Can Corporate America Protect Democracy?

The Department of Justice’s recent decision to drop its investigation of current Federal Reserve Chair Jerome Powell and the Trump administration’s nomination of Kevin Warsh to succeed Powell suggest that the White House is at last beginning to heed the growing concerns of a broad array of important figures in business and finance. In the past year, economists, former Fed chairs and Treasury secretaries, Republican lawmakers, and (perhaps most notably) JP Morgan Chase CEO Jamie Dimon have all spoken out in defense of the Fed’s independence. Their pivot came after months of corporate silence as the administration ratcheted up its pressure on Powell and on Fed Governor Lisa Cook. In corporate America during the Trump era, the public and unified advocacy for Fed independence stands out as an exception; the rule has been to keep one’s head down, as business leaders have stayed mum on a variety of extraordinary threats to their enterprises and to the broader economy. The situation represents a stark contrast to the era of stakeholder capitalism, which reached its apogee toward the end of the 2010s. In 2019, 181 CEOs signed onto the Business Roundtable’s Statement on the Purpose of a Corporation, which expanded the industry conception of a company’s constituency to include customers, employees, suppliers, and communities. By the start of 2020, when business leaders at the World Economic Forum’s annual meeting in Davos came to together to champion stakeholder capitalism, so-called sustainable assets that consider environmental, social, or governance (ESG) concerns reached over $30 trillion globally—36 percent of all assets under management. The rise of stakeholder capitalism was less a repudiation of shareholder primacy than an acknowledgment that so-called externalities matter for business performance. The risks of externalities such as climate change, executives came to understand in this period, needed to be managed, and there were commercial benefits to be gained from doing so. But as momentum grew, mission creep set in. Companies responded to the murder of George Floyd in June 2020 and the reckoning over racism that followed by matching their commitments to net-zero greenhouse-gas emissions with a flurry of programs and proclamations on social justice and diversity, equity, and inclusion (DEI). Unfortunately, it did not take long for ESG and DEI to become confusing shorthand for corporate responsibility, good intentions, and sometimes performative activities that conflated material business risks with a spate of more nebulous concerns. Although largely well meaning, the medley of corporate pronouncements stoked significant resistance from many quarters. By 2024, a backlash against what detractors had come to deride as “woke capitalism” was building, just in time to help Donald Trump regain power. The hush that has accompanied Trump’s return to the White House is not simply a pendulum swing. During the era of stakeholder capitalism, executives felt empowered to take strong stands on issues that they had historically addressed through political channels. By contrast, the corporate quiet of the current moment comes as the threats to the interests of individual companies and to the economic foundations on which they rely are much more fundamental. Today, unwillingness to appear political or partisan (and an intense fear of provoking the president’s ire) is preventing executives and investors from contending with material and systemic risks created by the Trump administration’s assaults on various institutions and flouting of traditional norms: the erosion of the rule of law, the compromised independence of federal agencies, and the intimidation of entities responsible for knowledge discovery and dissemination in an increasingly anarchic information ecosystem. Adherents to the shibboleth that markets price in risk, business leaders have counted on the sensitivity of financial securities to restrain the administration. Yet although the bond markets have wavered at times, record-high stock prices do not yet reflect these real and present risks. The irony is that corporate silence poses dangers not only to the foundational pillars of democratic capitalism but also, by extension, to bottom lines. To navigate the rest of the Trump era, corporate leaders must figure out how to differentiate mere commercial concerns from systemic risks that would imperil the freedom of the markets on which their companies depend. They must judge when the president’s agenda undermines not just their particular interests but also the broader system in which they operate. Corporate leaders should coordinate in identifying these systemic redlines and planning concerted responses for when those lines are crossed, defending the laws, norms, and institutions that make commercial and civic life possible in the United States. LEGAL EASE For centuries, the rule of law has been the sine qua non of a stable political and economic system. The rule of law makes economic activity predictable: contracts are enforceable, disputes can be resolved through the courts, regulations do not change arbitrarily. It ensures that individuals and companies can own assets and retain the profits those assets generate and gives businesses the certainty to plan, invest, hire workers, expand operations, and take risks. Strong legal systems reduce volatility and transaction costs—including insurance and risk premiums for business, municipal, and sovereign borrowers—and give firms and investors faith that a marketplace is stable, fair and competitive. Historically, the United States’ uninterrupted rule-of-law track record has made it a safe haven for capital and an attractive destination for investment and innovation. Perhaps the most blatant violation of the rule of law is outright corruption. Crony capitalism—reliant on bribes, personal connections, or self-enforcement—is costly and inefficient. Corruption takes a measurable toll on prosperity: good-governance experts estimate