Republicans Are Bad For Business

According to this story in The New Republic, business leaders are starting to doubt their allegiance to the Republican Party.

Reason: the Republicans' willingness to endanger the entire economy to score political points, as happened last summer in the insane debt ceiling stand-off, which wound up lowering America's credit rating and affecting the interest rates we all pay. Uncertainty is the enemy of business, and Republicans are using uncertainty as a political weapon.

Besides, recent decades have shown Democratic presidencies are far better for American business than Republican ones.

Bloomberg reports that private sector jobs increase far more under Democratic presidents than under Republicans.

"Since Democrat John F. Kennedy took office in January 1961, non-government payrolls in the U.S. swelled by almost 42 million jobs under Democrats, compared with 24 million for Republican presidents, according to Labor Department figures.

"Democrats hold the edge though they occupied the Oval Office for 23 years since Kennedy’s inauguration, compared with 28 for the Republicans. Through April, Democratic presidents accounted for an average of 150,000 additional private-sector paychecks per month over that period, more than double the 71,000 average for Republicans."

Business Week reports that investment dollars have yielded five times greater returns across the past five decades of Democratic presidencies than the same period's Republican presidents.

"$1,000 invested in a hypothetical S&P 500 tracking fund beginning when JFK was president and measured only during subsequent Democratic presidencies would have yielded $10,920 by the time the market closed yesterday. Alternatively, $1,000 invested when Richard Nixon was president and measured only during Republican presidencies would have yielded $2,087 on the last day of George W. Bush’s presidency."

USNews reports that Democratic presidents beat Republicans on 11 of 12 economic indicators. The source is a new book written by a business lawyer and the head of a financial services company. When we started writing, we did not cherry pick any of the data," says Deitrick, who said he knew only the stock market data when he began and "had no idea where the rest of the chips would fall."

"It was overwhelming and surprising to see the Democrats win on almost all of the economic indicators," said one of the authors.

The Fairy Tales of the Business Press

Brad Delong does a pretty thorough job of dissecting the inconsistencies in the so-called "conservative" economic line, the anti-Keynesian, austerity, drown-it-in-the-bathtub anti-government side of the economic argument we've been stuck in for three years. Why isn't the conservative side subjected to any logical analysis by the business press?

Is it just too complicated for business readers? Even for those "superheroes" who are supposed to know more than ordinary workers and citizens? Come on. Superheroes are capable of digesting this, even if they are busy. They ought to find time to think.

Or is it just too embarrassing for business readers? Businesspeople are worshipped as "job creators." Is it wrong to question their beliefs? Is it heresy to doubt the prevailing business thinking––which says that only private sector spending is holy?

Is it only heresy to doubt business orthodoxy if it endangers ad pages and TV air those businesspeople tend to buy as business owners?

How is it that conservatives, who seem to believe in an invisible hand of the market, who believe our economy is magically protected by fairies and elves (no government regulation required), are allowed to call Keynesian economics "a fairy tale" without being challenged about their own magical thinking?

Keynes, who was no liberal, had a fully rounded theory that was borne out by sustained prosperity and growth (and the absence of panics) during the best forty year period in the history of our country––and the planet.

The problem believers in unfettered capitalism had with Keynes was that he advised behaving more like ants than grasshoppers (to borrow from a cautionary fable. Keynesians prefer fables to fairy tales.) That we be prudent and save for rainy days, that we rein in our appetites during up times (with regulation and fair taxation) and support a flagging economy by spending and building during down times. Which is pretty middle-of-the-road stuff, economicswise. Or was Eisenhower a Communist?

The nagging suspicion that I keep having is that these so-called business conservatives, in order to help their Republican operatives, have been sitting on their capital for three years, not spending it, not hiring, not lending, blocking stimulus packages through their elected proxies, keeping the economy down, hoping to hang a bad economy around President Obama's neck like a burning tire. They hoped it might put a Republican regime back in the White House.

(It would be interesting to read the Republican emails with their corporate and banking clients, hoping and planning to foil Obama's recovery efforts. I don't doubt they exist. Airing them would be a good thing. It'd only be fair, considering the Republicans in Congress surreptitiously read the Democrats' emails for over a year in '03 and '04.)

The business sector wants Republicans back in full control. Oh how they want it. But we all know how clever the last Republican regime was. Taking a record surplus and making into a record deficit. Their energy policy resulted soaring fuel prices. Their laissez faire economic policy set up economic collapse. But that Republican president was a businessman. A failed businessman several times over, but a member of the club.

Why Income Inequality is Bad for Business

There's a very good, straightforward and powerful explanation of the importance of economic fairness in today's StarTribune, written by David Morris.

Income inequality as it exists in the U.S. today, an extreme inequality which the Republican Party is sworn to continue and increase, is bad economics, very bad for business, bad for the future of private enterprise, bad for our health, bad for our children and grandchildren, downright stupid when you measure its effects on education, and (today being Sunday, maybe we should consider this) it turns Christianity on its head. Why do these "super-Christian" and supposedly pro-business Republicans support policies which undermine everything they stand for? My explanation? It's a shell game, a trick, a sham, a con game. To use a phrase popular in the South "They'd climb a tree to tell a lie." They don't give a damn about the things they trumpet in speeches and commercials. Their loyalty is to money in their own pockets and power in their own hands.

One of the chief lies they tell is this: Democrats who favor greater income equality want everyone to earn the same. This is untrue. What we want is a return to the system which functioned well during the longest prosperity in American history, the period between the New Deal and the inauguration of Reagan, a period when workers' earnings rose as a companies profits rose. Since Reagan it's all been taken apart. Since 1980, the American Dream has been narrowed to the upper classes, to people who own stock for a living rather than working for a paycheck. They forget, and would like Americans to forget, that prosperous working people are the engine of a strong economy. Republicans treat them like the enemy.

