DeSantis’s attacks on Disney in Florida mimic democratic erosion around the world

Disney’s lawsuit against Florida Governor Ron DeSantis may turn out to be one of the more important cases litigated in this era of challenges to liberal democracy. 

That’s because it tackles head-on a danger that has been gathering steam in recent years: autocratic capture.

That’s a term we started using a few years ago to describe the phenomenon of authoritarian leaders trying to use the regulatory powers of the state to force private actors to toe a political line. If “state capture” or “regulatory capture” is the process of moneyed interests buying improper influence over government, “autocratic capture” is the opposite: government using its power to coerce political loyalty from moneyed interests. 

In a well-functioning democracy, business operates at arm’s length from the government. It neither has undue influence on it, nor is unduly influenced by it. For most of American history, if anything, we suffered from too little of the former: businesses had outsized sway over politics and policy compared to the electorate writ large. That may have been a desirable state of play for many CEOs. But the pendulum is quickly swinging in the other direction, where CEOs may soon find themselves the ones under a thumb.

And while autocratic capture is a new phenomenon here in the US, it has a sordid history overseas. In particular, Hungary’s Viktor Orbán has been a model for both Trump and DeSantis. What happened there and elsewhere should be a warning to businesses beyond Disney. 

Bálint Magyar, a former minister in the pre-Orbán Hungarian government who has become a leading scholar of Hungary’s democratic decline, describes the Orbán regime as a “mafia state” – one in which “oligarchs and the organized underworld have not captured the state; rather, an organized ‘upperworld’ of elites have captured the economy, including the oligarchs themselves. The result is a mix between a criminal organization and a privatized, parasitic state.”

Orbán helped to cultivate that “mafia state” by using the levers of state power to enforce political loyalty from big business. He used massive tax breaks and state subsidies to purchase German automakers’ silence on Hungary’s moves away from democracy and the rule of law. And he used state advertising dollars to prop up friendly media entities and used regulatory investigations to harass critical ones.  

Hosni Mubarak used these tactics to help cement 30 years of dictatorial rule in Egypt. Mubarak made sure that supporting his rule and marketplace success were one and the same. Business leaders who cross Putin in Russia find themselves jailed, robbed of their wealth, or exiled (or in the case of the once-richest man in Russia, Mikhail Khodorkovsky, all three). It’s a way for strongmen to exert totalitarian control.

DeSantis wasn’t the first to pilot this approach in the United States in recent years. Autocratic capture defined aspects of the Trump presidency. 

During his presidential campaign, Trump threatened to block the merger of AT&T and Time Warner if CNN didn’t cover him favorably — a threat the Department of Justice attempted to follow through on once he was elected. Trump also ordered his Postmaster General to raise shipping rates on Amazon to try to coerce more favorable coverage from Washington Post owner Jeff Bezos.  

Trump’s model of extracting tribute in exchange for regulatory protection set the stage. But others in the GOP quickly followed, shifting from championing free enterprise to treating businesses as a political chess piece. 

In 2021, after Delta Airlines, Major League Baseball, and several other companies spoke out publicly against proposed restrictions on voting rights in Georgia, Republican state lawmakers voted to increase taxes on Delta. And Republicans in the U.S. Senate threatened to retaliate against Major League Baseball by revoking an exemption it has long held from antitrust statutes. 

When DirecTV dropped the far-right One America News Network from its channel lineup, six Republican state attorneys general sent an unprecedented letter to DirecTV threatening to take action if it didn’t reverse its decision.

And when the January 6 Select Committee sought documents from telecommunications companies as part of its probe into the insurrection, now-Speaker Kevin McCarthy pulled no punches, warning that businesses who complied would face retaliation, including potentially “losing their ability to operate in the United States.” The choice was clear: defy a subpoena on the one hand and face the wrath of the courts; or comply with it on the other and face the wrath of a future Congress.

And now DeSantis. He’s used government power to retaliate against the Tampa Bay Rays baseball team for tweeting about gun regulations in response to the tragic shooting of school children in Uvalde, Texas. And he has been ratcheting up a regulatory war with Disney in retaliation for the company taking a stance against DeSantis’s bigoted “Don’t Say Gay” legislation.

