LONDON – Nobody wants to discuss politics. When I give a talk or my writing touches on politics, I am frequently asked to avoid the topic altogether and focus only on the business angle. Given the combination of disempowerment, frustration, and general news fatigue that many are feeling, the request is understandable. But it is also impossible to agree to it.
In a world where a week can feel like a month, it is difficult to fathom the extent to which Donald Trump has destabilized the United States and the world. In just one year as president, Trump has childishly taunted other world leaders, tweeting, for example, that his “nuclear button” is “much bigger and more powerful” than that of North Korean leader Kim Jong-un. He has also challenged longstanding alliances, including NATO, dismantled critical regulations, and withdrawn from international agreements.
And the hits keep coming. Just last week, Trump crudely insulted citizens of Haiti, El Salvador, and African states, reportedly lamenting that the US must accept immigrants from these “shithole countries.” It should come as no surprise, then, that Trump’s approval ratings are the weakest of any president at this point in his term, despite strong economic growth, a soaring stock market, and low unemployment.
It isn’t only US politics that has become inescapable. The Brexit vote in June 2016 has thrown the United Kingdom and the European Union into a tailspin, forcing businesses to guess what will come next – and, in many cases, spurring them to shift their operations to other countries.
Meanwhile, autocratic regimes have been on the rise, from Turkey, once the Muslim world’s beacon of democracy, to Poland, once Europe’s post-communist darling. Chinese President Xi Jinping has established himself as the most powerful leader since Mao Zedong, cracking down on any semblance of dissent. And Russian President Vladimir Putin has his fingers in a growing number of geopolitical pies – including, mounting evidence suggests, the US.
If we’ve learned anything in the past year, it is that politics and business are inextricably linked. Business shapes politics directly, with industries pouring money into campaigns in an attempt to advance their own interests, and indirectly, with innovations that push the boundaries of regulations.
Likewise, political developments have a major impact on business. One cannot assess financial markets without considering political risk and monetary policy, or retail strategy without weighing consumer confidence, which is influenced by the political environment. (After last summer’s general election in the UK, consumer confidence sank to its lowest level since the Brexit referendum.) Immigration policies are fundamental to the operation of labor markets. Public investment strategies, particularly with regard to upgrading and modernizing infrastructure, are integral to how businesses plan their own investment. The list goes on.
With every decision our governments make having a direct and measurable impact on our businesses and our lives as consumers, the belief that we can simply avoid politics, that the bad news or irresponsible leadership will simply pass, is untenable. In fact, the only real option is to do the opposite: we must work to gain a better understanding of the issues at stake, many of which are complex and interconnected. And we must become more persistent in attempting to shape political outcomes, and more resolute in ensuring that good businesses aren’t overwhelmed by bad politics.
And it is up to all of us – not just corporate strategists and legislators, but also citizens and consumers – to deepen our understanding of the connections between business and politics. Only then can we ensure that policy debates and decisions are based on fact, and that we are well-equipped to judge those who make decisions, engage with them, and ultimately hold them accountable. The alternative is to relinquish our ability to defend our own interests.
Poor corporate governance, I have argued, was one of the biggest risks that business faced in 2017. In many ways, that remains a top concern. But it has now been compounded by extreme political uncertainty.
How companies respond will shape all our futures. In the US, for example, there is a temptation to capitalize on the Trump administration’s deregulation drive in areas including oil drilling, consumer protection, immigration, trade policy, and environmental safeguards. But what may seem like a boon for business in the short term may do irreparable long-term damage, with implications for every sector, every investor, and every consumer.
It is the responsibility of all of us – board members, shareholders, employees, consumers – to force businesses to look beyond short-term profits and fulfill their broader corporate responsibility. We cannot afford to throw up our hands and simply hope for the best.
And lest we feel that our voices will not be heard, we would do well to consider recent efforts to catalyze change. The #MeToo campaign has amounted to a reckoning for many powerful perpetrators of sexual assault. The Shareholder Spring marked a ratcheting up of scrutiny by investors of executive remuneration packages. Instances of abusive labor conditions and large-scale corruption have been brought to light, leading to real change in some unexpected areas (like FIFA).
Ignoring politics won’t solve our problems. Engaging constructively just might.
Lucy P. Marcus is CEO of Marcus Venture Consulting.
By Lucy P. Marcus