Also: Ant's Credit Suisse bid, New York's 'doom loop,' the 'Korea discount.' 
Good morning.
It’s easy to understand why CEOs want nothing to do with U.S. politics. As Saturday’s South Carolina primary results demonstrate, the Republican Party remains enthralled to Donald Trump, who won business support for overhauling corporate taxes, but also alienated business leaders with attacks on global trade, democratic institutions, rule of law, human rights, etc. On the other side is President Joe Biden, who deserves praise for overseeing passage of the bipartisan infrastructure act and the most sweeping climate-related business incentives in history, but also has filled his government with regulators pursuing blatantly anti-business agendas.
On the latter point, it’s worth reading last week’s report on the Federal Trade Commission from the staff of the House Judiciary Committee. For decades, the FTC was respected on both sides of the aisle for its professional leadership and bipartisan approach to enforcement and policy making. But as this report makes clear, under chair Lina Khan the agency has not only been captured by an ideological agenda, but also plagued by classic mismanagement. Agency managers—who according to political contribution data are far more likely to support Democrats than Republicans—complain of “stated objectives that sound more like progressive buzzwords than actual direction,” routine “scapegoating of career staff,” micromanagement, unnecessary delays that sap morale, and an overall disregard for whether or not the agency can win in court.
Is there a political agenda behind this staff report? Sadly, in Washington these days, political agendas drive everything. But I was struck by the data from the Federal Employee Viewpoint Survey. Asked whether senior leaders of the agency maintain high standards of honesty and integrity, employees at the FTC scored their agency at 87% in 2020, but 53% in 2021, 49% in 2022 and 58% in 2023. On the key question of whether senior leadership generates high levels of motivation and commitment from staff, scores dropped from 80% in 2020 to under 50% in each of the subsequent three years. Readers of this newsletter know that I believe employee surveys provide an invaluable window into organizational effectiveness. On that score, the FTC is failing. Compared to other federal agencies, it has dropped from the highest-rated agency to one of the lowest.
Count that as one more government institution undermined by polarization of American politics. And while CEOs may want to steer clear, in the long run they can’t. Far-sighted CEOs now recognize their companies can’t survive on a planet headed for climate disaster. Those companies also can’t survive in country whose government persistently prizes political point-scoring over practical problem solving. Like it or not, America’s political dysfunction is a problem for business.
You can read the report here. Other news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
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A surprise bidder for Credit Suisse’s China business
Ant Group, the fintech firm founded by Jack Ma, has outbid Ken Griffin’s Citadel Securities for Credit Suisse’s investment bank in China. Beijing will likely scrutinize Ant’s bid closely, putting Credit Suisse’s new owner UBS in a bind: Go with Ant—the more lucrative but more politically risky option—or choose the safer but cheaper offer from Citadel. Bloomberg
New York’s coming ‘doom loop’
New York City is in the “first inning” of a coming doom loop, argues Columbia Business School professor Stijn van Nieuwerburgh. The economist is known for his pessimistic forecasts on how remote work shapes urban economies. A declining office market means less revenue for city governments, which van Nieuwerburgh says will result in “less money for transportation, less money for education, for sanitation, for all the things that make cities attractive.” Fortune
Tackling the ‘Korea discount’
Korean investors were disappointed by South Korea’s proposals to encourage companies to improve shareholder returns, sending the KOSPI index down 1.4% on Monday. The government will provide incentives to companies that enhance their market value in order to combat the “Korea discount.” Two-thirds of listed Korean companies have market values below their book value. Reuters
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Tech Poised for a Comeback Deloitte's 2024 Technology Industry Outlook predicts modest growth driven by lower recession risk and a focus on innovation. Areas of growth include investment in cloud computing, AI, cybersecurity, diversifying supply chains and navigating regulations. Read more.
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Brainstorm AI London convenes April 15-16 Join Fortune in London as policymakers, academics, and business leaders discuss how new regulatory frameworks could impact AI development, and how risks to security and labor by AI can be mitigated. Learn more here |
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