that corruption reduces global GDP by five percent—approximately $5 trillion—every year. Most crony-capitalism watchers have typically focused on unstable regimes outside the United States, but they are increasingly attentive to corruption in the Trump administration, which stands accused of profiteering from various cryptocurrencies; accepting emoluments from foreign governments, including a $400 million jet from Qatar; and self-dealing by multiple cabinet members and senior officials. Yet despite the unprecedented levels of graft, business leaders have raised little in the way of public objection. Less blatant but no less pernicious are the administration’s myriad challenges to the rule of law in its foreign and domestic policy: its unilateral imposition of sweeping tariffs, its decision to wage war in Iran without consulting Congress, its general disregard of administrative procedure and due process, and its menacing messaging on free and fair elections. Respect for the rule of law in all its forms remains a linchpin of liberal democratic capitalism. As former Supreme Court Justice Felix Frankfurter famously argued in 1943, “The history of liberty has largely been the history of observance of procedural safeguards.” The rule of law makes economic activity predictable. In recent years, U.S. business leaders have sometimes risen to the occasion in defense of these safeguards. In 2021, for example, 700 business leaders signed a nonpartisan “We Stand for Democracy” statement protesting efforts by several states to restrict voting rights. In 2023, PhRMA, the leading trade body of pharmaceutical companies, signed an amicus brief in the U.S. Supreme Court case of U.S. Food and Drug Administration v. Alliance for Hippocratic Medicine in support of the FDA’s long-standing approval of the abortion medication mifepristone. The statement was less a foray into reproductive politics than an effort to protect the FDA’s authority to rule on the safety and efficacy of all medicines, providing the “certainty” necessary for research and development and investment in the trillion-dollar pharmaceutical industry. The case, in which only two of the 700 companies had a direct economic interest in protecting mifepristone, underscored the broader connection between rule of law, the integrity of independent federal agencies, and viable commerce. Yet since the beginning of Trump’s second term, only a very few business leaders have sounded the alarm about the rule of law, institutional integrity, or systemic risk. Among the most significant challenges to all three is the administration’s attempt to influence the Fed. As the central bank of the United States, the Federal Reserve has a mandate from Congress to manage interest rates and the money supply to maximize employment and ensure low and predictable inflation. The Fed’s independence—its ability to insulate economic decisions from political pressure—enables the bank to avert boom-and-bust cycles, allows businesses to plan with confidence, and maintains trust in the U.S. dollar and markets. For these reasons, the Fed’s independence is enshrined in law. The 1913 Federal Reserve Act granted the agency statutory authority to set interests rates via an independent board, whose members, including its chair, cannot be removed for policy disagreements. And for these reasons, as the White House doggedly labored to subvert the Fed’s independence by attempting to fire Cook, assailing Powell on social media, and launching a criminal investigation into his oversight of the renovation of the Fed’s headquarters, corporate executives voiced their worries that politicization of the Fed would be deleterious for business. “Everyone we know believes in Fed independence,” Dimon said in January. “Anything that chips away at that is probably not a good idea.” The seemingly understated comment carried tremendous weight, suggesting a path forward for concerted action by CEOs. Attempts to unduly influence the Fed, however, are hardly the only threat to which executives must respond. STATISTICAL SIGNIFICANCE Independent federal agencies such as the Fed serve a number of public-good functions, among them the provision of high-fidelity public data: monthly Bureau of Labor Statistics reports on employment, wages, and consumer spending; Census measures of population, housing, and business activity; and troves of industry-specific information from the Energy Information Administration, the Department of Agriculture, and the Food and Drug Administration, among others. These statistics support billions of dollars in revenue generation and guide trillions in corporate investment each year. For example, to calibrate short- and long-term production goals, the automotive industry, which accounts for five percent of U.S. GDP and ten million jobs, depends on data about auto sales and disposable-income levels collected and published by the Bureau of Economic Analysis; consumer credit information and interest rates from the Federal Reserve; the consumer price index for new vehicles from the Bureau of Labor Statistics; energy prices from the Energy Information Administration; and climate and weather patterns from the National Oceanic and Atmospheric Administration’s Center for Environmental Information for demand forecasting, logistics, inventory, and supply chain management. Inaccurate or dubious data, by contrast, hinders the ability of businesses across industries to plan for and manage their operations or to invest for the future. The commercial value of correctly reported statistical information makes even more remarkable the corporate quiescence when the Trump administration fired Bureau of Labor Statistics Commissioner Erika McEntarfer in August 2025, charging her with “rigging” weak jobs data to reflect poorly on Trump’s handling of the economy. INFO WARS Businesses’ reliance on trusted, reliable, and apolitical government data speaks to the larger importance of impartial, agreed-on facts and information to a healthy democracy and economy. This is why the