It’s Time To Stop Demonizing Business

There is a deeply troubling trend in this election season of demonizing business. It did not start with this year’s campaign of Bernie Sanders or the polarizing campaign of real-estate tycoon Donald Trump. Indeed, it was in full force four years ago when candidate Mitt Romney’s business experience was seen as a liability by many. But it’s taken hold of the dialogue in this election cycle in a way that is not helpful to business leaders, business owners, employees, new graduates charting their careers ­– or society as a whole.

There is vitriol aimed at Wall Street over the economic calamity that gripped the world in 2008 and 2009. There is frustration, understandable, that the stock market has nearly tripled since 2009, and C-suite compensation has soared, while wage growth has stagnated and GDP has been nudging along at 2% or less quarter by quarter. Unemployment is extremely low, but job growth for the middle class has been slow.

But how much is “big business” and Wall Street to blame? And in a year of often childish name-calling from the political stump, does it really propel us forward to demonize “business” as if “business” itself is bad? Almost daily, Democrats and Republicans are pointing at the other’s donor base and economic advisory panels as bad for the country: “Crooked Hillary counts on Wall Street for donations;” “Trump is being advised by bankers and billionaires.” Bernie Sanders during his run often citing “corporate America” and “big business” as the problem.

The blaming of business for our ills gets us nowhere. Business is the most powerful force in society for creating economic value and enabling social mobility and change. Governments and NGOs play their parts. But business is the engine that drives economic and social prosperity. The private sector has enabled industrialized countries to develop. And in developing markets, the driving force is investments from businesses that enhance the flow of goods and services across borders and create jobs at every level of society.

Too many people today want to dwell on companies “dodging” taxes and reincorporating overseas. Layer on top of that more rhetoric about how U.S. companies are “un-American” if they’re moving business outside of the country. I understand the anger and frustration, but business is the answer, not the enemy.

What we need when the smoke clears from this election is for business leaders and policy-makers to start talking about working together again to move society in a more positive direction. We need to craft better policy that motivates companies to invest in the U.S., whether it is a U.S. company or a foreign-owned company. We need to stop talking about the extremes of regulation versus deregulation, and start talking about smart regulation. Not higher or lower taxes, but smarter taxes. Just as a car needs brakes to keep its occupants safe, business needs brakes to protect the public from individual self-interest, short-term profit maximization, and corporate politics.

We are in the midst of a major debate about how accountable businesses and companies are to their communities. Ford and Carrier moving jobs to Mexico, or Fiat Chrysler and Tyco re-incorporating in Europe. Accountability to the U.S. and to communities is a big part of the Bernie Sanders phenomenon this year, and even a key part of Donald Trump’s populist support. When they say, “Businesses aren’t held accountable for staying in their communities,” I fundamentally disagree.

Reincorporating elsewhere to save on tax expenses is not illegal. We can debate the morality, but we live in a global society and companies have customers all over the world. General Motors, for example, sells more vehicles most years overseas than it does in the U.S. More than 60% of Apple’s revenue is outside the U.S. Why do we look at any company and say, “That company is bad” – simply because it is operating in a global marketplace? That company employs hundreds and thousands of our neighbors, in part, because it operates in a global marketplace. Instead, why don’t we look at ourselves and say, “How do we make our country, our states, and our cities more competitive so companies want to invest more in the U.S.?” We need to stop demonizing companies and start creating business-friendly policies and communities that can do what they do best–solve problems and meet needs.

The easy scapegoat for what ails the country is business. But what we need to do is ask, “Why are these businesses engaging in behavior that may not be ideal for the U.S. economy, and job and wage growth?” It’s extremely painful to families and communities when a plant or corporate headquarters is lost. I saw this first hand growing up in High Point, NC, where the entire furniture industry and community was decimated by global competition. And my heart breaks when I encounter people losing their jobs due to layoffs or corporate restructuring. These decisions affect individuals, families, and entire communities. But blaming a company for making a move that is best for its long-range prospects based on current tax and trade policies is not fair or smart.

It’s easy to get jaded about the willingness of law and policy makers from both major parties to sit down to solve real problems. They seem to have lost the principle that strong leadership requires intelligent compromise. A lower corporate tax rate, for example, which one party wants, may need to be accompanied by allowing students and graduates to refinance student loans at lower rates and a let-up on trying to repeal Obamacare, which another party wants. Or perhaps a lower tax corporate tax rate comes with conditions that motivate companies to invest more in the U.S.

But if you are looking for real hope and change, I encourage you to look at what is happening at business schools around the world. Business is the most popular major among undergraduates. MBA applications at leading business schools are up. And the business-school student of today sees business not only as an attractive career path but also a path to making a positive difference in the world -- new jobs for the middle class; new wealth for developing economies; new ideas to drive local economies; and new businesses and ideas that shape how people live, work and play. The students we are educating today want great careers, but they also tell us that they are hungry to solve societal problems–whether it be heroic acts like eradicating blindness in developing countries or bringing healthcare delivery to impoverished areas, to the seemingly more mundane, yet critical, job of helping a city like Detroit collect business taxes in order to fix its crumbling infrastructure.

We cannot demonize “business” but glorify “job creators” in the same breath. They are one in the same, and they are the engine that drives our economy. Leaders – from both business and government – can and should be smarter about how we build and support businesses that power prosperity for the many, not the few.

Scott DeRue, Dean of The University of Michigan Ross School of Business.

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