Corporate America Brings The Hammer Down After Capitol Insurrection
NOEL KING, HOST:
It's worth comparing how Congress reacted to the insurrection at the Capitol with how corporate America reacted. So the Senate acquitted Donald Trump this weekend on an impeachment charge, but American companies sued, they suspended contracts, and they stopped donations to politicians who spread false claims of election fraud. Are companies doing a better job of holding our elected officials accountable than our elected officials are? Last week, our guest host, Sacha Pfeiffer, talked to Professor Luigi Zingales. He teaches about capitalism at the University of Chicago.
SACHA PFEIFFER, BYLINE: I want to reel off some of the ways that the corporate hammer has been coming down recently. We saw Dominion and Smartmatic sue former President Trump's allies for lying about their voting machines. We saw companies, including American Express and Morgan Stanley, suspending their donations to key Republican lawmakers. The PGA pulled its tournament from a Trump golf resort. I see this happen, and it makes me think that the corporate response to political controversy has been more nimble and possibly more effective than the government one - effective if you disagree with what these politicians were doing. Am I fair to view it that way?
LUIGI ZINGALES: I think you are fair, but I will distinguish very much between actions that are in the interests of the corporation themselves, in the financial interests, and actions that are not necessarily in financial interests. So take, for example, Dominion suing Fox for misinformation. That's an action that they don't take because they are Democrat or Republican. They take to preserve their reputation, their money.
PFEIFFER: Even if some of these companies are motivated to do this by profit, they've still been effective in the sense that they have changed behavior. Can capitalism accomplish something that government doesn't seem to be able to?
ZINGALES: Certainly, capitalism, which, at the end of the day, is freedom of choice, can have a gigantic impact on the way, even, we run the government and the way we distribute information and so on, so forth. And when it comes to that tension, the profit motive is a very good one.
PFEIFFER: In some ways, if you like the decisions that corporate America has made because you tend to be more left-leaning and you're happy with those decisions, then you're seeing the benefits of a capitalist society.
ZINGALES: That's certainly true. But I think a fundamental principle is you have to invert the situation and see whether you still like it. So if, in this moment, corporations were to help Republicans, will you still like it or not?
PFEIFFER: Do you think it's ever the case that companies make these decisions truly out of principle or ethics or altruism, or is there always a profit motive involved?
ZINGALES: I think, most of the time, it is a profit motive. Sometimes is even worse is the motive to appease who is in power at the moment. I think it's scary to me that all these companies found out about the lies of Donald Trump or about not donating after Donald Trump lost the election, and just before, they weren't as vocal or as aggressive. So I want to see to what extent that the same companies are standing up to the Biden administration, if the Biden administration were to do something wrong. But there are certainly cases where people do out of principle. I think that I read, at least, of the CEO of Dick's Sporting Goods that decided not to sell assault rifles in his stores, even if he knew that this was costly from a profit bottom line. But he just did not want to have the moral responsibility of being part of a mass shooting.
PFEIFFER: Do you think that these actions by some companies, to say enough is enough, is going to be a lasting effect, or could they just simply go back to the way it was in a few months, once the politics of the day calm down?
ZINGALES: My hope is that this will become a conversation at shareholders meeting because I'm concerned that the person who plays the role of CEO has a disproportionate power. And I would like this decision to be made not in the boardroom but at the shareholders meeting and the employees meetings because those are the key stakeholders that should voice their preferences because I consider a fundamental freedom the freedom not to work, invest or even buy from a company you don't agree with.
PFEIFFER: Professor Luigi Zingales of the University of Chicago, thank you for talking with us about this.
ZINGALES: My pleasure.
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