China’s Communist party: a role model for American CEOs
In recent years, Howard Schultz, the founder and chief executive officer of Starbucks, has battled to change how we drink coffee. Now he is engaged in a tougher mission. Last week in Washington, Mr Schultz took to a platform at a vast investment conference and made an appeal for political reform. More specifically, he repeated a call he first uttered last year that businesses and investors stop funding politicians, unless the politicians pledge to break the poisonous gridlock in Washington.
Will anybody listen? Don’t hold your breath. Last year Mr Schultz said that 100-odd executives were promising to follow his lead. Last week I chatted with dozens of chief executives of American companies in Washington for a forum. No one there seemed about to launch a funding strike.
But if you want to understand why Mr Schultz’s comments matter, take a look at a survey by the Conference Board for the Business Council, an industry body. This asked 70 CEOs how they evaluated the economic and political climate. The results were striking. When this group was asked which global institutions they considered most competent and credible, the body they put in first place was . . . er . . . themselves (about 90 per cent of these CEOs think that “multinational corporations” have been “moderately”, “very” or “most” effective in handling the challenges created by the economic crisis and financial shocks). After this, they admire central banks: almost 80 per cent deemed these “moderately”, “very” or “most” effective.
But the group that grabbed third place was the Chinese Communist party leadership: it garnered a 64 per cent approval – or “effective” – vote for how it has handled political and economic challenges in recent years. This was way ahead of the US president’s ranking (33 per cent) and the US Congress (with a dismal 5 per cent). Yes, you read that right: American capitalist CEOs apparently think that “Communist” bureaucrats have been more effective than democratic western politicians.
This finding partly reflects the rise of China, which has done an impressive job of keeping its giant economy growing since 2007. There is no guarantee this can continue, but what impresses some global CEOs is how the Chinese government takes a long-term policy view. “The Chinese have some policies we hate, but at least we know what those policies are,” one CEO said, complaining that “the problem in the US is that policy making is so short-term . . . nobody knows what will happen next.”
The other side of the equation goes back to Mr Schultz’s appeal. When the Business Council asked CEOs what they most badly wanted to see from their government, they put tackling fiscal woes and boosting economic growth first. But near the top was “leadership to end domestic political stalemates”. Those CEOs are also upset about gridlock.
If you want to be an optimist, you might view this as just a short-term phenomenon. America has suffered plenty of malaise before and Congress is designed to have checks and balances. If one party sweeps the polls in November, gridlock might end: today’s rhetorical posturing might turn into a consensus for action. It is possible, though, to be much gloomier. Never mind that polls suggest the 2012 race will be a close call. What is more worrying is that Washington’s gridlock may reflect bigger social splits. In particular, as authors ranging from Charles Murray to my colleague Edward Luce argue in their new books, it seems American society is becoming more polarised in an economic, social and political sense. Fragmentation is being exacerbated by the fact that powerful interest groups are using their cash to further their own ends.
This is why men such as Mr Schultz are worried. But it is also why businesses are unlikely to go on a funding strike. As polarisation grows, they fear they must spend ever bigger sums to protect themselves. It is a structural tragedy, in every sense. George Washington may yet spin in his grave. Or Chairman Mao might chuckle.