General Secretary Mikhail Sergeyevich Gorbachev stepped down from his post as leader of the Soviet Union in December 1991. The national treasury was depleted, pensioners had to forgo their meager stipends, the heat was turned off in winter to save energy, and innovation was long a thing of the past.
Curiously, Gorbachev emphasized the advent of the fax machine and international travel, and the PR problem that ensued, as the drivers of the Soviet Union’s demise. These new information channels overpowered the state’s near perfect control over the media and broke the spell of the workers’ paradise. Gen X, the younger generation at the time, gravitated toward a modern western lifestyle and began remaking the culture and economy in their own image.
Like the Gen Xers in the Former Soviet Union, digital-native Gen Zs in 2022 America are coming of age in an era of profound uncertainty and taking advantage of new communications channels.
And they are strongly in favor of abortion rights.
The June 2022 US Supreme Court decision to rescind federal abortion rights has opened what may be the most significant schism in American society in a long time. Half of the population has suddenly been deprived of federal support for bodily autonomy. In some states, healthcare decisions during difficult pregnancies are now being decided by lawyers instead of medical staff. Other human rights may follow if Justice Clarence Thomas is to be believed, including same sex marriage.
This is bound to have severe consequences for the American economy. Workforce diversity, job choices and opportunities may differ between states, forcing employees and employers into impossible decisions, and creating both reputational and legal risks for companies and their financial backers.
The Supreme Court decision is also a brutal blow to the possibility of societal consensus. While many in the country have long opposed abortion rights, a majority supports them. And societies ultimately coalesce and function on soft cultural agreements: we may not agree about everything, we may even agree about few things, but what we agree on is enough to keep us together. That is the foundation and the engine of a functioning society and economy, including in the United States. That foundation is now eroding, putting the country’s economic prospect at risk.
When the draft opinion on the overturn of Roe v. Wade was published in May, a majority of Americans felt that they were no longer a nation of rights expansion, but of rights revanchism. The web of anti-choice court decisions and State legislation had finally come together to assert a highly retrogressive ideal on a citizenry who found little appeal to the utopia of 1950s suburbia.
Since then and throughout recent primaries, events have confirmed what survey data told us for decades — that even pro-lifers are anti-abortion ban. Senate Minority Leader Mitch McConnell recognized this too and bridled at Florida Sen. Rick Scott’s 12-point plan, risking political chaos and division in the party.
SCOTUS’ new term
This alone should be cause for concern for political risk analysts – perhaps more used to monitoring the political vagaries of young democracies and fragile states. With the reconvening of the Supreme Court this month, core democratic processes, balance of power and voting rights in the U.S. are also in play.
All eyes may be on the 2022 midterms to find out how deeply gerrymandering and other forms of voter suppression may have hollowed out the power of the popular vote. Cue a group of Supreme Court justices — Alito, Thomas and Gorsuch – who are leading SCOTUS’ retrenchment on several issues considered to be ‘settled law’, and are driving the exploration of a legal theory critical to voting rights.
The theory, called “independent state legislature”, is at the center of the Moore v. Harper case in the queue for possible further action later this year. Depending on where the Supreme Court lands, a decision could essentially put electoral maps and voting rules under control of incumbent legislatures by eliminating fundamental checks and balances.
The court is scheduled to hear several other cases that together, could substantially change the way that America embraces minorities and the democratic process more generally. As with the overturn of Roe, decisions in these cases could deliver immediate and tangible effects in people’s lives, as well as reframe doctrine legal broadly. And then all bets would be off.
Today’s Gen Z has mastered virtual universes by consuming information fluidly, and turning it around in the form of organic activism. Gen Z is only starting to enter the workforce, to earn and contribute to the economy, but when they do so they are not leaving their values at home. Gen Z hungers for substance over political grandstanding.
For all the public statements on a everything from the murder of George Floyd to bathroom bills, corporate leadership is strongly, and increasingly, conservative in many respects. Other than broadly advocating for deregulation, it is not in most companies’ DNA to take openly political positions. In doing so, they support a political status quo.
But a political status quo is never neutral. And more than ever, today’s political status quo is polarized, regressive and stirs intergenerational conflicts. It therefore says a lot that many companies struggle to stay neutral in the abortion dispute. A September 2022 survey showed that 51% of employers now offer or will add for 2023 travel and lodging benefits for abortions. An additional 21% are considering adding these benefits.
Investors have also not been idle. Over the last three years, investors have filed a few dozen shareholder resolutions at publicly listed companies asking them to report on their political spending, on the premise that such donations might diverge from companies’ stated values or commitments to their workforce, and to report on their risk mitigation strategies for employees in states that have stringent abortion bans.
The strategies have yielded some successes, with companies revisiting their criteria for political donations, or instating travel cost coverage for women requiring out of state procedures. The Dobbs decision has stepped up pressure on public companies; private equity and venture capital GPs are also scrambling for solutions to protect portfolio company employees.
How this plays out is hard to predict. All the more reason for investors to take a close look at how companies respond to the new reproductive rights landscape, how companies respond to intergenerational conflicts, how their lobbying influences political and election outcomes, and how the Supreme Court slowly but surely descends America into chaos.
In the end, markets may very well bet on Gen Z over 1950s suburbia.