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Business Leaders Can Help Curb Nativism, Isolationism, and Protectionism

Ambassador Kristen Silverberg, executive vice president of the Business Roundtable, comments on how the business community can develop responses to racism in the United States; why nativism and isolationism worry her more than populism; and why we need to remember that what originates abroad can impact us here in the United States.

Interview with Kristen Silverberg July 21, 2020 //   11 minute read

Kristen Silverberg is executive vice president of the Business Roundtable, where she leads the policy team. Before joining the organization, the University of Texas Law School graduate served as U.S. ambassador to the European Union from 2008 to 2009 and as assistant secretary of state for international organization affairs from 2005-2008. She also worked in the George W. Bush administration as deputy domestic policy advisor.

Silverberg spoke with Lindsay Lloyd, the Bradford M. Freeman Director of the Bush Institute’s Human Freedom Initiative, Chris Walsh, senior program manager of the Bush Institute’s Human Freedom Initiative, and William McKenzie, senior editorial advisor at the Bush Institute, about how the business community can develop responses to racism in the United States. She explains why nativism and isolationism worry her more than populism. And she acknowledges that it is natural for Americans to focus on home given the pandemic and racial injustices, but we need to remember that what originates overseas can affect our democracy here. That’s why the United States needs strong ties internationally and should lead in the world.

How should Americans, including in the business community, best respond to the crisis that has arisen since George Floyd's murder? What do we want other democracies learning from our response?

Free societies depend upon the idea that every person is equal under the law, that the system is just, and that there are real limits on government power. That’s why our Constitution prohibits police from unreasonable searches and seizures, including the use of excessive force.

Congress has an important role to play in making sure that right protected for every American, including Black Americans, by undertaking serious police reform. At a minimum, Congress should ensure greater transparency and accountability to ensure that bad actors are held responsible. Businesses have a role to play in pressing for reform, in part because abuses in policing threaten their employees and customers. 

Businesses have an important role in saying that our system needs to be just, that it needs to ensure a quality of treatment regardless of race, and that we need a policing system that enjoys the trust and confidence of all Americans.

I hope other countries would look to the United States and see that we aren’t perfect, but that we are able to confront our challenges directly. We have a free press that exposes problems; we have freedom of association so Americans can go out on the streets and protest peacefully; and we have free elections so we can hold our elected officials accountable.  

One issue that we are exploring in this round of Democracy Talks is populism. Do you have a sense of alarm about the rise of populism in democracies around the world, or is this just a natural expression of popular frustration with international institutions, global trade, globalization, or immigration?

I would distinguish between populism, meaning suspicion of elites, and a tendency towards nativism or isolationism. Those are frequently related, but not necessarily. I am more worried about trends towards nativism and isolationism in part because I think they will make the United States and our fellow democracies a lot weaker.

I want to distinguish between populism, meaning suspicion of elites, and a tendency towards nativism or isolationism. Those are sometimes related, but not necessarily.

Democracies around the world are tied through our formal alliances, like NATO, economically, and because we share values. Letting those ties fray and turning too much inward — not focusing on our alliances  will provide an advantage for our competitors. It will particularly provide an advantage for China, which is investing very heavily in its relationships around the world.

Today, we're in the middle of a pandemic. It's natural that Americans are thinking about things here at home. As we come out of this crisis, I hope we see a renewed commitment to invest in our country’s relationships around the world and in American leadership.

You had the privilege of serving as America's ambassador to the European Union (EU) in Brussels. When you look at the EU today, do you feel it has helped to dampen nationalism, protectionism, and isolationism, or has it fanned the flames of resentment?

It has done both. At its best, the European Union has demonstrated to its citizens the advantages of the single market and free trade. Europe has been much stronger economically because of the single market. But there are elements of the European project that have caused anxiety for Europeans.

For example, immigration policy in Europe has been a big bone of contention. When the single market originated, Europe adopted a principle favoring the free movement of people within Europe as a way of promoting flexible labor markets so that people could move from areas of high unemployment to areas with lower unemployment. Over time, the argument in favor of internal European immigration became less about the economy and more about creating a single European citizenry, in essence suggesting that there's no difference between someone from Poland and someone from the UK or someone from Germany.

Many Europeans felt like this was an attack on their national ties, and that Brussels had failed to be transparent about its aims. To succeed, Europe has to find a way to let European citizens be part of this broader project and to retain their strong commitments to their own countries.

How is the business community viewing Western democracies, including our own, turning more inward? And how might business leaders best address the growing isolationism?

When we come out of the pandemic, I hope it will remind us that events overseas will have profound effects here, whether we like it or not. Weaknesses in the Chinese health system combined with a lack of transparency had catastrophic effects here in the United States. I hope this reminds us of the need to engage internationally and work to address problems where they originate.

But when we come out of the pandemic, I hope it will remind us that events overseas will have profound effects here, whether we like it or not. A weakness in a health system or a lack of transparency in another country can have catastrophic effects for the United States. I hope that this reminds us we need to help address problems where they originate.

Let me ask you about two other forces. Does capitalism need democracy to survive and prosper, or can they exist independently?

In the short term, countries can open up economically, but stay closed politically. But in the long term, I don’t think so-called “authoritarian capitalism” will work.

Among other things, in a closed political system without a free press, without free elections, without transparency or accountability, there's a natural tendency towards corruption. The state directs more resources towards itself or towards state officials rather than to the free market and what the public needs and demands.

The strain in trying to connect a closed political system with an open economy is unsustainable over time. What is strong and resilient about the U.S. system is our adaptability. The free market makes us adjust over time to make sure that we're meeting the public's needs. Our open political system and commitment to the rule of law and accountability are among our greatest economic strengths.

To what extent might the pressure on democracies today be coming from the emphasis in the information age on gathering and distributing information versus manufacturing and selling products?

New data tools and automation are causing our economy to change rapidly, with profound implications for workers. The pandemic will probably accelerate these trends. This is causing anxiety for Americans who worry about their ability to navigate the changes and about declining economic mobility in the U.S.  Many Americans believe that no matter how hard they work, they are unable to get ahead. That may be why a growing number of Americans are drawn to socialism, notwithstanding the dismal track record of socialism around the world.

To preserve our free market system, I think we need to double down on efforts to ensure that every American has a fair shot at succeeding. That certainly requires investments in education and in struggling communities. I think it also requires a new mindset about capitalism.

From 1997-2019, Business Roundtable endorsed a principle that said that corporations exist only to serve their shareholders  so-called “shareholder primacy.” No wonder many Americans were resentful. Millions of American workers were told that they mattered less to corporate America than the company’s investors.  

In 2019 we adopted a new statement that said that to succeed over the long term, companies have to serve all of their stakeholders, including their shareholders, employees, customers, and the communities in which they operate. Companies should strive to provide a good return to their shareholders, but they also strive to be good employers, to keep the trust of their customers, and to be responsible members of their communities. I think that’s a starting point for a healthier conversation about the benefits of capitalism.

What role do you see the business community playing in reminding us that while we need to take care of ourselves during this pandemic, the United States should remain involved globally for our own economic and political reasons?

The pandemic was a shock because it came quickly, but it was not at all unpredictable. We knew that we would face a pandemic at some point. It was a predictable crisis that we failed to plan adequately for.

I think the business community will be a strong supporter of making sure that we learn lessons from the crisis and are better prepared next time. That will include investments in health systems around the world and should include investments in multilateral bodies that can promote greater transparency.