Trump administration’s attempts to dismantle the institutions that discover and disseminate knowledge are antithetical to a thriving business environment and warrant a more vigorous defense from corporate leaders. Consider the assault on higher education. Over the last half century, research conducted at American colleges and universities, often with federal support, has led to the breakthrough technologies and innovations that have powered the U.S. and global economies. But in little more than a year, the administration has launched multipronged investigations, citing a variety of allegations, including antisemitism and “race exclusionary” practices, student aid fraud, and foreign influence, at approximately 75 schools and cut or frozen hundreds of billions of dollars in federal funding, often for basic research. In doing so, it has not just suppressed freedom of thought and expression, both necessary ingredients in the development of critical thinking and new ideas; it has also begun to repel the talent, domestic and international, emerging and established, involved in that knowledge discovery. The business community has mostly stood by in the face of this onslaught, despite the estimated two dollars in economic output generated for every federal dollar invested in R & D, and the thousands of jobs and billions of dollars in projected loss from cuts to National Institutes of Health and National Science Foundation funding. Threats to the creation and transmission of knowledge and information are not confined to academia. They are also manifest in the Trump administration’s attacks on independent media. The administration has castigated the press as an “enemy of the people,” and his White House has selectively withheld credentials from news agencies and put its thumb on the scale for favorable media mergers. These systemic risks have been exacerbated by technological changes that have transformed the media industry. In 2024 and 2025, the World Economic Forum identified mis- and disinformation as a top global risk. In the United States and around the world, the erosion of traditional business models that once sustained local and investigative newsrooms and the shuttering of thousands of independent media outlets over the last few decades have left local news deserts where communities lack access to reliable information. The result is a fractured and polluted information ecosystem in which people turn instead to social media. Today one in five Americans, and nearly half of adults under 30, get their news from TikTok. For businesses, the consequences of disinformation are material. For example, when specious claims about the linkages between Tylenol and autism made by Health and Human Services Secretary Robert Kennedy Jr. and amplified by Trump circulated widely on social media, the stock price of Kenvue, the maker of Tylenol, sank, erasing a quarter of its $40 billion market capitalization. Kenvue’s experience was not unique; an oft-cited 2019 report by economist Roberto Cavazos in collaboration with the cybersecurity firm CHEQ put the cost of fake news to business at $80 billion per year, an estimate that predates the ubiquity of artificial intelligence–generated deepfake images and fraud. CLASS SOLIDARITY Business leaders are professionals charged with making decisions in the interests of their companies. They are also human beings. Often the matters and measures that define and reward their success—compensation packages, quarterly reporting cycles, industry peer pressure, and demanding boards—skew their incentives toward the short term. With so much at stake, fear and favor are not irrational motivations, and with federal research funding, contracts, investment, licenses, approvals, investigations, litigation, and prosecution on the line, it is hardly surprising that many executives have opted to cut deals with the administration or wait it out in the hopes that the markets restrain its overreach. Nor is it surprising that they have struggled to present a united front. But unlike the collective action problem playing out in higher education or the legal profession, in which sector-specific dynamics and competition can complicate collaboration, business leaders across industries face a more easily solvable coordination problem because of their shared interest in a well-functioning operating environment. It is possible, in other words, to harness corporate self-interest for the larger good. The challenge is to facilitate alignment on the systemic and foundational issues worth preserving and embolden leaders’ collective voice to defend against their erosion. Business leaders need not speak out on every issue. CEOs and their management teams must first distinguish material commercial risks from the larger set of important but non-existential concerns. Then, they should further differentiate between issues that can be negotiated through the traditional policy architecture—even important matters such as climate change, tariffs, immigration, or the responsible deployment of AI—and those that imperil the structural integrity of the political and economic system itself. CEOs cannot and will not act alone. Stakeholder capitalism may be dead, but capitalism’s stakeholders still have a catalytic role to play. To break the collective action logjam, trusted and bipartisan organizations with business leaders in their ranks, including the Business Roundtable, the Chief Executive Leadership Institute, or the Leadership Now Project, should discreetely convene influential executives to develop a coordinated defense strategy. But action cannot be confined to meetings behind closed doors. Business leaders must use their voice in the public sphere. Consumers, employees, shareholders, and citizens, meanwhile, have a role to play by rewarding business leaders who speak in defense of the principles and practices of democratic capitalism. The costs of collective action may be high, but the costs of inaction are higher still. 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