Corporate America is breaking with Donald Trump

Executives are now more worried about democracy than their tax bills or the president’s tweets

Andrew Edgecliffe-Johnson

© Ingram Pinn/Financial Times


In recent days, leading US industry associations, chief executives, investors and business school professors have issued oblique rebukes of Donald Trump’s suggestions that he may not abide by the results of next week’s election if he does not like them. Most have been carefully worded but, as with any artfully indirect social media post, their meaning has been unmistakable. 

Most notably, several of the US’s biggest industry groups joined forces on Tuesday on a statement as striking as it was anodyne. 

“We urge all Americans to support the process set out in our federal and state laws,” they wrote. That such traditionally cautious groups felt the need to say this speaks volumes. As anyone who has ever haggled over the phrasing of a statement with so many authors will tell you, its lowest-common-denominator wording was also as close as the business community will come to sending a shot across the president’s bows.

Faith-based investors had urged business A-listers who were keeping quiet to champion a peaceful transfer of power or risk being seen as “complicit in the chaos”. JPMorgan’s Jamie Dimon is one of the few to do so, though Expensify’s CEO went as far as to implore the 10m users of its expenses software to vote for Joe Biden because “not many expense reports get filed during a civil war.” 

Whether hesitant or hyperbolic, these statements all carry the same message: there is a growing consensus in corporate America that Mr Trump is no longer good for business. That represents a sharp change since the start of the president’s term, but also an understandable consequence of what has happened since. 

Back in 2017, “business leaders held their nose and engaged in dialogue with this president because they saw some immediate financial opportunities and decided to look past what some wanted to believe were just stylistic peculiarities”, recalls Aron Cramer, CEO of BSR, a group which helps multinationals navigate their social responsibilities. 

Those opportunities were quickly realised, in the form of deregulation and a historic cut to corporate tax rates. But even early on they also came with sharp disagreements over tariffs, immigration, racist violence and environmental policy. 

Once tax cuts were in the bag, “the business relationship went from the good, the bad and the ugly, to just the bad and the ugly”, remarks Bennett Freeman, an adviser to companies on labour and human rights issues. 

Share prices rose, but CEOs found themselves having to manage trade wars, growing divides among staff and customers, and threats to the status of employees who held visas or were brought to the US illegally as children. 



And as big companies embraced “stakeholder” causes, from inclusion to environmentalism, Mr Trump espoused a dated caricature of capitalism: his focus on stock markets as the yardstick of economic progress made him look like one of the last devotees of Milton Friedman’s shareholder primacy doctrine. 

His inattention to issues such as economic inequality, racial injustice and climate change also forced reluctant CEOs to fill the void by speaking out on politically charged topics they would rather avoid. 

Corporate America is no political monolith. In industries such as healthcare and energy, many executives still believe Mr Trump would be better for their bottom lines. Yet fear of Mr Biden’s agenda is ebbing. As a recent PwC survey shows, executives worry Democrats would raise taxes but believe Mr Trump would be worse on US-China relations, immigration and foreign policy.

Markets’ relative stability as Mr Biden has led the polls supports this view. Polls also explain executives’ willingness to turn their backs on Mr Trump as the risk of speaking out has fallen with his re-election chances. 

Most executives entered 2020 determined to avoid getting sucked into a bitterly contested election. Their belief that the Trump administration handled the pandemic and the racial justice protests that have defined this year less capably than their companies changed the equation. 

But it is only recently that executives have come off the fence, as Mr Trump’s musings about not accepting a peaceful transfer of power tested companies’ vaunted conversion to social responsibility, notes Deepak Malhotra. The Harvard Business School professor wrote a letter signed by more than 650 academics, which urged executives to speak out against the threat they argue the president poses to the republic. 

“The pendulum often swings left to right but here’s something that might rip the pendulum off the clock,” he argues. 

In private conversation, business leaders have run through the worst-case scenarios. If a peaceful transfer of power looks doubtful, BSR’s Mr Cramer says, top executives would quickly make their alarm public, not least to congressional Republicans, who understand the risk of alienating donors. 

Whether or not the subtweets become a tweetstorm, CEOs who once dreaded @realDonaldTrump tweets have lost their fear of the man behind them. 

