Almost a year ago I said in this space, “I have a fantasy that Howard Schultz, of Starbucks fame, will challenge Trump.” This week the coffee retailing mogul made it all but fact, announcing his retirement as the company’s chairman and publicly admitting he is considering a run.
While you’re savoring your first cup, imagine a race in which President Donald Trump faced a challenger who ran a business in a way that used to make Americans proud of business.
Imagine him facing a contender who didn’t file for bankruptcy multiple times or even once.
Imagine him challenged by a billionaire who owed his success not to cutting deals with local politicians, or to chiseling lenders and suppliers, but to peddling a product people want.
Imagine two tycoons on the podium — one with a web of murky financial connections to overseas oligarchs and domestic cronies, some of them under criminal investigation, whose finances and tax returns remain a state secret; the other a socially conscious former CEO of an entrepreneurial success story, financed by public shareholders that participate in his company’s success, and whose financial statements are open and transparent.
Imagine, finally, a contest between fear and trust, which polar opposites Trump’s and Schultz’s business careers, respectively, represent. Let Trump go on saying the world is full of enemies, enemies and imagined enemies being the oxygen he inhales.
Trump’s business credo is that the world is fearful terrain, full of people out to chisel us. The Trumpian business universe is a zero-sum place, as if every business were a casino, in which nobody wins without somebody losing. Naturally he wants to shut out foreigners and foreign products, to slap even our friends with destructive tariffs.
Starbucks is a good example of how capitalism creates a positive sum. When Schultz returned from a trip to Italy, in 1983, with the idea that Italian-style coffee bars could become a meeting place in American life, coffeehouse were relatively rare. After acquiring, in 1987, a then-tiny chain, he built it to 28,000 stores in 77 countries.
The 350,000 people Starbucks employs didn’t “take” their jobs from someone else. They are working at jobs that, a generation and a half ago, didn’t exist. Starbucks’s profits over the years (in 2017, operating income was $4.1 billion, or about $150,000 per store) weren’t a loss to some other industry. Schultz made a bet that people would pay more for a higher-end coffee drink served in a café-style setting. He partly envisioned, partly created, a need where none previously existed.
Nowhere does his faith in capitalism contrast with Trump’s essential distrust more than overseas. Trump the nationalist says, ‘Build a wall.’ Schultz competes. Starbucks’s growth has slowed at home, but in China it is growing like Topsy.
Multiply that contrast across industries and you get two different visions on the podium, one of an America strangulated with trade restrictions and retaliatory barriers, so that the essential mission of business becomes trying to win political favors and exclusions. The other is closer to Adam Smith.
Schultz is a born promoter with a sometimes self-congratulatory air who can sound, at least in print, as if he drank too many of his double espressos. He has the politician’s penchant for characterizing private success as an expression of public virtue. In his first book, “Pour Your Heart Into It,” he described when, after he had retired as CEO and Starbucks hit a rough patch, he returned to the saddle. “Love is why I had come back as CEO,” he wrote, not sparing the saccharine. He also took stock options — an unseemly practice for a billionaire executive who already had ample financial incentive.
Reporters will discover more flaws; we are well used to the fact that political candidates aren’t perfect. I’d take him over Trump in a nanosecond. But the fantasy of November 2020 is a long way off. First, Schultz has an equally important mission: to resurrect the Democratic Party, meaning the Democratic Party of Bill Clinton and JFK — liberal internationalist, pro-growth and economically sensible. Even — let’s say it out loud — “pro-business.”
Pro-business does not mean, necessarily, either lowering or raising corporate taxes, or governing in the narrow interest of Schultz’s richly paid fellow CEOs.
Pro-business is a mind-set. It means recognizing that no redistribution of income can succeed if the underlying economy that creates the income is not itself successful. It means recognizing that success in business is a good thing.
Remarkable this needs saying in the country that all but invented modern capitalism, but the center has fallen away from the Democratic Party. One of Trump’s most corrosive effects is to have destroyed the appeal of moderation.
Even before the last election, Bernie Sanders, a socialist, had more energy than any of the Democrats. In this cycle, among elected office holders, Elizabeth Warren has more purchase among blue voters than anyone else. Sanders and Warren both routinely demonize bankers and corporations. Rhetoric to the contrary, profitmaking banks — well-regulated, and with regulations that are strictly enforced — are a good thing, so that the next returning voyager from Italy with a worthy idea can get a loan.
Among potential Democratic contenders, you scarcely hear a favorable word about corporations — even to say “favorable” and “corporations” in the same sentence sounds a little funny these days. It shouldn’t. Though they are loath to admit it, the Democrats’ enthusiasm for trade is scarcely greater than that of the White House.
Schultz could, if he chose, be a beacon for liberal Democratic ideals without the we-against-they populism that has also infected the political left. The son of a Brooklyn truck driver, Schultz has an obvious empathy with today’s struggling wage earners. Starbucks was an early adopter, for a fast-food chain, to pay health care benefits; famously, it pays college tuition for some employees and stock options even to part-time workers.
Make no mistake: Starbucks baristas are low on the wage scale, estimated on average at close to $10 an hour, not including benefits. Schultz was in business for profit; he would say wages (with some reasonable floor) are set by supply and demand. As a politician, he is apt to pursue policies than expand opportunities for the bottom, as distinct from targeting the top. He’ll support progressive taxation, but I’m guessing that his goal — an important distinction — will be raising potentials, and eventually outcomes, for the disadvantaged and the middle class, rather than equality per se.
As both a capitalist and liberal, he knows that desirable social policies (including protecting the environment, on which he has been outspoken) also entail costs, regardless of who is paying for them. He recognizes, or has the experience to recognize, that politics involves trade-offs. The appeal of Schultz is not tethered to a particular policy, but it is informed by the idea that liberal capitalism and liberal democracy are not in conflict (in fact, each is a pillar of the other). The hope — this writer’s hope — is that Schultz can reclaim the disappearing middle-ground in American politics.
Roger Lowenstein is a financial journalist and author of six books, including “America’s Banks: The Epic Struggle to Create the Federal Reserve.” He wrote this article for the Washington Post.