The Cost of Combining Politics and Business

Politics and business, for a number of reasons, do not make good bedfellows! Take Elon Musk for example: While he and his minions are running havoc cutting (or more likely ‘slashing’) costs within the US government, sales of his Tesla cars have hit the rocks. In Switzerland in January 26.6% fewer Teslas were registered than in January 2024 (in Europe the drop in sales amounted to 45%). And in February the drop in Switzerland was with 66.6% even steeper (the drop in sales in February in Germany was 76%). Sure, there are a number of reasons for this: Chinese EV manufacturers are now flooding global markets with their rides and Tesla hasn’t launched a new model in a while.

But according to some observers, the problem also seems to be Elon Musk himself: His authoritarian and unbridled behaviour is increasingly becoming a burden for Tesla and many Tesla drivers do not want to be associated with his attitude. This hurts the man financially (he won’t be of spare cash anytime soon though, after all he still owns roughly 20% of the company), since also the share price of Tesla has fallen by approximately 32% between January and early March. Admittedly, there are other reasons such as declining sales in China and trade tariffs at least partially responsible, but Musk’s boisterous behaviour (and potential at least temporary lack of interest in the company of which he still owns roughly 20%) is to blame for the drop in the share price too.

Instances where the actions of an individual affect a company or brand are rare, but there are more examples of situations where politics and business didn’t mix well: In 2022-2023 Disney opposed Florida’s “Don’t Say Gay” law, leading Governor Ron DeSantis to retaliate by removing Disney’s special tax district in Florida. As a result Disney faced political attacks from conservatives while DeSantis faced lawsuits from Disney, which argued that Florida was punishing free speech. And during the same period Ye (probably better known as Kanye West) made antisemitic remarks and praised Hitler in public interviews and verbally attacked business partners such as Adidas, Gap and Balenciaga). Adidas terminated its billion-dollar Yeezy partnership, losing $1.3 billion in sales in the process while Ye’s net worth dropped from $2 billion to below $500 million.

It is laudable if influential businesses and their leaders are taking a stand for a good and just cause, but actions have consequences and some of the deeds and utterances by celebrities really sometimes make me question their sanity or at least wonder when and why they came off the rails. The negative publicity surrounding Elon Musk now also leads some people, namely in the USA, to take drastic action and attack Tesla dealerships and cars. But also production at the Grünheide (Germany) plant was stopped for nearly a week following an arson attack in early March 2024. So closely are the man and brand intertwined that embarrassed owners are resorting to anti-Musk bumper-stickers to distance themselves from him. How long until Tesla staff or drivers are being harmed?

Just in case you are wondering, this is not the first time that an American president empowered a captain of industry to trim the budget and reduce tired tape. The president then was John F. Kennedy and the CEO Robert McNamara of Ford, who got appointed to the office of secretary of defence. What Musk and McNamara seem to have in common is an arrogant certainty that the business techniques and practices they used in the private sector could be applied to “fix” government. The notion that business experience is an essential qualification for reformers in government persists to this day, especially among Republicans, who frequently used it as a line of attack against Democrats. Barack Obama and Joe Biden were both criticised for having too little private-sector representation in their cabinets. And President Trump, during the campaign leading up to his first stint in the White House, certainly very prominently played his credentials as a businessman against the government experience of Hillary Clinton. Never mind that Trump’s businesses had repeatedly filed for bankruptcy. But while complaints about government inefficiency are pretty universal, the idea that a businessman will be able to fix it seems unique to the US. In other mature democracies, there is a clearer separation between the public and private sector; people understand that government provides essential public services and is not in the profit-making business. For my part I have to admit that as a younger man I also adhered to the philosophy that the private sector and business acumen was suited to de-dust governments.

There are at least two lessons to be learned: CEOs & founders can’t separate their personal behaviour from their businesses and politics, scandals, or extreme behavior can instantly erase billions in value and put even the lives of innocent people at risk. Ask ChatGPT for examples of business men who made bad heads of state m top of the list is Donald Trump and his first stint in the White House from 2017 to 2021. Others listed include the late Italian business tycoon and Prime Minister Silvio Berlusconi whose tenure was marked by corruption scandals, conflicts of interest, and a focus on personal gain. Or Thaksin Shinawatra (Prime Minister of Thailand, 2001–2006), a telecom billionaire, accused of corruption, nepotism, and authoritarian tendencies, his leadership was marked by human rights abuses, including a violent war on drugs.

There are no doubt other examples in the developed let alone the emerging economies, but one thing seems increasingly clear: successful business leaders do not necessarily make good stewards of government. And those captains of industry who abuse their authority in their official position may see their business interests suffer.