They got the tax cuts they wanted and see little to lose in breaking with him now. 

Three strongmen and their battle for the Middle East

The Russian, Turkish and Saudi leaders are engaged in a struggle for power and influence

Gideon Rachman 

© James Ferguson


Vladimir Putin, Recep Tayyip Erdogan and Mohammed bin Salman have a lot in common. The Russian, Turkish and Saudi leaders are all nationalists with regional ambitions. They are autocrats who have centralised power and have been ruthless with domestic political opposition. And they are all risk-takers, who are happy to use military force.

These three strongmen are also believers in the diplomacy of personal relations. Like mafia dons, they can be best friends one day and bitter enemies the next. That matters because their often conflicting interests are fomenting conflict across a swath of territory from the Middle East to north Africa and the Caucasus. If their rivalries get out of hand, civilians will suffer.

The relationship between Mr Putin and Mr Erdogan is particularly peculiar. The presidents of Russia and Turkey have backed conflicting sides in three regional conflicts — Syria, Libya and now Nagorno-Karabakh. At times, they have clashed directly — the Turks shot down a Russian plane over Syria in 2015. Turkish troops were killed in bombing raids in Syria, earlier this year, by Moscow-backed Syrian forces.

Yet the Russian and Turkish leaders retain a wary friendship. To the outrage of its Nato allies, Turkey chose to buy S-400 anti-aircraft missiles from Russia. When Mr Erdogan was almost overthrown in a 2016 coup attempt, Mr Putin quickly offered support, while the US remained silent.

The reason that the two presidents instinctively understand each other is linked to why they clash with each other. Both are anti-US autocrats, seeking to expand their influence into the power vacuum created by a reduced US role in the Middle East. They are willing to act, while the EU hovers on the sidelines. Mr Putin and Mr Erdogan are not the only ambitious, strongman leaders jostling for influence in their shared neighbourhood. A third key player is Prince Mohammed bin Salman — the crown prince and de facto leader of Saudi Arabia — who is much more closely aligned with Washington.

The willingness to use violence — at home and abroad — links all three. Mr Putin annexed Crimea in 2014, intervened in Syria in 2015 and has authorised a range of intelligence black-ops, including allegedly the attempted murder of Alexei Navalny, his most dangerous domestic political opponent. Prince Mohammed has launched a war in Yemen, blockaded Qatar and has taken responsibility as Saudi leader for the 2018 murder of the journalist, Jamal Khashoggi, although he denies personal involvement.

Mr Erdogan has sent Turkish troops into Syria and Libya and is risking another military conflict in the eastern Mediterranean with Greece — while supplying military support to Azerbaijan, in its struggle with Armenia. At home, the Turkish president increasingly locks up political opponents, journalists and civil-rights activists.

To some extent, these three leaders are engaged in a zero-sum struggle. The Turkish-backed government of Libya is battling Saudi and Russian-backed rebels. Turkey’s support for Qatar and the Muslim Brotherhood, and its closeness to Iran, enrages Saudi Arabia.

The Saudi-Russian relationship is more complex. Mr Putin helped to rehabilitate Prince Mohammed, after the Khashoggi murder, with an infamous high-five at a G20 summit in 2018. But the Russian and Saudi leaders fell out badly over oil prices this year.

By and large, however, the three leaders have been able to manage their conflicts. Russia and Turkey may be on opposite sides of the Syrian civil war — but their most urgent priorities are compatible. For Mr Erdogan, it is stopping the establishment of a secure Kurdish enclave within Syria. For Russia, it is preventing the fall of Syrian president Bashar al-Assad.

But these carefully balanced accommodations can easily come unstuck. After two weeks of fighting, the Russians brokered a ceasefire in the conflict between Azerbaijan and Armenia over Nagorno-Karabakh. But the peace is fragile, there are already reports of fresh fighting and, while Turkey is wholeheartedly behind Azerbaijan, Russia has a defence treaty with Armenia. Moscow is unlikely to tolerate the long-term expansion of Turkish influence on former Soviet Union territory.

