Standing up to Trump is good for business

Merck Chief Executive Kenneth Frazier deserves congratulations for resigning from a White House business council to protest President Donald Trump's shameful response to last weekend's white supremacist riot in Charlottesville, Virginia. So do two other CEOs who followed his example.

More corporate leaders should do the same.

It's in their interest to do so. Corporate leaders lend credibility to a presidential administration when they sit on official councils and commissions. When an administration, or a president, is as morally deficient as Trump was this weekend, the reputations of leaders and their companies stand to be hurt by that association.

And surely it is the case that social stability is in the long-term interest of corporate America — business leaders and investors alike. We should not underestimate the danger posed by a U.S. president who gives a wink and a nod to white nationalists.

Even before Charlottesville, I've been surprised that more corporate leaders haven't spoken out against the administration's support for protectionism, opposition to globalism and retreat from American leadership abroad. The post-World War II order has created prosperity, and sustaining it is clearly in the interest of investors. Drawing back from the world, moving away from free trade and global openness, and cozying up to foreign strongmen will hurt American business.

Speaking out might move the needle. It's hard to know for sure, but the timing of Monday's White House public statements suggests that public support for Frazier may have played a role in the president's decision to finally denounce white supremacists by name. This White House may be especially responsive to criticism from business leaders like Frazier and the two other CEOs who quit, Under Armour's Kevin Plank and Intel's Brian Krzanich, given the president's career as a businessman himself and given the pro-business goals of the administration.

Corporate leaders may be reluctant to speak out in part because they don't want to be attacked by the president. This must have been on Frazier's mind when he made his announcement Monday morning. And, predictably, Trump fired back Monday on Twitter:

"Now that Ken Frazier of Merck Pharma has resigned from President's Manufacturing Council, he will have more time to LOWER RIPOFF DRUG PRICES!"

The president is acting like the leader of a banana republic, not as the head of state of a nation dedicated to the rule of law. Markets work when households and businesses make deci- sions based on economic fundamentals — not because they might be threatened by the most powerful man in the world. Corporate leaders are in a good position to remind the president of this. Corporate interests are served by strengthening the rule of law and the culture and norms surrounding it. The chilling effect of the president's threats grows stronger with the silence of corporate leaders in its face.

Corporate leaders tend to be reluctant to enter public debates. This reluctance is often appropriate. The decision to resign from a presidential commission — giving up the ability to influence an administration from the inside in exchange for the opportunity to publicly criticize — represents a real tradeoff. Penning an op-ed or going on television to criticize an administration carries with it significant potential costs, to both the CEO and the corporation.

But corporate America has been too cautious. Now is not the time for cautious citizenship.