To be clear, this is not an approach all Republicans have rallied around, with recent criticism from presidential hopefuls Chris Christie and Asa Hutchinson. And while Republicans have turned away from their pro-business leanings to become the dominant practitioners of autocratic capture in recent years, some Democrats have dabbled in it too: ten years ago, local Democratic politicians threatened retaliation against Chik-fil-A over its owners’ political stances; more recently, California Governor Gavin Newsom announced he would decline to renew government contracts with Walgreens in retaliation for its decision to halt sales of Mifepristone in other states (a promise that later seemed to be empty).

All of which is why Disney’s case is so important. As David French writes in The New York Times, if Government officials are allowed to use state power to retaliate against either government employees or private businesses whose speech the government dislikes, “governments could use the power of the purse to create a two-tiered society, granting and withholding government largess on the basis of political agreement.” French rightly warns that this “would not just distort the public square but would also disrupt the democratic process itself.”

Numerous scholars have identified the business sector’s historic role as either bulwark against authoritarianism or its handmaiden.

Businesses are on the frontlines of preventing that from happening. Which may be why numerous scholars have identified the business sector’s historic role as either bulwark against authoritarianism or its handmaiden. We cannot afford to let the role of the private sector fall on the wrong side of that divide.

Which is also why Disney’s lawsuit, while righteous and critical, is not enough. What the business world really needs is a collective-defense agreement — the equivalent of NATO’s Article 5 — a pact with the rest of American industry that a politicized attack on one of its members is an autocratic attack on all.

This is typically the role of major business organizations, but in this case, the Business Roundtable and the Chamber of Commerce have been relatively quiet in response to DeSantis’s attacks. Both groups know how to go to war politically when tax rates are at stake, and neither have used that approach here. But the threat to businesses from autocratic capture is far greater than a tax hike: it’s a threat to the CEO’s ability to manage a firm for the purpose of making a profit. So just as the United States has reiterated its commitment to Article 5 in the face of Russian attacks in Eastern Europe, America’s CEOs need to reiterate their commitment to defend the private sector in the face of autocratic attacks on their own.

Because it’s a very different cost-benefit analysis for Governor DeSantis to consider scoring cheap political points by taking on one or two companies in isolation than it is for him or Donald Trump to take on the entirety of American industry.  

CEOs also need to get out ahead of autocratic capture. As with any wildfire, the place to snuff it out is before it’s had a chance to grow. Risk-averse C-suites are failing at this. Trying to avoid fragmenting their workforce or customers or other stakeholders over what some view as political, too many are taking a heads-down approach, declining to confront this problem unless absolutely forced to.

The problem is that they will almost certainly be forced to confront autocratic capture at some point, only at a time of its choosing, not theirs. Neither Disney nor AT&T nor Time Warner picked the moment of confrontation. And while it didn’t crush them this time, as this trend gains strength, it could. Recall McCarthy’s threat: those companies who cross him might lose “their ability to operate in the United States.”

The story of Hungarian media companies should be a cautionary one for American business. In the early 2000s, Origo was the most popular news site in Hungary, a success story of the first dot com boom. But as an independent media outlet, it failed to meet Orbán’s strict standards for political loyalty. So in order to coerce its public statements and political stances, first Orbán’s party subjected it to regulatory harassment and discriminatory government treatment, not unlike DeSantis’s moves against Disney and the Rays. But Orbán didn’t stop there. Ultimately, he pressured Origo’s owners and several other media properties to sell to a government-controlled nonprofit affiliated with his regime. 

Now, that’s unlikely to be a tactic deployed by Trump or DeSantis anytime soon, but it’s worth America’s business leaders considering where that leads. Because the victims were not just Hungarian voters who lost access to the kind of free and unbiased media necessary for democracy to function, Origo’s business owners fared poorly in the end too. The companies the nonprofit took over were collectively worth an estimated $100 million. 

Their owners received nothing in compensation.