All three leaders also have delicate balances to strike between foreign intervention and domestic stability. At the time of Mr Putin’s Crimea annexation, Russians joked that they were faced with a choice between the television and the refrigerator. The fridge was empty, but the TV was full of news of exciting military victories. Mr Putin’s popularity soared after his Crimean success. But, as the economy has struggled and nationalist fervour has subsided, he has faced new, fridge-driven discontent.

Mr Erdogan faces a similar trade-off. Turkey’s military adventures are bolstering his popularity at a time of economic weakness. But small wars overseas can eventually be seen as a waste of resources, particularly if they start to go wrong. Prince Mohammed has a version of the same dilemma. His decision to launch a war in Yemen excited many young Saudis. But a quick victory has not materialised and the Saudi economy is suffering from low oil prices.

As their economies struggle, all three leaders need more than ever to demonstrate strength overseas. The danger of clashes between them is rising.

Should Fiscal Policy Get More Chinese?

New IMF research suggests the rich world substantially increase public investment

By Nathaniel Taplin

             The Chinese model. / PHOTO: ALEX PLAVEVSKI/SHUTTERSTOCK


China spends too much on infrastructure. The U.S. and some other wealthy countries, it is widely accepted, invest too little. Now the International Monetary Fund, long a champion of fiscal rectitude, is suggesting that rich countries inch a bit further in China’s direction by substantially increasing public investment.

An unusual confluence of factors suggests the IMF’s note last week may be right. Interest rates are near record lows. Public capital stock in wealthy countries, particularly the U.S., has badly eroded. The level of uncertainty about growth is particularly high, even by the standards of past recessions.

And global political winds are shifting: Once the pandemic dies down, a significant effort to diversify supply chains away from China is likely. To take advantage, countries need solid infrastructure—both the hard physical type and “soft” kinds like a healthy, well-educated populace and well-funded research institutions.


Recent research on public investment highlights some interesting trends. A July working paper from the World Bank found that while returns to infrastructure and government investment were higher in China than in the U.S. for most of the 1980s, ‘90s and early 2000s, the opposite has been true for much of the past decade.

The IMF has come to similar conclusions: It blames much of the slowdown in Chinese productivity growth—which has roughly halved since 2009—on falling returns to investment in infrastructure. But it finds that the stock of public capital in rich countries has eroded greatly relative to output since the early 1990s. Fixing all of America’s roads and bridges alone would cost an estimated 3.5% of GDP, the fund says.

Interestingly, the IMF also finds that when economic uncertainty is very high—as measured by how widely dispersed forecasters’ growth estimates are—fiscal policy sparks private-sector investment as well, perhaps because private companies see a big fiscal push as a strong signal of a government’s commitment to growth and stability. 

The IMF finds that an unexpected fiscal investment expansion of 1% when uncertainty is high leads to output gains of about 2.7% and private-investment gains of about 10.1% after two—but a small negative impact on both when uncertainty is low.

And uncertainty has been very high indeed in 2020: The IMF’s data shows that the standard deviation of forecasts for U.S. and eurozone growth in early 2020 was orders of magnitude greater even than in late 2008. What this means is that right now, boosting public investment could pack a particularly big punch.

There are some significant caveats, though. The IMF finds that when companies are highly leveraged, the evidence of a positive impact on private investment disappears. 

For the U.S., where corporate leverage has risen quickly in recent years and jumped even further in the wake of the coronavirus, that might dilute some of the benefits. Spreads on U.S. junk bonds have declined sharply since their spike this spring, but still remain well above late-2019 levels.

China has gone too far building infrastructure and has already paid a substantial price in lost productivity. But for wealthy countries that have run too far in the other direction over the past three decades—particularly those where companies have been relatively prudent—now might be a uniquely good time to invest in the rusty underpinnings of the economy.

Strait shooting

Defending Taiwan is growing costlier and deadlier

Would America have the stomach for such a fight?


Rousing music accompanies the h-6k, a hulking Chinese bomber, as it sweeps up into a pink sky. Moments later, its pilot presses a red button, with the panache and fortitude that only a People’s Liberation Army (PLA) officer could muster, and a missile streaks towards the island of Guam. 

