The Corner

Corporations and the People: Who Influences Whom?

As corporate political advocacy becomes more liberal, leftists who blame businesses for corrupting the democratic process might experience some cognitive dissonance.

Georgia governor Nathan Deal (R) decided Monday to veto a bill that would allow clergy to refuse to perform marriage rites that violated their religious beliefs. He did so under tremendous pressure, including from corporations such as Coca-Cola, Home Depot, UPS, Walt Disney, Netflix, and Apple.

Bernie Sanders has built his platform and his coalition partly on the view that corporations have too much political clout and that their incentive is to promote causes that serve the 1 percent. Progressive activists demonize corporations, sometimes ascribing to them the lion’s share of America’s problems.

So what happens when corporations openly advocate not capital-gains-tax cuts, but LGBT demands? Dana Milbank writes in the Washington Post,

you can see the effects of a new corporate citizenship that is emerging. Corporate America is traditionally conservative, reluctant to react to social controversy and divisive issues. But as public sentiment shifts dramatically on gay rights and as pro-equality millennials become a large bloc of consumers, business is shedding its reticence.

One stark example of shed reticence was the sea of rainbow profile pictures on corporate Facebook and Twitter accounts following the 2015 Obergefell ruling in favor of a constitutional right to same-sex marriage.

Critics of “corporate interests” often speak in conspiratorial terms about businesses covertly trying to cripple democracy. What, exactly, are corporations interested in? While people rail against money in politics, it seems businesses have actually succeeded in being discreet about getting money from politics, from publicly taking a stand. When the majority of a company’s market share holds certain views very strongly, a good marketing strategist will take note. Corporations are interested in their bottom line, which means they’re interested in what their customers care about; as any marketing specialist or Mad Men fan could tell you, people don’t just buy products, they buy experiences — what products make them feel.

Which means that the incentive for corporations in a free-market economy is to blow with the prevailing democratic wind. In 2015, Pew Research found that 55 percent of Americans support same-sex marriage, and only 39 percent oppose it. Citizens, i.e., current or potential customers, exercise far more influence over companies’ political advocacy than companies exercise over our political system. Corporations must please customers in order to exist.

Does anyone think Disney is trying to subvert democracy by supporting same-sex marriage? Disney is trying to keep and attract customers by openly adopting a view many customers already hold. It does so because it wants to turn a profit, an impulse that also best ensures safe, ethical, high-quality goods and services. Of course, Disney’s CEO Bob Iger might personally support same-sex marriage, but you can be sure Disney’s public politicking was a carefully researched business strategy. (And if a business owner disagrees with the majority on some issue, he or she can always remain silent rather than violating his or her conscience or alienating customers.)

Corporations have an incentive to pursue political goals that benefit them at the people’s expense only when the market is not free. When companies know they can rely on the government for subsidies or bailouts or tariffs, they will lobby for these policies. These policies boost profits without making companies maximally accountable to their customers. Products then can become subpar and/or more expensive. This is the fault of cronyism, not business per se or the free market.

And if you want cronyism, Bernie or Hillary might be the candidate for you.

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