 on a particular law that it was. The CEO ultimately left, 0:16:30.560 --> 0:16:33.600 and this really started a debate in this country as 0:16:33.640 --> 0:16:36.800 to whether or not the CEOs should really be that 0:16:36.920 --> 0:16:40.160 involved in the political process. They always kind of were, 0:16:40.320 --> 0:16:45.280 because companies did, through packs and whatnot, made contributions well 0:16:45.280 --> 0:16:48.160 through their packs, i should say, to candidates. And there 0:16:48.200 --> 0:16:51.280 were CEOs who personally contributed on both sides of the 0:16:51.280 --> 0:16:55.480 aisle to candidates. Companies are always accused traditionally of being 0:16:55.840 --> 0:16:59.320 very pro Republican, and a case that came out of 0:16:59.360 --> 0:17:03.800 the Supreme Court that basically allowed corporations to make direct 0:17:03.840 --> 0:17:08.560 political effectively make political contributions, not to campaigns, but to 0:17:08.600 --> 0:17:11.760 make their enough views known on political issues Citizens United, 0:17:11.800 --> 0:17:14.880 if you recall, it came out during the Obama administration, 0:17:15.480 --> 0:17:19.840 and people on the left at least decried it, saying 0:17:19.880 --> 0:17:22.760 this is going to increase corporate influence over the elections. 0:17:23.040 --> 0:17:25.280 Problem is, it didn't work out that way. It turns 0:17:25.280 --> 0:17:30.199 out that most large corporations ended up supporting democratic causes 0:17:30.440 --> 0:17:33.280 as opposed to Republican causes, and it was the other 0:17:33.359 --> 0:17:36.680 party who got upset about the ruling. So that where 0:17:36.800 --> 0:17:40.080 That's kind of where we were until now. That sets 0:17:40.160 --> 0:17:40.760 up for now. 0:17:41.080 --> 0:17:43.280 It's very interesting you say that there's obviously been big 0:17:43.320 --> 0:17:47.040 money flowing into politics on both sides thanks to Citizens United. 0:17:47.080 --> 0:17:49.879 That decision, I guess that was in twenty ten. But 0:17:50.840 --> 0:17:53.200 that doesn't put a lot of money on both sides 0:17:53.400 --> 0:17:56.960 of the political argument in the US in a way 0:17:57.000 --> 0:17:59.440 that certainly in the UK and in Europe we would 0:17:59.480 --> 0:18:04.040 find is against our sort of culture of political contributions. 0:18:04.480 --> 0:18:07.320 But the thing that striking this time, I would have 0:18:07.359 --> 0:18:11.240 thought was that even stating that you're in favor of 0:18:11.359 --> 0:18:17.520 free and fair elections has become something that chief executives 0:18:17.560 --> 0:18:20.840 are nervous of doing. And that seems like that takes 0:18:20.840 --> 0:18:22.119 things to a whole different level. 0:18:22.520 --> 0:18:26.000 Oh, I think it does, because what happened was, after 0:18:26.160 --> 0:18:30.560 the significant corporate involvement, it created a blowback. It was 0:18:30.600 --> 0:18:32.760 felt that a number of companies in the stands they 0:18:32.800 --> 0:18:35.679 were taking were very I guess sort of left of 0:18:35.760 --> 0:18:40.080 center as opposed to right of center, and the particularly 0:18:40.080 --> 0:18:43.720 following the abortion ruling of Roe v. Wade, and a 0:18:43.800 --> 0:18:48.119 lot of folks on the right of the divide, felt 0:18:48.119 --> 0:18:52.680 that corporations had become a captive to the left the divide. 0:18:53.040 --> 0:18:57.440 So they threatened, boycott's attacked, and CEOs for speaking out, 0:18:57.920 --> 0:19:02.840 employees got angry, and you created a mess. And the mess, frankly, 0:19:03.520 --> 0:19:06.840 could have been avoided had the CEOs not jumped into 0:19:06.880 --> 0:19:09.840 this thing to begin with, which happened, as I said, 0:19:09.920 --> 0:19:14.400 during the Trump era and after the two thousand elections, 0:19:14.480 --> 0:19:16.960 that's what really blew it up. And a lot of people, 0:19:17.000 --> 0:19:19.240 including me, said, look, you need to stay out of 0:19:19.280 --> 0:19:23.800 this completely because it divides people, and companies only work 0:19:24.240 --> 0:19:28.000 if there's unanimity within the company on corporate purpose despite 0:19:28.080 --> 0:19:31.440 your politics. Now that being said, the democracy point I 0:19:31.520 --> 0:19:33.679 think you make a good one is why is it 0:19:33.720 --> 0:19:38.760 so terrible to support democracy? Because it became a politicized term. 0:19:39.040 --> 0:19:44.200 Trump was viewed as anti democratic or complaining about the 0:19:44.240 --> 0:19:47.160 results of the election. He was a threat to democracy, 0:19:47.640 --> 0:19:52.400 so that term became rather than we all are supported democracy, 0:19:52.680 --> 0:19:56.280 the term became loaded and that it was well supporting 0:19:56.359 --> 0:20:02.280 quote democracy means opposing Trump, support you know, Joe Biden 0:20:02.359 --> 0:20:04.880 or Kambella Harris. That's the issue now. 0:20:04.920 --> 0:20:06.320 So Charles, can we just be clear. 0:20:06.440 --> 0:20:08.600 Do you think what we're seeing right now, which is 0:20:08.720 --> 0:20:11.800 essentially it looks like the sort of pedging by CEO 0:20:11.960 --> 0:20:13.639 sitting on the fence, whatever you want to call it, 0:20:13.920 --> 0:20:16.480 do you think that that is because of the very 0:20:16.520 --> 0:20:20.359 real possibility of retribution by a second president Trump or 0:20:20.400 --> 0:20:22.840 do you think that this is a backlash or you know, 0:20:23.720 --> 0:20:25.119 a swing back to the norm. 0:20:25.480 --> 0:20:28.480 Oh, I think it's a return to the tradition. I 0:20:28.520 --> 0:20:31.480 don't think it's based on you know, fear of retribution. 0:20:31.680 --> 0:20:36.760 It's fear of retribution from your customers. That's the problems, 0:20:36.880 --> 0:20:39.320 and that's really what happened. I think they would learn 0:20:39.400 --> 0:20:42.199 the lesson that. Look, by taking a stance, half the 0:20:42.240 --> 0:20:44.600 country will love you, the other half will hate you, 0:20:45.119 --> 0:20:47.040 and that's terrible way to run a business. 0:20:47.280 --> 0:20:49.160 People will be surprised to hear you say it's sort 0:20:49.160 --> 0:20:51.800 of back to the previous datus quote, because obviously in 0:20:51.840 --> 0:20:56.639 the old days, there wasn't a sort of majority of 0:20:56.680 --> 0:21:02.080 American voters expecting potentially violence on either side of election day, 0:21:02.720 --> 0:21:07.240 and we hadn't had a presidential candidate refused to concede 0:21:07.760 --> 0:21:10.640 an election result. So it does feel like the stakes 0:21:10.680 --> 0:21:11.639 are quite high. 0:21:12.240 --> 0:21:14.879