The ground ripples and a fiery explosion consumes America’s Andersen air force base. 

Never mind that the pla propaganda film released in September pinches footage from Hollywood blockbusters; the message is that this is what America can expect if it is foolhardy enough to intervene on behalf of Taiwan in a regional war.

China’s Communist Party claims Taiwan, a democratic and prosperous country of 24m people, although the island has not been ruled from the mainland since 1949. 

A tense peace is maintained as long as Taiwan continues to say that it is part of China, even if not part of the People’s Republic. 

China once hoped that reunification could be achieved bloodlessly through growing economic and cultural ties. But two-thirds of Taiwanese no longer identify as Chinese, and 60% have an unfavourable view of China. 

In January Tsai Ing-wen of the Democratic Progressive Party was resoundingly re-elected as president over a China-friendly rival.

Last year Xi Jinping, China’s leader, declared unification to be an “inevitable requirement for the historical rejuvenation of the Chinese nation”. 

The PLA has stepped up pressure on Taiwan in recent months, sending warplanes across the “median line” that long served as an unofficial maritime boundary and holding large naval drills off several parts of Taiwan’s coast.



Defending Taiwan is growing ever harder. A decade ago China had four times as many warships as Taiwan. 

Today it has six times as many. It has six times the number of warplanes and eight times as many tanks. China’s defence budget, merely double Taiwan’s at the end of the 1990s, is now 25 times greater (see chart).

American intelligence officials do not think that China is about to unleash this firepower. The PLA’s amphibious fleet has grown slowly in recent years. 

China has never held even a single exercise on the scale that would be required for a d-Day-type campaign. Indeed, no country has assaulted a well-defended shore since America did so in Korea—with good reason.

Although China could wipe out Taiwan’s navy and air force, says William Murray of the us Naval War College, the island would still be able to fire anti-ship missiles at an invading armada, picking out targets with mobile radar units hidden in the mountainous interior. That could make mincemeat of big ships crossing a narrow strait (see map). 

“The PLA can’t use precision weapons to attack small, mobile things,” says Ethan Lee, who as chief of general staff at Taiwan’s defence ministry in 2017-19 developed a strategy for asymmetrical warfare.


Nor can China put all its forces to use. “Only a fraction of the pla could be deployed,” says Dennis Blasko, a former American army attaché in Beijing, “because its overwhelming numbers can’t all fit into the Taiwan front or in the airspace surrounding Taiwan at one time”. 

Satellite reconnaissance would give Taiwan weeks of warning to harden defences and mobilise reserves. Mr Blasko thinks a nimbler air assault, using helicopters and special forces, is more likely than an amphibious attack. Even then, he says, the island is “very defensible, if it is properly prepared and the people have the will to defend it”.

Alas, Taiwan’s preparedness and its will to fight both look shaky. “The sad truth is that Taiwan’s army has trouble with training across the board,” says Tanner Greer, an analyst who spent nine months studying the island’s defences last year. “I have met artillery observers who have never seen their own mortars fired.” 

Despite long-standing efforts to make the island indigestible, Taiwan’s armed forces are still overinvested in warplanes and tanks. Many insiders are accordingly pessimistic about its ability to hold out. Mr Greer says that of two dozen conscripts he interviewed, “only one was more confident in Taiwan’s ability to resist China after going through the conscript system.” 

Less than half of Taiwanese polled in August evinced a willingness to fight if war came.

A vital question is therefore whether Americans would do so, for the sake of a distant country whose defence spending has fallen steadily as a share of gdp over two decades. America does not have a formal alliance with Taiwan. 

But it sells the island weapons—$13bn-worth over the past four years—and has long implied that it would help repel an invasion if Taiwan had not provoked one. 

Yet the same trend that imperils Taiwan in the first place—China’s growing military power—also raises the price of American involvement.

In wargames set five or more years in the future, “the United States starts losing people and hardware in the theatre very quickly,” says David Ochmanek of the rand Corporation, a think-tank. 

“Surface combatants tend to stay far from the fight, forward air bases get heavily attacked and we’re unable to project power sufficiently into the battlespace to defeat the invasion.” 

