May 24, 2012
President Calvin Coolidge is reputed to have made the above headline-title- statement. It symbolizes “the Roaring Twenties” in American politics. It was mocked in the Depression era 1930’s by the Democrats who were desperately attempting to repair the damage of the stock market crash and casting about for government-led remedies for the sick economy.
Yet the overlap between business and government contains a profound truth. Most people in the US believe that the President can affect the economy. They expect their President to steer the economy into good times for all. That clashes with the fiery talk of the Republicans who advise government to get out of the way in order for the natural forces of supply and demand to cause the US economy to recover.
The fact is government has always been a force for growing business. Americans expect their government to create the conditions for growing businesses. Think of the Homestead Act which simply gave away land in the American West to settlers. Think of all the public works which were not installed by private enterprise alone: roads, bridges, dams, dredging rivers and ports.In my neighborhood, people at the New Jersey shore expect the Corps of Engineers to replenish the sand at the edge of the sea.
On the other hand, there has always been a populist strand to political thinking in America—the idea that the little people who simply want to make a living are manipulated by bankers and financiers. For a long time the idea of “sound money” was the preserve of Republicans; the Democrats at the turn of the Twentieth Century campaigned as champions of poor farmers and poor city folk against the big banks and big business.
But the fact is that neither party can govern without the support of business. Despite reckless slogans today, both parties need help or at the least the acquiescence of major business interests in the USA. The real struggle is about how much government intervention and how much government regulation of business. The Democrats lean toward sufficient regulation to prevent business from escaping necessary taxes and rules which promote sufficient revenue to pay the bills for public services. The Republicans today act as if all we need do is free business of regulation and the natural forces of private enterprise will provide for the jobs and services we need.
That is why it is interesting at this moment (the end of May 2012) to observe the flap over Democrats’ criticism of the activities of Bain Capital (Mitt Romney’s former firm). Is Bain –a private equity financial firm – a creator of jobs or is it simply a tool for single-mindedly increasing share value for investors?
The fact is that defending private equity practices is not a natural position for all Republicans today. The “Tea Party” Republicans are not necessarily a natural fit for Finance Capital Republicans. See what Republican candidates have said in the past year:
Rick Perry:“The idea that you’ve got private equity companies that come in and take companies apart so they can make profits and have people lose their jobs, that’s not what the Republican Party’s about.” (New York Times, 1/12/12)…“Instead of trying to work with them to try to find a way to keep the jobs and to get them back on their feet, it’s all about how much money can we make, how quick can we make it, and then get out of town and find the next carcass to feed upon”…“They’re vultures that sitting out there on the tree limb waiting for the company to get sick and then they swoop in, they eat the carcass. They leave with that and they leave the skeleton” (National Journal, 1/10/12)
And then there is Newt Gingrich: “The Bain model is to go in at a very low price, borrow an immense amount of money, pay Bain an immense amount of money and leave. I’ll let you decide if that’s really good capitalism. I think that’s exploitation.” (New York Times, 1/17/12)… “He [Romney] claims he created 100,000 jobs. The Washington Post, two days ago, reported in their fact check column that he gets three Pinocchios. Now, a Pinocchio is what you get from The Post if you’re not telling the truth.” (NBC News, 1/13/12)… “If Governor Romney would like to give back all the money he’s earned from bankrupting companies and laying off employees over his years, then I would be glad to then listen to him” (Mediaite, 12/14/11).
So even Republicans think that some business practices can operate against the public interest. We need business, we need private enterprise, but clearly we need some rules and we some power to regulate what business does.