By Mort Zuckerman
The growing tension between the Obama administration and business is a cause for national concern. The president has lost the confidence of employers, whose worries over taxes and the increased costs of new regulation are holding back investment and growth. The government must appreciate that confidence is an imperative if business is to invest, take risks and put the millions of unemployed back to productive work.
America’s get-up-and-go entrepreneurial culture and adventurous spirit outlived the passing of the frontier, and still inspires and nourishes millions. No other country has a population so habituated to self-help and self-improvement. American managers have consistently led the world in investing in new technologies and providing high-tech training to exploit them. No other country has met the requirements of an emerging economic system that needed people to be mobile both physically and psychologically. No other country invests so much in business training and retraining – on top of having the largest and world’s best graduate and undergraduate business schools.
The energy in business is matched by a unique and remarkable world of finance capital that funds young talent and new ideas, and accepts the risks associated with high-tech, high-growth, high-concept companies.
Further, we enjoy a political framework that articulates not just what the government does but what the government does not do. It is the private sector that makes the overwhelming majority of business decisions, which is the best way to allocate resources.
But – and here’s the heart of the current concern – the Great Recession has resulted in great damage to our traditions. Having expanded at a healthy clip for most of the past 70 years, we have faced a break and then a decline in prosperity. The first decade of the 21st century marks the first decline of median incomes and net worth since figures were compiled over 50 years ago.
Washington’s ability to initiate a resurgence is limited by the long-term dangers of our deficits and our debts. But one unfortunate pattern that has emerged in the past 18 months is to lay all the blame for our difficulties on the business community and the financial world. This quite ignores the role of Congress in many areas, most glaringly in forcing Fannie Mae, Freddie Mac and the Federal Housing Administration to make loans to people who could not afford them. Then there is the Securities and Exchange Commission, which raised acceptable levels of leverage for financial institutions.
The predilection to blame business was manifest in one of President Barack Obama’s recent speeches. He was supposed to be seeking the support of the business community for a doubling of exports over the next five years. Instead he lashed out at “unscrupulous and underhanded businesses, who are unencumbered by any restriction on activities that might harm the environment, take advantage of middle-class families, or, as we’ve seen, threaten to bring down the entire financial system.”
This kind of gratuitous and overstated demonisation – widely seen in the business community as a resort to economic populism on the part of Mr Obama to shore up the growing weakness in his political standing – is exactly the wrong approach. It ignores his disappointing stimulus program, which was ill-designed to produce the jobs the president promised. It also undermines the confidence that business needs to find if it is to invest in the face of a new generation of regulations, increased bureaucracy and higher taxes.
Disillusion has spread to the Business Round-table, the US Chamber of Commerce and the National Federation of Independent Business, which represents small businesses. The chief economist of the NFIB recently wrote: “Business owners do not trust the economic policies in place or proposed … the US economy faces hurricane-force headwinds and the government is at the center of the storm, making an economic recovery very difficult.”
Some people have called the gulf oil spill “Obama’s Katrina”. The better analogy is to our economic crisis. The causes of economic uncertainty are all too clear, yet the president has yet to mobilize the will or resources to do what is necessary to address them.
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