America is disadvantaged by geography, with its air force reliant on a handful of Asian bases well within range of Chinese missiles. American bombers can swoop in from the safety of American soil, but there is a shortage of missiles to arm them. 

Nor is it clear how America’s technology-dependent armed forces would fare against an inevitable physical and electronic barrage on their satellites and computer networks.

In another wargame conducted earlier this year, the Centre for a New American Security (CNAS), another think-tank, assumed that Taiwan would fight tenaciously and that America would have access to weapons still under development. 

Under those rosier circumstances, the island survives—at least after ten notional days of combat—but even then only at huge cost. The seas around Taiwan would look “like no-man’s-land at the Somme”, notes Christopher Dougherty of CNAS.

The question is whether America has the stomach for this. The conquest of Taiwan would not just dent American prestige but also expose the outlying islands of Japan, an ally America is pledged to defend. 

The Trump administration has sent several high-level officials to Taipei to show its support—one reason for the recent Chinese bluster. In Congress support for Taiwan is at “new highs”, says Bonnie Glaser of the Centre for Strategic and International Studies (csis), another think-tank.

Polls by csis show that Americans broadly support coming to Taiwan’s aid, roughly as much as they support helping South Korea, Japan or Australia. Such enthusiasm may wane, however, if American ships start getting sunk in large numbers.

American losses in the cnas wargame amount to a hundred or so aircraft, dozens of ships and perhaps a couple of carriers. “An aircraft-carrier has 5,000 people on it,” says Mr Murray. 

“That’s 100 voters in every state of our union. That’s a lot of funerals.”

Fear of such losses might deter an American president from entering the fray. But incurring them might stiffen American resolve. America and its partners can use this dynamic to their advantage, says Elbridge Colby, a former Pentagon official. 

If American troops were to disperse in allied countries like Japan and draw on allied support to repel a Chinese attack, China would have to choose between striking a wide range of targets beyond Taiwan, and outraging American and Asian public opinion, or sacrificing military advantage.

Escalation might go even further. The fact that Chinese nuclear missiles can now reach any American city raises the stakes dramatically. “When the bullets really start flying,” says Michael Hunzeker of George Mason University, “the American people, most of whom can’t find Taiwan on a map, will be hard-pressed to say, ‘No, I’m really willing to trade Los Angeles for Taipei.’”

Taiwanese officials acknowledge these grim trends. Even if America is willing to come to Taiwan’s aid, that is no use if it is not capable of doing so, Su Chi, a former secretary-general of Taiwan’s National Security Council, has argued. But the logical response, transforming Taiwan’s own defences, is hard when only a fifth of people think war will come. 

In the sleepy fishing village of Zhuwei, on the north-west coast, an area thought to be a prime landing site for the pla, tourists eat stir-fried seafood in restaurants as multicoloured fishing vessels bob in the harbour. 

“The Chinese won’t invade,” says Lin Fu-fun, an airport safety inspector who has come to watch the waves splash on a jagged breakwater. “Our language and culture are the same.” 

In Search of a Solution to Russia’s Strategic Problem

By: George Friedman


Russian President Vladimir Putin described the collapse of the Soviet Union as the greatest geopolitical catastrophe in history. Though it may not be true of all of history, it is certainly true of modern Russian history, because it cost Russia what it needs most: strategic depth. 

Until 1989, Russia’s western border was effectively in central Germany. The Caucasus shielded Russia from the south. 

Central Asia was a vast buffer against South Asia and potentially China. The Russian heartland, in other words, was secure from every direction.

The fall of the Soviet Union pulled its western border back behind the Baltics, Ukraine and Belarus. Russia retained the North Caucasus but lost the South Caucasus – Azerbaijan, Georgia and Armenia. 

Central Asia broke down into independent states. This contraction of Russia represented not only a diminution of size but a decreased distance between potential enemies.

Russia inevitably sought to redraw the borders before a serious threat emerged. That no serious threat existed gave Russia some time. But for a country like Russia, insecurity can manifest quickly. 

Germany went from being a national wreck to an existential threat in less than a decade. The Russians had to increase their strategic depth, but they had to do so without triggering the attack they feared before their depth was increased.

