00:00:00
Well, we have seen the government recently announced that they were going to take a stake in Intel and we are
00:00:06
seeing more potential moves coming in the future for assets seen as strategic to the strength of America. But what we
00:00:14
aren't seeing is a lot of push back by leaders of various companies. They are
00:00:19
staying silent over concern that their company maybe could be next. And this approach has both sides of the aisle a
00:00:26
bit concerned. Pleasure to be joined right now by Philip Nichols who's a professor of legal studies and business
00:00:31
ethics here at the Wharton School. Is also a professor of social responsibility in business. Phil, great
00:00:37
to talk to you again. How are you, sir? >> I'm great, Dan. It's always good to talk
00:00:40
to you. >> All right, so take us through what we've seen recently and give us your thoughts
00:00:44
on some of these moves by the White House. >> Sure. Um, this is going to take a bit of time, but
00:00:53
not much time. the what we're seeing recently is part of a larger shift in the environment of
00:01:03
business in the United States. Uh and it's a huge huge shift. The only thing I
00:01:09
can compare it to in the last century is the New Deal. And that's basically um what was once a fringe theory about
00:01:20
presidential power, the exe the unified executive theory has now become the working way of
00:01:29
thinking about the constitution of the United States. And and that's that's just this
00:01:36
fundamental change. What it means is that we now have an executive who is not is immune to most forms of
00:01:47
prosecution. Almost all. It's hard to think of any that they aren't. We have a
00:01:51
president who's not bounded by the the the authority of Congress. Um, Congress
00:01:58
no longer dictates how funds are to be allocated and how funds are to be spent on what laws are to be enforced. And we
00:02:08
have a Supreme Court that in trying to figure out this unified theory is giving a lot of latitude to the president to
00:02:15
the executive in all kinds of arenas of the business world and the social and political world as well. But our concern
00:02:24
is the business world. It took after the the the many Supreme Court decisions that came late in the
00:02:33
New Deal. It took decades to figure out what the new rules were. It also took, particularly after, you know,
00:02:42
ironically, another Roosevelt, Teddy Roosevelt, it took decades to figure out the new social norms regarding the
00:02:52
relationship between the executive and business. And so right now, you know, one of the
00:02:59
funny things about um business people assessing risk is they have a team of lawyers who can tell you
00:03:10
with with really really great accuracy the risks involved in taking action. Do this, this will
00:03:20
happen. Don't do this, this will happen. We don't have the same kinds of teams
00:03:25
regarding the risk with social rules, but people navigate social rules. Right now, we can't do either of those things.
00:03:34
A a business cannot assess the risk involved in taking action or not taking action with respect to the law because
00:03:43
the law is essentially being rewritten and it it takes a while. It takes it'll
00:03:48
take a few decades. How much of this then is the time that we are in when you think about the advent of AI and the
00:03:56
impact of cryptocurrency and so many of these new components >> absolutely
00:04:01
>> that have that have come into our world in the last 10 years. >> Absolutely. And and they
00:04:07
that is it's it's perhaps not a coincidence that this huge shift in law accompanies a huge shift in what we're
00:04:17
able to do and how we're able to do it. But that only adds to the uncertainty
00:04:25
about everything. The the social rules in particular are being rewritten as social media takes over the way that we
00:04:33
interact with one another. And so once again, you point as you point out, it's impossible to assess the risk. We
00:04:41
just don't know. >> So then what is your expectation as we move forward here? Because we see this
00:04:48
move uh around Intel. Uh there's also the moves to receive revenue from Nvidia
00:04:56
over sales of chips from China. Uh Howard Lutnik, the commerce secretary, said in an interview this morning that
00:05:02
the Pentagon may start to look for these types of business partnerships. Is this
00:05:07
going to be the new norm? Is that wall that was kind of there where the government stayed away from the private
00:05:13
sector? >> Yeah. >> Has that been broken down now? Yes, I would guess that it has been. I would
00:05:19
compare this and I I don't want to get political. People make their choices and that's
00:05:25
great, but I would compare this to other regimes that have a powerful central authority without a check on it
00:05:36
and they tend to get heavily involved in business and that isn't good for business. It reduces competition. It
00:05:43
skews contracts in a particular way. It generally means that businesses are going to be smaller and more cautious in
00:05:52
how they expand, how they innovate, how they do things. >> What does this mean then for seuite
00:05:57
executives and how they have to approach not only running their business but obviously the relationship they have
00:06:04
with the government and not only their government but obviously if they're a a
00:06:08
multinational governments around the world. I would imagine that a lot for that very reason a lot of them will
00:06:15
start moving their headquarters to more neutral places and then interact with the United States from someplace else.
00:06:23
um because it's going to be really hard to grow and to navigate in the business
00:06:28
environment that's being created now particularly during a time of uncertainty right I I think the
00:06:34
interesting component I'll finish up on this is that as you look at it some people see this as a protection of a lot
00:06:42
of the businesses that are out there others will say that it's not that and it's you know getting your hand in the
00:06:51
cookie jar when it really shouldn't be. How do you view what we're seeing play
00:06:55
out right now? >> That's a great So, if you look at other places and other times when this has
00:07:00
happened, it may start out as it doesn't always, but it may start out as we're
00:07:05
doing something beneficial to our our polity, our country, whatever, but it almost always devolves into the hand in
00:07:13
the cookie jar. I mean, it just goes that direction eventually. >> Phil, great to have you with us today.
00:07:20
Thanks very much for your time and your insight. All the best. Thank you. You got it. Philip Nichols,
00:07:25
who's a professor of legal studies and business ethics as well as professor of
00:07:29
social responsibility in business here at the Wharton School.