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The president s corporate advisory councils, now disbanded, had achieved little
I VE never known it to be an embarrassment for a business leader to be
associated with an American president, declares Max Bazerman of Harvard
Business School. Donald Trump, in particular, has positioned himself as a
businessman-president, whose corporate acumen would unleash a new era for
American business. Investors seemed to believe him his election prompted a
giddy Trump bump in the stockmarket and corporate bosses flocked to his side.
This week they fled. For many, it seems as much a clear-eyed business
calculation as a moral awakening.
Some distanced themselves more quickly than others. The trigger was Mr Trump s
reluctance to condemn neo-Nazis and white supremacists who staged violent
protests in Virginia on August 12th. Kenneth Frazier (pictured), chief
executive of Merck, a big pharmaceutical firm, was the first to leave Mr Trump
s advisory council on manufacturing. On August 14th Mr Trump denounced racist
groups in a scripted statement. But the bosses of Under Armour, a
sporting-goods outfit, and Intel, a computer-chip giant, defected, too.
On August 15th Mr Trump appeared once again to equate white supremacists with
demonstrators opposing them. As word leaked the next day that chief executives
might resign en masse, Mr Trump swiftly tweeted that he was disbanding his
manufacturing council and his strategic and policy forum, another advisory
group.
The calculus of aligning with Mr Trump at first seemed straightforward. By
serving on the president s councils, bosses hoped to nudge him to deliver
reform. Banks remain eager to roll back financial regulations. Manufacturing
and construction firms hope to benefit from support for domestic production and
a binge in infrastructure spending. All companies want a lower corporate-tax
rate.
More than two dozen chief executives, led by Andrew Liveris of Dow, a chemicals
colossus, joined Mr Trump s manufacturing advisory council. About a score
joined the strategic and policy forum, led by Stephen Schwarzman of Blackstone,
a private-equity firm. Mr Trump seemed to take particular pleasure in summoning
corporate titans; executives smiled as he spoke of his bold plans, even as some
acknowledged his shortcomings in private.
Technology firms were early to distance themselves from the president: Google
and Apple, for instance, have supported a suit challenging Mr Trump s policy
for immigrants from Muslim countries. But many bosses stayed on the councils,
even in the immediate aftermath of the Charlottesville crisis. Those included
JPMorgan Chase s Jamie Dimon, Mary Barra of General Motors and Ginni Rometty of
IBM.
No longer. Even setting aside matters of personal conscience, the costs and
benefits for bosses of sitting alongside the president have changed. Serving on
Mr Trump s councils yielded few obvious benefits. The forums are mostly
ceremonial. Mr Trump has so far proved unable to advance any major policy,
including a business-friendly rollback of Democrats health law. Tax reform is
complex even in favourable political climates; it does not help that Mr Trump
has taken to lambasting Mitch McConnell, the Republican Senate majority leader
and a supposed ally. Democrats may not back Mr Trump even on infrastructure
spending, which they support.
Continuing to serve on the councils increasingly seemed to serve little purpose
other than to anger consumers and staff. In the wake of the president s
comments, companies that did not quit at once (among them PepsiCo, which sells
fizzy drinks and snacks) faced campaigns threatening boycotts. IBM must compete
with Silicon Valley for talent; staff had criticised Ms Rometty s allegiance to
Mr Trump.
Many executives will doubtless continue to court Mr Trump in private. Mr
Schwarzman has known the president for years, for example. His new
infrastructure fund, which in May received a $20bn investment from Saudi
Arabia, has much to gain from any new spending on bridges and roads. Others
will decide they are better off keeping their distance. Recent jumps in share
prices have been largely attributable to firms own performance, despite Mr
Trump s tweets claiming credit.
This article appeared in the Business section of the print edition under the
headline "End of the affair"