When many of our political leaders fail to address the current dangers to American democracy, then some other group must step up to safeguard it. I believe the U.S. business community—a group that has a major stake in having a healthy governing system—should take on that leadership role. Leaders of the private sector must confront the reality that our public sector has become polarized and dysfunctional and address the serious problems plaguing our democracy.
Since the 2016 presidential election, American democracy has faced one challenge after the next: an outside government interfered with our election process; our free press has been consistently attacked; and the president demonstrates little regard for ethical standards or democratic norms while attacking our democratic institutions and making an average of five false statements a day. A White House in chaos is often used to describe the Trump administration. Congress is not blameless, ceding much of its constitutional authority to the executive branch. Political corruption and ethical shortcuts are pervasive in the nation’s capital. Our constitutional system of checks and balances is barely surviving.
American democracy’s civic bargain is undergoing significant stress as citizens of all political persuasions witness these daily examples of a dysfunctional federal government in both the executive and legislative branches. Once confidence in our democracy is eroded, there would be the very real possibility of losing our economic and commercial wellbeing. Determining how business can address these matters should be on the mind of every corporate CEO and their board of directors. Disappointingly, it is not.
But a recently released survey taken at a “CEO Summit”—hosted by the Yale University School of Management—indicates that close to ninety percent of attendees agreed that Trump had cost the country the trust of allies. Three-fourths confessed they had apologized to overseas business partners for the president’s “embarrassing diplomatic messages.” The survey was taken before Trump’s recent impulsive decision to pull troops out of Syria and openly speculate he might fire the head of the Federal Reserve.
Republican members of congress—afraid of offending Trump’s political base—have failed to serve as a check on this president. The business community has a base, too. It is their shareholders. Corporate leaders have a legal obligation to consider investors’ views on important public sector activity—including the president’s fitness for office—that affect their investments.
Because mutual and investment funds have a unique fiduciary standing in corporate America, I submit only they are positioned to play the leading role in addressing this matter. Combined, they act in a fiduciary capacity for U.S. stock valued at almost $19 Trillion. This gives them the power to cast proxy votes for matters dealing with corporate governance—including the power to remove members of a board of directors and apply pressure to change company management.
Mutual funds and investment companies, as fiduciaries, must make the financial case that addressing these matters would ultimately increase firm profits. By that standard, corporate America has a fiduciary responsibility to address government dysfunction. The erosion of our democracy would impose incalculable financial, as well as social, costs on our businesses.
Leaders of mutual and investment funds should challenge corporate executives to look beyond their individual short-term special interests and instead concentrate their attention on the systemic problem: the quality of our government. Working together, the business community should address our current political shortcomings and move to safeguard our democracy—in part because of a national responsibility but also because it would shore up the foundation of our democratic capitalistic system. Our business leaders need to address these matters because shocks to our democracy are the most fathomable disruption imaginable to America’s private sector. The business community has an obligation to develop and pursue appropriate steps to avoid this calamity.
Simply put, the U.S. cannot have a vibrant economy if it has a dysfunctional government and political system. Those nations that have dysfunctional governments and political systems are called banana republics for a reason. And they are not democracies. If nothing is done we will be left with a much weaker and more tentative democracy, which in turn, will likely lead to the loss of our rights guaranteed by the Constitution.
Tom Coleman is a former Republican Member of Congress from Missouri and has served as an adjunct professor at American University and at New York University’s Robert F. Wagner Graduate School of Public Service where he taught “The Intersection of Business and Government in the Nation’s Economy.”