Finance

The GOP can be pro-capital and anti-‘woke capital’ because ‘woke capital’ isn’t capital at all

Summary List PlacementGOP Sen. Shelley Moore Capito of West Virginia says Republicans want to work with Democrats on an infrastructure bill— with total spending around $600 to $800 billion, rather than the $2 trillion package President Joe Biden has proposed, and focused on traditional infrastructure items like roads, bridges, and power and water systems, plus one less traditional item: broadband. But Capito also had a warning: Raising corporate income taxes, as Biden has proposed, is "a non-negotiable red line." Republicans do not want to raise taxes on corporations. This refusal to increase corporate taxes feels dissonant with increasingly common talking points...

Coca-Cola Boycott

Summary List Placement

GOP Sen. Shelley Moore Capito of West Virginia says Republicans want to work with Democrats on an infrastructure bill— with total spending around $600 to $800 billion, rather than the $2 trillion package President Joe Biden has proposed, and focused on traditional infrastructure items like roads, bridges, and power and water systems, plus one less traditional item: broadband.

But Capito also had a warning: Raising corporate income taxes, as Biden has proposed, is “a non-negotiable red line.” Republicans do not want to raise taxes on corporations.

This refusal to increase corporate taxes feels dissonant with increasingly common talking points from conservatives complaining about big corporations as yet another set of progressive-leaning institutions in our society — kicking them off of social media, banning their books from stores, and piling on with Democrats in opposition to laws they pass. They’re mad at “woke capital.” GOP Sen. Ted Cruz has even pointed to big companies as yet another overly concentrated area of power, alongside big government.

It may appear that these stances are in conflict — decrying the corrupt influence of corporations while rejecting any policy to hit their bottom line or rein in their power — but the dissonance isn’t what it seems. That’s because “woke capital,” to the extent it exists, mostly isn’t capital. Often, it’s labor.

Companies are managed by people, and Republicans are annoyed at those people

Why do companies weigh in on political issues? Of course, often they do this because a government action will affect the income the company can generate for shareholders. But the issues Republicans are focused on — like Atlanta-based Coca-Cola and Delta raising public objections to Georgia’s new law on voting — have little apparent direct nexus to profits. 

Sometimes, companies speak on political and social issues because it helps them appeal to customers who care about those issues. Or workers may want the company to speak out — this seems to have been a big issue in Georgia — and the company taking a public stand helps to attract and retain employees without having to pay them more.

Pleasing customers and workers can boost profits, but profits aren’t the only reason executives might act on behalf of customers and workers. These groups are stakeholders of a corporation in their own right, and executives, who are human, may directly weigh those stakeholder interests when deciding whether to speak out.

But in addition to acting on behalf of these stakeholders, corporate managers may act in their own personal interest. Here I’m talking about the C-level executives who ultimately make high-stakes decisions like whether to take a stance on Georgia’s law, but I’m also talking about the mid-level managers and even employees in areas like public affairs, communications, and marketing who are involved in determining a company’s social positioning.

Like anyone, these executives and well-placed employees bring their own personal views and biases to their jobs. The way they influence a company’s social positioning can reflect their desire to have the company take positions they like. They may also imagine that stakeholder groups on whose behalf they act (including shareholders) have preferences that happen to align with their own.

Virtually all of these people have college degrees, and their incomes range from respectable to extremely high. These sorts of powerful corporate employees are hardly a core Democratic party constituency, but they are generally part of a demographic that trended especially hard against Republicans in recent years. In effect, corporate head offices are just another place where we’re seeing the revolt of the affluent suburbs against Donald Trump.

The Republican ‘anti-corporate’ agenda aims at managers, not shareholders

A common thread with Republican messaging about the evils of “big corporations” is that they’re aimed at corporate acts that do not appear to have shareholders as the key stakeholder in mind.

For example, Republicans would like corporations to pipe down about social issue legislation. If corporations did that, workers might be less happy, but aggregate profits and therefore stock prices would be unlikely to change.

Republicans have talked about restricting the moderation decisions social media companies can make. While such rules — if they survived constitutional challenge — might imperil certain business models and therefore profits, I don’t think that’s Republicans’ conception of what such restrictions would do. It’s not that they expect to take a whack at Twitter or whichever platform’s bottom line, they basically just think their proposals would get the companies to let Donald Trump and Milo Yiannopoulos and whoever else back on the platforms. They see moderation decisions that companies appear to have made on behalf of their customers or their workers, and they’re trying to reverse those.

Republicans talk (usually in vague terms) about breaking up big companies, especially tech companies. That would probably be bad for shareholders in those specific companies, and in theory it could reduce corporate profits overall by giving workers and customers more negotiating power in a more fragmented industry. But if those companies’ current behavior is truly anti-competitive, breaking them up might increase overall profits in the corporate sector by giving their competitors a level playing field.

To the extent Republican anti-corporate rhetoric has a policy component, it seems pretty specifically designed to take aim at executives, managers, and the non-capital stakeholders in firms — not at shareholders.

Republicans don’t want to rein in corporate power where doing so would harm capital

This becomes even more clear when you look at Republicans are not proposing to “rein in” corporate power. They don’t want a higher minimum wage. They don’t want to weaken protections for intellectual property. As New York Times columnist Jamelle Bouie notes, they don’t want to make unions more powerful — unless a more powerful union would penalize one specific shareholder who has pissed Republicans off. And of course, they do not want to raise the corporate income tax.

I, for one, am not particularly concerned that corporations are too large or too powerful. Certainly I do not prefer small business over large business. Large firms are more productive than small firms, they tend to pay their workers better wages and benefits, and it is easier to keep track of whether they are obeying laws including labor laws.

As such, my preferred approach is almost the opposite of the recently preferred Republican approach: I want to harness large businesses for the good things they do in society, while implementing policies to ensure workers are treated well and that they, along with customers, get a fair share of the firms’ output.

But I don’t think the Republican position is incoherent. It’s exactly what you’d expect from people who like shareholders but don’t care that much for the other stakeholders involved in a corporation.

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