There's a simple reason companies are becoming more publicly left-wing on social issues
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- Companies are leaning more to the left on social issues, as we've seen in how many have decided to cut ties with the NRA.
- That trend is likely to continue as companies follow their customer base.
Ross Douthat has very interesting but ultimately flawed column this week about "woke capitalism," or the trend of companies making a performance of their left-leaning attitudes on social issues, most recently seen in the form of many companies cutting ties with the National Rifle Association.Douthat argues this trend is not in conflict with companies' recent performance of a conservative political ritual - touting small bonuses as a demonstration of the good public effects of a tax cut that will mostly serve to raise corporate profits - but is part of the same phenomenon: the corporate sector trying to make itself popular enough with each political coalition so that politicians will implement pro-corporate (or at least not anti-corporate) policies when in power.Advertisement
I think there is some of that happening. But I don't think it's the main thing that's happening.
The main reason that companies have been increasingly willing to take one side of hot-button social issues (the left-leaning side) is that's increasingly a good strategy to please customers and employees.Partly, this is because certain policy issues have disproportionately left-leaning polling. Gay rights are popular. Most of the gun regulations on offer in the current debate poll well, too.
But it's also because socially liberal segments of the public punch above their weight as potential customers (and, in some cases, as potential employees) for these companies.Think about who companies most want to advertise to: people who have a lot of disposable income and aren't too old. This advertiser preference is why television ratings are reported in terms of adults 25 to 54 (or sometimes even 18 to 49) and it's why networks like Bravo tout their unusually upscale viewer base to potential advertisers.Appealing to senior citizens is a good way to win an election, but it's not a good way to sell most consumer products and services.Advertisement
Meanwhile, in recent decades, American politics has become much more polarized by age than it used to be, and much less polarized by income than it used to be. Affluent people are not (yet) a Democratic-leaning demographic, but they're not the strongly Republican-leaning demographic they were 30 years ago. And young people report strongly liberal attitudes on social issues and strong opposition to President Donald Trump.
All of which means, when a company like Delta Air Lines imagines its average target customer - on the early side of middle age with plenty of disposable income - that customer is probably a lot farther to the left politically, especially on social issues, than would have been true in the past.Add another effect Douthat touches on - people's increasing emotional investment in brands and corporations, as other shared civic institutions have become weaker - and that customer probably has a stronger expectation than before that his or her favorite brands should demonstrate shared values.Advertisement
So, why doesn't consumer-driven corporate activism extend to the left's positions on economic issues? Mainly because of something Douthat discusses: Companies have a direct financial stake in lower taxes, in a way they don't with guns. And maybe also because they (correctly?) think their liberal-leaning customers are more emotionally invested in, and more likely to change their spending habits because of, social issues.
I have some bad news to close with for Douthat.He notes the trend toward corporate liberal social activism "encourages cultural conservatives in their feeling of general besiegement, their sense that all the major institutions of American life, corporate as well as intellectual and cultural, are arrayed against their mores and values and traditions."Advertisement
I think that's probably true. But it simply reflects the fact that free markets are not small-d democratic. Some consumers matter more than others.
And that's why "woke capitalism" is likely to persist even if it's not an effective strategy for getting Democratic lawmakers to stay away from tax increases and new regulations. As long as companies' core customer demographics remain opposed to cultural conservatives on these issues, companies will end up in opposition to cultural conservatism - not as a lobbying strategy but as a customer-retention strategy.This column does not necessarily reflect the opinion of Business Insider.Advertisement
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