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Faculty Viewpoints

Business Leaders Must Demand Truth over Tantrums

Professor Jeffrey Sonnenfeld argues that the ongoing political standoff over a border wall and the consequent government shutdown are doing tangible damage to the American economy. Business leaders can’t afford to stand by, he says; they must shoulder their responsibility as civic leaders and create a path out of the stalemate.

The Washington Monument seen through bars on a window.

Photo: Chip Somodevilla/Getty Images

  • Jeffrey A. Sonnenfeld
    Senior Associate Dean for Leadership Studies & Lester Crown Professor in the Practice of Management

This article originally appeared in Chief Executive.

For the past 2,500 years, the most influential military strategic guide has been The Art of War, attributed to Sun Tsu. Sun Tsu warned, “To a surrounded enemy, you must leave a path for escape.” Otherwise, with no visible dignified retreat or hope for survival, an adversary will fight to the finish instead of finding a mutually beneficial early truce.

Business cannot watch in amusement as if the fight-to-the-finish government shutdown was an episode of World Wide Wrestling featuring bellicose, non-strategic gladiators. As we approach the longest government shutdown in almost a half century, business leaders have become alarmed. This week we saw dueling wooden, hypnotically read, rehearsed, and unconvincing primetime TV appeals to the nation by President Trump and House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer. As unsuccessful as were those blanketed broadcasts, things were even worse the next day when Trump stormed out of a White House meeting with his opponents after 30 minutes—perhaps forgetting that the White House is his own residence. Hopefully he got back in and did not have to look in the windows from the bushes with former top staffer Omarosa.

While some offer reassurance that much of the U.S. government is fully funded, the partial shutdown is corrosive to the U.S. economy and our national brand image, while unjustly punishing almost a million innocent devoted government employees. Astoundingly, the highly respected centrist veteran political columnist Michael Barone cavalierly suggested this week that the government shutdown may be no big deal: “Government shutdowns, formerly headline news, seem less painful these days (three-quarters of government is funded). Looks like stalemate.”

Apparently, Barone did not notice that last month completed the worst year on U.S. stock markets in a decade and was the worst single month since the Great Depression. The Wall Street Journal reported that the furloughed government workers in this shutdown will interrupt 10 years of continued job growth, destroying what was the longest growth streak in over 80 years, launched in the Obama administration. In fact, the Journal pointed out that the Securities Exchange Commission has furloughed thousands of employees needed to review and approve corporate registration statements, including all proposed IPO filings. With SEC accountants and lawyers unable to work, the surge of all new IPOs—including those for such major firms as ride hailing services Uber and Lyft—have ground to a halt.

The nation’s health and safety are put in jeopardy as food inspectors overseeing 80% of the nation’s food supply, charged with detecting contamination that kills thousands each year, go without pay for over a month. TSA security screeners protecting us from terrorists call in sick. Farmers, grocers, and other businesses have been devastated by the inability to access needed government services. Leading bank economists have reduced economic growth forecasts.

The tantrums and stare downs have been productive—but only for legal scholars! In a fresh New York Times column, Yale Law School’s Bruce Ackerman invoked historic lessons to suggest why Trump’s recourse to declare a national emergency will not be deemed constitutional, while the Federalist responded with counter-legal analysis to support Trump’s discretion. Surprisingly, even the normally pro-administration Fox & Friends has concluded that Trump’s prospective declaration of a national emergency would itself be a national disaster and an undermining of the balance of powers in government, which could be abused by a Democratic president. The National Review and the Wall Street Journal warned that a presidential declaration of national emergency would strain the limits of executive power and launch a dangerous precedent justifying tyrannical presidential fiats on compelling issues, ranging from healthcare and abortion to gun violence and climate change. Others add concern over the challenge of preventing tunneling under a wall and the seizure of private property.

It is hard for the Democrats to explain continued resistance when the price tag has dropped from almost $40 billion for this wall last year to $4.7 billion this year. Democrats have previously backed existing, insufficient fences, which needed reinforcement, without labeling their construction as fundamentally racist. It is equally hard for Trump to explain how, contrary to his rhetoric, his own government agencies report virtually no terrorists crossing the southern border illegally—and the illegal drug interdiction Trump announced actually is captured completely at legal ports of entry.

“The needed path for dignity must be provided by the oddly silent U.S. business community, which has been passively watching this mutually assured destruction in horror.”

In fact, the fearmongering offered is refuted by statistics that show that natural born U.S. citizens have far higher crime rates, including violent crime, than immigrant or illegal alien populations. The pathetic argument that Mexico may yet be paying for the wall through the new NAFTA II or the USMCA deals is false, as they generate no government revenues and they have not even been ratified by any of the three nations. It is also confusing to all that a unanimous Senate vote, once supported by Trump, for government funding with no wall was rescinded after he chafed at criticism from a few hard right pundits.

A chillingly prophetic 1958 TV Western series called “Trackdown” featured a character named Walter Trump who claimed he would build a wall in order to protect a town from the end of the world, and it did not end well.

At our Yale CEO Summit last month, fully half the group voted that instead of a booming economy, a recession was likely in the next year. When asked to select between a dozen different economic and geopolitical factors that could destabilize financial markets, the CEOs overwhelmingly selected “U.S. domestic political instability” as the nation’s great threat, more than war, trade conflict, the Federal Reserve, European instability, or Chinese, North Korean, or Russian mischief.

Harvard economist D. Quinn Mills warned in an interview for this piece, “Our two political parties represent more than their political objectives and their members; they represent democracy to the world. They have a duty to democracy and this is at the core of their representation of the U.S. as leader of the free world. The shutdown is making democracy look ineffective in face of an increasing challenge abroad from dictatorships. Our political leadership has a duty to end the shutdown now, regardless of who gains in American domestic politics.”

Yes, in a twist of Commodore Oliver Hazard Perry’s 1812 claim “We have met the enemy and they are ours,” cartoonist Walt Kelly’s star character, a swamp possum named Pogo, warned, “We have met the enemy and it is us.”

The needed path for dignity must be provided by the oddly silent U.S. business community, which has been passively watching this mutually assured destruction in horror. The Business Roundtable, the U.S. Chamber of Commerce, the Committee on Economic Development, the National Association of Manufacturers, the Business Council, and the like should stop writing bland white paper policy nostrums or lobbying for parochial targeted regulatory reforms. In fact, the market gains from last year’s hard-fought tax reform have been resoundingly crushed by the recent market collapse. Business leaders must use their collective voices to explain to both political parties that they are jeopardizing the health and safety of our nation more than does any of our external adversaries.

Related: Citizen Trump And The Boulevard Of Bedlam

Department: Faculty Viewpoints