California Assembly Bill 1955 was sitting on Governor Gavin Newsom’s desk, waiting for his signature, when he got a call from Elon Musk. The bill would prevent schools from requiring parental notification for a child to change his or her gender identity, and Musk warned Newsom that if he signed it into law, it would “force families and businesses to leave California to protect their children.”
Newsom signed the bill anyway and, true to Musk’s prediction, two companies shall Leave California—his companies, X, and SpaceX. This is an increasingly common tactic for Musk and other billionaire CEOs: threaten lawmakers who oppose your preferred policies with consequences—like moving your company’s headquarters—even if those policies have nothing to do with your company’s mission. And then hope that lawmakers care more about jobs and tax revenue than the legislation the Democrats want. While the threats didn’t work for Musk this time around, they’re unfortunately an effective tactic. In 2020, Musk threatened to move his Tesla headquarters unless Alameda County lifted its pandemic “lockdowns” and reopened its factories. Days after that threat, the county caved in and Tesla reopened. A year later, Musk moved Tesla’s headquarters to Texas anyway.
There is clearly something wrong with a single billionaire holding a state hostage in this way, and yet we continue to tolerate and even encourage it. Like the filibuster, both parties are willing to keep it around in case democracy doesn’t go their way. Liberals have used this tactic extensively to protect LGBT rights in conservative states. In 2016, for example, Salesforce CEO Marc Benioff threatened divestment in Georgia and Indiana to kill bills that would have allowed companies to refuse service to LGBT customers, and PayPal canceled plans to build offices in North Carolina to pressure the state to repeal its “bathroom law,” which it quickly did. As conservative states pass increasingly restrictive abortion laws, it will be tempting to drag corporations back into the fray. But if we want to protect fundamental rights without violating democratic norms, we need to understand the line between good corporate citizenship and undemocratic threats.
It’s not always easy to find that line. For example, there’s nothing wrong with companies informing lawmakers if a proposed law would make it hard to compete or if they would have to lay off workers. Those consequences are relevant to the evaluation of the law, so companies need to make sure lawmakers are aware of them. The problem is that companies will always say that they forced to lay off workers, cancel expansion plans, and so on. But very often, these aren’t consequences of the law; they’re just choices companies are willing to make to influence policy. Meta, for example, recently pressured California to delay a bill that would have required social media companies to pay news organizations a fee to link to their content. Meta—a company that made $39 billion in profits last year—told lawmakers that it couldn’t possibly afford the fee and that it would instead “be forced to remove news from Facebook and Instagram.” As Meta well knows, removing news links from social media would undermine the entire point of the bill, so it was understandably killed.
This difference – between being forced to face consequences and choosing them – is the line between offering democratic reasons and making an undemocratic threat. Democracy, at its best, is about the exchange of reasons: you tell me how raising the minimum wage will force companies to reduce their workforce, and I’ll tell you how higher wages will improve worker well-being. But if it turns out that you’re not telling me what shall happen after the pay rise, but what you are choose to do When an increase is implemented, it changes from a reason to a threat.
Reasons are at the heart of democracy; threats are their opposite. Reasons are exchanged between equal citizens who have no power over each other except the power of persuasion. Threats are possible only when someone has significantly unequal power—enough power to artificially plant stakes on one side and tilt a debate. Elsewhere, Vishnu Sridharan and I have called this the difference between offering “natural” and “created” reasons. In a well-functioning democracy, no one should have the power to create reasons, because they can turn any social problem into an economic problem. Gender identification laws are less about how much we value children’s privacy or parental rights and more about how much we value jobs and tax revenues.
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Of course, businesses will always argue that social and economic issues are intertwined. Musk said that families who disagreed with California’s social policies would have to leave the state, making it impossible for him to staff his businesses. If that were true, he wouldn’t be creating an economic reason to oppose a social policy; the social policy would have a natural economic consequence and force him to move. So how do we know if Musk actually should move or if he’s just using his power to get California to do what he wants? How do we know if it’s a natural or created reason? There’s no formula, but there is a simple test we can use. Would Musk have told lawmakers to move out of California if he didn’t? personal against the gender ID law? In other words, if Musk were a big proponent of gender choice, would he have grudgingly admitted to lawmakers that his company couldn’t operate under progressive social policies? Probably not.
We need to keep this test in mind as we fight restrictive abortion laws across the country. In states with few legislative allies, it’s tempting to ask, even demand, that local CEOs threaten to withdraw from those states unless the abortion laws are repealed. Some of those CEOs might rightly argue that they can’t attract workers to a state without reproductive rights. But others will simply be Elon Musk’s liberal analogues, where personal beliefs dictate corporate policy. When we engage those CEOs, we need to know that we are sacrificing democracy for justice.
Some will say that this is okay – that the end justifies the means. Others will worry about unilateral disarmament if the other side continues to profit from these threats. But we must remember that the most common use of these tactics benefits neither liberals nor conservatives; it benefits corporations.
Amazon bribed states with the promise of a new headquarters in exchange for all the tax breaks it wanted. Apple and Google threatened to cancel investments in any state that tried to regulate their “app stores.” We can’t stop companies from making these threats any more than we can stop Clarence Thomas from boarding another yacht. But we can decide that corporate threats and bribery are not an acceptable part of our democratic process. We can tell activists to stop demanding them, states to stop competing for them, and CEOs to stop bragging about them. Corporations will continue to use every weapon they have, but at least we can stop inviting them into the fray.
