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- The Indispensable Newsletter #12
Hey everyone,
We're just a few weeks away from the election—and the stakes couldn't be higher. The race is … incredibly close. A normal polling error in his favor could give it to Trump, while a 2020-size polling error in Trump’s favor would probably keep Harris the winner. But the broader question about the fate of our democracy goes beyond who will win it.
The crucial issue we face is this: Can a democracy truly be considered stable if its continued existence hinges on one particular party winning every time?
That's the focus of this month's newsletter. Let's dive in.
Deep Dive: Democracy at a Crossroads
Democracies are held together (to a greater extent than people realize) by an elite consensus on the importance of staying a democracy. When you have that, even countries that, by traditional political science models, have no business being a democracy (India is a classic example) can manage it for extended periods—and that’s because they want to do so (my friend Chappell Lawson at MIT did fantastic research on this).
The United States is traditionally considered the standard-bearer democratic country, the one against which all others are measured. The American government—founded in 1789—is one of the oldest in the world (even Britain’s government, for example, only took its modern form in the 1830s, while those of France, Italy, Germany, and Spain date to after the Second World War). But what we're seeing is a real fraying of the elite consensus that the country should stay a democracy.
Admittedly, people aren't really saying that—not explicitly, anyway. But there's a fundamental attack on the basic pillars of liberal democracy, particularly the integrity of elections and the apolitical neutrality of the judicial system. These things are fundamentally challenged by the Republican party in a way that we haven't seen, at least in the last few generations.
When democracy falls apart, most of the time nobody stands up and says, "Well, it's a dictatorship today." What happens instead is the window dressing remains, but without the substance.
In this world, we'll still have elections—but people who aren't for the favored political party might find their voter registrations canceled, or they might just find it harder to get to the ballot box.
Politicians might try to gerrymander districts that are not even vaguely representative of the people within them.
Officials might seek to overturn election results.
… And a Supreme Court—picked by the same President they're defending—could rule that all of this is constitutional, even though any fair reading of the law would say it's not.
The Wealth-Democracy Nexus
The erosion of democratic norms we're witnessing is inextricably linked to the concentration of wealth in America. This concentration is playing a significant role in our democratic erosion. (Look only to Peter Thiel’s claim that freedom and democracy are incompatible.) More and more, too many in the uppermost echelons believe their wealth should put them above the law.
This is how democracies fall.
This wealth-powered assault on democracy manifests in various ways, but one stark example is the systematic defunding of the IRS, particularly its ability to audit the wealthy. The best estimates are that every additional dollar the IRS spent on investigating tax fraud amongst the wealthy would return at least $40 in revenue to the US government. Yet, over two generations, we have essentially stopped giving the IRS the resources and capability to audit people who are that rich.
This isn't just about tax policy—it's about democratic equity. Every time there's any kind of budget standoff, the Republican party pushes for stripping the IRS of funding that's been allocated to go after wealthy tax cheats. There is no more obvious example in American history of the priorities of a political party than that they are willing to risk the United States government going into default in order to protect people who are cheating on their taxes.
A Glimmer of Hope?
This disregard for accountability isn't limited to the political sphere. It also seems to be influencing the values of the next generation of business leaders. However, there are some encouraging signs that this trend might be reversing. It's striking that, unlike what my colleagues tell me was routine a generation ago, I’ve seen few MBA students saying, 'Look, my job is to make money. It's the job of the system to make sure that the money isn’t made in ways that are harmful.”
I think this is a new development, likely generated in the wake of the financial crisis. There is just much less willingness to accept that if the market rewards this with profits, it must be right. There's much more understanding that there are lots of ways that you can make enormous profits in the markets from predatory behavior, and that is not defensible.
This evolving mindset represents a potential bulwark against the erosion of democratic norms. It suggests a growing recognition that the health of our democracy and the fairness of our economic system are intertwined. As these future business leaders reject the notion that market rewards automatically justify any action, they lay the groundwork for a more ethically robust and democratically aligned business culture.
The fate of American democracy hangs in the balance, not just in this election cycle, but in the years to come. While the challenges are significant, the shifting attitudes among young business leaders offer a glimmer of hope. It will require vigilance, engagement, and a renewed commitment to democratic principles from all sectors of society—from the classroom to the boardroom to the ballot box.
Recent Columns
What truly drives long-term business success? In "From 737s To Sneakers, It's The Same Sad Story," I examine how Boeing and Nike's focus on short-term profits over innovation led to market struggles. Once again, we see the pitfalls of prioritizing financial engineering over product quality.
What are the true limits of genius in business? In "Why Comparisons Between Elon Musk And Batman Fall Short," I examine how the comic book myth of unlimited genius distorts our expectations of real-world business leaders like Elon Musk. Exceptional individuals don’t excel at everything, and even the most brilliant entrepreneurs have limits their fictional counterparts lack.
The hidden dangers lurking in corporate leadership. In "The Psychopaths Who Lead Us," I explore the surprising prevalence of psychopathic traits among CEOs. The piece examines why modern business environments often reward these traits and how this impacts organizations—from Theodore Roosevelt to today's tech titans.
Recent Appearances
I recently sat down with Julie Hyman on Yahoo Finance’s Opening Bid to talk about everything from OpenAI to Boeing to the spectrum of psychopathy (yes, really!). You can catch the full segment here.
And for more on Boeing in particular, check out my deep dive on Straight Arrow News and my recent interview on CNBC’s Squawk Box:
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