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CAN BUSINESS GOVERN AMERICA?

CAN BUSINESS GOVERN AMERICA?. Rising Productivity, Stagnating Compensation. Hourly Productivity. Median Hourly Compensation. Median Male Hourly Compensation. Policy Feudalism. Prosperous Societies Need a lot of Government.

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CAN BUSINESS GOVERN AMERICA?

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  1. CAN BUSINESS GOVERN AMERICA?

  2. Rising Productivity, Stagnating Compensation Hourly Productivity Median Hourly Compensation Median Male Hourly Compensation

  3. Policy Feudalism

  4. Prosperous Societies Need a lot of Government • Crucial Characteristics are very high levels of Complexity and Interdependence. Knowledge generation and innovation are central to expanding prosperity • Public Goods • Huge Externalities, both Positive and Negative • Macro-Stabilization • Information Asymmetries and Myopia • State Capacity Needed to Guard Against Capture (rent-seeking)

  5. Eric Johnston, President of the U.S. Chamber of Commerce, 1942-1946 • Collective bargaining is “an established and useful reality.” • Business should support the new capitalism, “stripped of the ancient prejudices against organized labor, government activity, and community planning.”

  6. Factors Conducive to Business Support for the Mixed Economy I • OPPORTUNITY (“Organizational Slack”) • Limited foreign competition • Managerial autonomy (“stakeholder capitalism”) • ADVANTAGE • Perceived benefits of public goods • Competitive edge (e.g. large firms and regulation) • Possibilities for rent-seeking

  7. Factors Conducive to Business Support for the Mixed Economy II • CONSTRAINT • Countervailing Power (e.g. Unions) • Strong and Legitimate (Post-War) State • Party System (e.g. moderation of the GOP)

  8. U.S. Business and Neo-Liberalism • Declining Opportunity • Financialization and “Shareholder Value” • Shortened Tenure of CEOs • Declining Advantage in a Globalized Economy • Edge over domestic competitors less relevant • Increased incentives to free-ride • Declining Constraint • Weak unions • Weak state (gridlock, obstruction and drift) • Permissive GOP

  9. The Politics of Drift

  10. “In all cases where justice or the general good might require new laws to be passed, or active measures to be pursued, the fundamental principle of free government would be reversed. It would be no longer the majority that would rule: the power would be transferred to the minority.” —James Madison, Federalist #58

  11. Mann and Ornstein “The Republican Party is an insurgent outlier. It has become ideologically extreme; contemptuous of the inherited social and economic policy regime; scornful of compromise; unpersuaded by conventional understandings of facts, evidence, and science; and dismissive of the legitimacy of its political opposition, all but declaring war on the government.”

  12. A Tale of Two Associations: The Business Roundtable and the U.S. Chamber of Commerce

  13. BR: Elite Network • Very Powerful in the 1970s and early 1980s; “Learjet Lobbying”; resistant to overt partisanship • By early 1990s neither non-partisanship nor reliance on sustained direct action by “corporate leaders” remain viable organizing principles • A weakened BR now focuses on issues directly influencing the bottom lines of member firms (e.g. tax treatment of foreign earnings) and personally beneficial to CEOs (e.g. resisting closer regulation of stock options and corporate governance) • In 2010 the BR appoints a former GOP governor (John Engler) as its new President

  14. USCC: Delegated Governance • Turn to Moderation in the Early 1990s leads to Backlash (John Boehner: It is “the Chamber’s duty to categorically oppose everything that Clinton was in favor of.”) • New Leadership (Donohue) aggressive practitioner of organized combat. • Much more conservative policy agenda • Tight linkages to GOP • Huge Expansion of Resources • Willing Supporter of Rent-seeking (and a Rent-seeker Itself!)

  15. Chamber of Commerce Lobbying1998-2012

  16. Average Income (After taxes, including public and private benefits; 2007 dollars)

  17. Top 1 %’s Share (Excl. Capital Gains)

  18. “It would be popular for me to stand up and say I’m going to give you government money to pay for your college, but I’m not going to promise that. Don’t just go to one that has the highest price. Go to one that has a little lower price where you can get a good education. And hopefully you’ll find that. And don’t expect the government to forgive the debt that you take on.” – Mitt Romney, March 2012

  19. ADDITIONAL SLIDES….

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