We have seen three events in recent months – one in Belarus, one in the South Caucasus, one in Kyrgyzstan – that together encompass portions of the borderlands Russia lost. To be clear, it is always possible to see three disconnected events connected by logic, and to assume that this logic has anything to do with Russia’s strategic problem. 

Coincidences abound in history and these three events do not even constitute a perfect coincidence. Even so, where coincidences are accidents that appear to be deliberate, it is easy to dismiss deliberately connected events as simple coincidence. The answer to this is to simply note that a coincidence has occurred, and that regardless of intent by anyone, a coincidence could have the same consequence as an intentional event.

In Belarus, a key buffer on the North European Plain, longtime President Alexander Lukashenko was reelected in what many describe as an illegitimate election in August. 

Protests against the results have gone on more or less ever since. Russia’s relationship with Lukashenko is complicated – he tries to balance between Russia and the West when he can – but Lukashenko could hardly be described as pro-West. 

He and Moscow have their differences, but Moscow has always been very influential in Minsk and thus has always had an imperfect solution to its strategic dilemma to the west. If Lukashenko were replaced with someone more antagonistic toward Russia or more sympathetic to the West, it could effectively move NATO, Poland and the Americans farther east, relegating cities such as Smolensk to border towns.

In Kyrgyzstan, which sits between Russia and China, there is similar political unrest. 

Here, too, an election has resulted in claims of fraud and large-scale demonstrations. 

The Russians have some military facilities there, but the most important point is that it provides a buffer between Russia and China. 

Russia and China are not currently at odds, but they fought each other as recently as the 1960s. Though that was 60 years ago, geopolitics tends to repeat itself, and whatever current interests might guide them, both are old hands at the shifts of history, and neither wants the other to have an advantage. 

It’s unclear whether the Belarusian playbook will work here, but Moscow has a stake in what happens, and given the likelihood that an arbiter will be needed, involvement would not be surprising.

In the South Caucasus, a war has broken out between Azerbaijan and Armenia over Nagorno-Karabakh, a disputed enclave governed by ethnic Armenians inside Azerbaijan. Broadly speaking, Azerbaijan is backed as before by Turkey, a country with whom Azerbaijan has an ethnic affinity, while Armenia is supported by Russia. 

But the conflict is much more complicated than that. For one thing, Azerbaijan has important relations with Russia that it cannot afford to sever. For another, Russian intelligence would surely have been aware of war preparations in Azerbaijan and so would have advised them to back off given Moscow’s relations with Armenia. That didn’t happen. 

Last, Russia has noted that the treaty it has with Armenia does not include Nagorno-Karabakh and that therefore Moscow has no obligation to intervene militarily on Armenia’s side. The Russians are clearly using the war to increase their influence with Azerbaijan, the most powerful and wealthy country in the South Caucasus. (Moscow helped to broker a cease-fire, but it quickly fell apart.) 

Without Russia, Armenia has few options. Georgia, which was invaded by Russia in 2008, won’t be much help, and the United States, which helped Georgia in said war, will likely choose to abstain. 


By appearing to shift their support from Armenia to Azerbaijan or, more precisely, bringing them both into the Russian orbit, the Russians solve a vital strategic problem. 

First, it helps to secure the South Caucasus, which, second only to Eastern Europe, is the path most likely taken by potential invaders. Second, by increasing control of the South Caucasus, the North Caucasus are made more secure. 

Of course, Russia already controls the North Caucasus and maintains a strong line of defense there, but Chechnya and Dagestan are home to militant Islamist movements, which Moscow claims are supported by the U.S. through intermediaries from the South Caucasus. True or not, Moscow isn’t taking any chances.

So we see events in Russia’s western and southern frontiers playing out in such a way that the geopolitical catastrophe Putin spoke of is being rectified. There are no tanks rumbling in either direction, but the politics of the situation appear to be heading that way. Of course, all of this may be coincidence 

But it’s interesting to note the process that coincidence or calculation seems to have put in motion. But the Russians aren’t fools, and with Armenia and Azerbaijan aligning with Russia and Turkey excluded from the game, Georgia is isolated, and a repeat of 2008 would undermine the subtlety of the Russian move.