Should-Read: Larry Summers: A Telling Moment for Business Leaders

Should-Read: Business leaders are, in general, not the people to look to to take the lead in the public good operations of civil society at the nation state or the global level. They are enmeshed in networks of obligations. They thus respond to pressure that threatens the interests of those to whom they are obligated. But they do not take the lead that their take-charge within-the-firm personas would lead one to expect.

They can be–and very often are–powerfully influential and effective. But as a rule they are so only when their views and ideas are channeled through intermediary institutions with both funding and voice: the Republican Party, the Rubin wing of the Democratic Party, the Conference Board, the Business Roundtable, etc. It is the effective collapse of the first of these intermediary institutions as anything more than a lobby for tax cuts for the rich that is, I think, at the root of this Summers discontent. But while other forms of civil society mobilization produce crowds and argument in the streets, I think Summers will wait in vain for crowds and argument in the suites. That’s not how they do:

Larry Summers: A Telling Moment for Business Leaders: “I got a chance to spell out my views on the role of business leaders in influencing public policy…

…It is a complex issue given chief executives’ obligations to their shareholders, desire to be effective, fears of retaliation and much else. Just before the inauguration I expressed strongly the fear that American business leaders in Davos were legitimising the excessively problematic policy approaches of the new president, Donald Trump. Events since the inauguration have confirmed my fears. Policy has gone further than I expected in threatening an open global system and provoking key partners. It has undercut Statue of Liberty values and the rule of law more than I anticipated. Especially in foreign policy, words are deeds. It takes decades for a nation to build credibility and trust that can be sacrificed in a matter of hours. There are signs that quite a few business leaders are waking up to the dangers to their companies inherent in current trends. So maybe the business community, whose approval the administration craves, will start to pressure the administration rather than simply cheering on tax cuts and deregulation.

The Friday meeting of corporate leaders and the president will be very revealing. Will the group let themselves be used to legitimise policy trends? Will they focus on near-term parochial regulatory and tax issues? Or, as I hope, will they express real concern about the long-term impact if the US continues to embrace protectionism, undercut European integration, challenge China over Taiwan and prevent Muslims from entering the country? For those who argue that business should focus on the long-term and stress how closely American economic and business success are related, this will be a telling moment.