Un-American Business

All the productivity gains of the past thirty years have been paid upwards, but, hell, that's what productivity gains do or they cease to exist.

Because "increased productivity" is another way of saying workers are working longer/harder/faster for the same or less money. (Or have been replaced by machines.)

That Americans don't understand this shows how good their media are at lying to them, disinforming them, misinforming them, how good the propaganda is. When workers applaud productivity gains they are applauding the enrichment of someone else.

American business used to honor three loyalties: to the customer, to the employees, and finally, when the other two were satisfied, to shareholders, themselves. The first two loyalties have been degraded by a devotion to profit and only profit. Because profit boosts share value and share value boosts bonuses linked to share value. Profits have become God. Because obligations to customers and employees (in a societal sense the same thing) subtract from profit they have become the great enemies of American business.

Praise of the noble employee is lip service; the nobler he/she is the less he/she will work for. (You know how sacred such things as pension obligations are if you've read Ellen Schultz's book Retirement Heist.)

Today's treasured customer is thought of in predatory terms. "New and Improved" usually means they've put more air in the cereal or made the hardware flimsier or the software buggier. A key economic shift occurred when insurance companies ceased to think of themselves as insurers of people and began thinking of themselves as raisers of capital.

The problem is capital has nowhere to go if the customer hasn't got enough income to spend on goods and services. And the customer is the employee. In the past decade American business has shifted its focus from fulfilling needs and wants to exploiting vulnerabilities and shortages and fears. We live in a predatory economy. Next stop? Kleptocracy.

A Narrowing Sense of Loyalty

David Carr has a pertinent column today. Maybe it explains why the news media has been dismissive of the Occupy Wall Street movement. It also raises, again, a key element in the current crisis. It's a matter of loyalty.

When a business ceases to be concerned with what it delivers to its customers and only interested in delivering cash to its owners, we have a problem. When this is the model everyone is copying our society is in trouble. When our news is crafted in a way that supports this model we have a hard time resisting it, but that is the picture we get from most of our reporting class––most uniformly on FoxNews and on radio. That, in the words of the recent Bush White House, is "our new reality."

Pay cuts for workers are seen as a revenue source by those further up the food chain. It's unattractive, antisocial, predatory, but it's described admiringly in the business press. American business used to have three key loyalties: to customers, employees and owners. (I've written about this before.) But there's been a dramatic shift in the past forty years; the first two have been degraded to feed the last loyalty. We are loyal to our companies but our companies have ceased to be loyal to us.

All obligations to employees and customers are set on the debit side and seen as negative to the only true value, profit, and profit feeds the bonus machine. So employees and customers are, in a very fundamental sense, seen as the enemy in many or possibly most executive suites and also by the economists and accountants who equip business plans with their rationale. Look at our present economy: 99% of Americans are in financial difficulties and afraid, but very eager to work for whatever they can get. This is a very pleasant picture for the lucky few.

Look at the Austerity model being pushed by Republicans today. Is it telling us that we never deserved the broad prosperity of the recent past? Was the postwar boom an illusion or an aberration or a problem that it took the executive class forty years to eliminate?

Does prosperity belong only at the top of the pyramid? We get to build that pyramid and admire it from a distance, but in the economy built by Reagan and Milton Friedman and Grover Norquist and the U.S. Chamber of Commerce, the pyramid is purely for the glorification and enjoyment of the small class whose names are engraved at the top. And this circles back to something I wrote in 2002 and posted to this blog's first entry in 2004. Who are we working for? What are we creating with our labor? What is this vast efficient machinery meant to do? Who is it meant to serve?

How Not to Rush to the Bottom

Today's must-read is by Harold Meyerson in the Washington Post. America is dealing less intelligently with global trends than its European rivals. We are losing ground as a result.

American business seems bent on making the U.S. into a low-wage paradise, like Indonesia, the Philippines, Mexico or Guam. We are blind to the flip side of this "paradise". The downside which we can see right next door. We are becoming a nation that can't afford the products being made. Low wage countries are not the envy of the world. They are not societies to emulate or admire, and we should know better. The leaders of American business should know better. Many of them do. But the low-wage competition has a powerful pull to it. It's hard to compete against a more ruthless business rival, hence this foolish race to the bottom. And what do we have when we arrive there? We have low-wage consumers who cannot afford to buy the products or hire the services.

Prosperous workers are not the enemy. Prosperous workers are less inclined to radicalism and likelier to invest in the company they work for. They become partners––up to a point. They share the same broad goals and values.

At some point the systematic impoverishment of the American worker will do two things. It will reawaken radicalism among workers, radicalism to match what we see in their employers, the Chamber of Commerce and the Republican Party.

The second thing is already happening. Flat and declining wages over the past thirty years have already eaten the muscle out of the American consumer economy. Workers who once could afford homes no longer can. Nor are they buying goods to furnish and fit them. They don't have the money. Rising necessary costs and debt have squeezed out discretionary spending. Workers can afford cars less often. They can barely afford healthcare and are becoming less healthy as a result, at the same time that employers are cutting health benefits and government programs to fill the gap are being cut. We have a revenue deficit because low incomes pay less in taxes to pave the roads and hire the teachers. When they retire the young workers of today will be much poorer than today's retirees, and there goes another large segment of the economy.

A prosperous working class was the goose that laid the golden egg––creating a half century of stable growth, broad prosperity and a robust economy. Reaganomics crippled organized labor, which killed that goose. No more goose. No more golden eggs. The current economic crisis was the inevitable result, but it's only the opening chapter.