The Business of Business
Posted on January 16, 2013
"The chief business of the American people is business.”
Calvin Coolidge said that to a group of newspaper editors in 1925, smack dab in the middle of the Roaring 20’s, a decade of brisk economic growth. It was also in the middle of a huge stock market bubble (a bubble which would collapse four years later).
Coolidge summarized perfectly both the Republican and the business sector’s approach to government. Get the government out of the way and let business take care of the people through greater prosperity.
As we all know, the dream of the unfettered private sector would collapse during the Great Depression. Business didn’t have customers because consumers didn’t have money, and as a result, the economy stagnated and unemployment rose to 30 percent. The crisis in American capitalism was met by the bold and often ineffective leadership of Frank Delano Roosevelt, who first campaigned as a budget balancer and then promptly tried to prime the economic pump with government spending.
Republicans in that era mounted what can only be called an ineffective response. While they were able to thwart Roosevelt’s efforts to pack the Supreme Court, politically they were in the wilderness for almost two decades.
While FDR was anti-Wall Street, business interests ultimately found that they had to find ways to cooperate with the government. And as the nation pulled out of the Depression, went to war and then settled into post-war stability, big business, big government and big labor found ways to work together in an era of high taxation and regulation.
It was Jimmy Carter who first pushed deregulation (he deregulated the airline and trucking industries), a cause that was later taken up by Ronald Reagan.
When House Republicans came to power for the first time in 40 years in 1994, they were inspired by Reagan and they marched lock-step with the business community. The Contract with America was crafted with the business community in mind. One of the 10 planks of the Contract was an aggressive push to deregulate industry, apply cost-benefit analyses to new environmental regulations, and broadly reform taxes, including cuts to capital gains taxes and dividends, to get the economy moving again.
Back then, the NFIB, the Chamber of Commerce, the National Association of Manufacturers, the National Restaurant Association, the National Association of Wholesale-Distributors, all worked together very closely with the Republican leadership to push a pro-business agenda.
Republicans running the Congress in 1995 didn’t necessarily make a distinction between big business and small business, although there was definitely a distrust of Democratic lobbyists who represented corporate America. In fact, Tom DeLay, the Majority Whip, pushed to get those Democratic lobbyists fired and Republicans hired.
Today, as the New York Times pointed out, there is a huge disconnect between the business community and the Congressional Republicans. “In a shift over a half-century, the party base has been transplanted from the industrial Northeast and urban centers to become rooted in the South and West, in towns and rural areas. In turn, Republicans are electing more populist, ant-itax and anti-government conservatives who are less supportive — and even suspicious — of appeals from big business. Big business, many Republicans believe, is often complicit with big government on taxes, spending and even regulations, to protect industry tax breaks and subsidies — “corporate welfare,” in their view. “One of the biggest lies in politics is the lie that Republicans are the party of big business,” Ted Cruz, a new senator from Texas and a Tea Party favorite, told The Wall Street Journal during his 2012 campaign. “Big business does great with big government. Big business is very happy to climb in bed with big government. Republicans are and should be the party of small business and of entrepreneurs.””
This cleavage is not good for either the Business community nor Congressional Republicans. Imagine, for a moment, if Congressional Democrats would pick a fight with the NEA or the AFL-CIO. Republicans would rejoice if Democrats would break with Labor. Democrats rejoice when Republicans break with the business community.
And the idea that the business community can be bifurcated between big and small is kind of ridiculous. Small business needs big business to prosper if it wants to prosper and big business contracts a bunch of its work to small business.
There is some legitimacy, though, to the complaints of Congressional Republicans. Far too often, big business fights for special deals, rather than for a level playing field. And often, the price they pay for those special deals is acquiescence to legislation that would hurt their bottom lines a bit, but prove to be devastating to the bottom lines of their competition.
But Congressional Republicans have to be more realistic in their legislative approach. Their firm anti-tax philosophy has meant that there aren’t enough resources to rebuild our national infrastructure. Their anti-spending jihad means we don’t have enough money to invest in basic research and science. And they have to understand that sometimes regulation is vitally important to make the marketplace work. The invisible hand only works so well, in a society that has more than a few con men and crooks.
The business of most Americans is business. It is big business and it is small business. And for Republicans, they better understand that they will be more effective if they work with the entire business community. And the business community better understand that the Republican reform philosophy is far more useful for their bottom lines than the Democratic vision of crony capitalism.