By Larry Summers for FT
I have since inauguration day been troubled by the abdication of moral responsibility on the part of business figures who have lent their reputations to Donald Trump. So congratulations to Merck chief executive Ken Frazier on his resignation from the American Manufacturing Council over the president’s manifestly inadequate response to Charlottesville.
Interestingly, Mr Trump lashed out by tweet at Mr Frazier, who is African American, for resigning. He did not lash out at Disney’s Robert Iger or Tesla’s Elon Musk, who are white, when they resigned from the strategic and policy forum because of the president’s decision to pull out of the Paris climate accord.
Andrew Ross Sorkin gets it absolutely right when he asks why there have not been more resignations from Mr Trump’s advisory councils. As I’ve discussed before, the president has again and again traduced American values of international co-operation, of integrity in government and of human decency.
No advisor committed to the bipartisan American traditions of government can possibly believe he or she is being effective at this point. And all should feel ashamed for complicity in Mr Trump’s words and deeds. I sometimes wonder how they face their children.
After this weekend, I am not sure what it would take to get the CEOs to resign. Demonising ethnic groups? That has happened. Renouncing international agreements that have supported business interests? That has happened. Personal profiteering from the presidency? Also happened. Failure to deliver on ballyhooed promises? That has happened as well.
Of course, CEOs might argue that while they also loathe all that is wrong with the Trump administration, they can be more effective by remaining involved. Give me a break.
Anyone who thinks that by attending a meeting less than monthly with 30 people in a room they are moving the nation is engaged in egotistical self-delusion of a high order. Yes, technical advice on specific issues might be a valuable contribution. But there is no reason why providing such advice requires lending one’s prestige or that of one’s company to Donald Trump.
Does anyone doubt that even if he resigned from the Trump council, any official at the Treasury, Federal Reserve, Securities and Exchange Commission or in the White House would be happy to take Jamie Dimon’s call? Or that the head of the Department of Commerce would take a call from Jim McNerney, the former CEO of Boeing? Or that GE chairman Jeff Immelt would not be able to “participate in the discussion on how to drive growth and productivity in the US” (his proferred rationale for failing to resign) without being on Mr Trump’s manufacturing council?
There is another argument I have heard CEOs make: “My company cannot afford to alienate the president and face retaliation.” They should note that Merck’s stock price rose on Monday (despite the president’s disparaging tweet) as an indication that this fear is overblown.
But more important, if this is what corporate America’s leaders believe, it is a damning indictment of the president and of their own cowardice. If a substantial group of CEOs resigned en masse, what realistically could the president do other than tweet his frustration and hopefully ultimately learn a lesson?
There is a long tradition in American history of business leaders as statesmen and moral leaders. They played an important role in the passage of the Marshall Plan. They have provided important support when the Supreme Court has upheld affirmative action. Business has long supported co-operation with other nations to promote prosperity. Most CEOs were strong and effective supporters of the Paris climate agreement. At the local level business leaders have fought to strengthen public schools and to resist discrimination against minorities.
This is the tradition that needs to be honoured today.
In the Obama administration, I frequently counselled that “business confidence is the cheapest form of stimulus”. I resisted populist rhetoric that vilified corporations, instead favoring approaches that emphasised accelerating economic growth and competitiveness for the benefit of all. I still favour such an approach. But given the cravenness now on display in CEO-world, I fear that on the current path a massive backlash against business is all but inevitable. That would be highly unfortunate, but not difficult to understand.
Every member of Mr Trump’s advisory councils should wrestle with his or her conscience and ponder Edmund Burke’s famous warning that “All that is necessary for the triumph of evil is for good men to do nothing”
Since writing this post, Under Armour CEO Kevin Plank has also decided to step down from the American Manufacturing Council. I applaud this decision, and hope that many other chiefs will follow suit.