Looking at the Obama Administration's New Approach to Economic Policy
Previously published on Feb 19, 2011
From Donald Trump's potential run for President to the appointment of GE CEO Jeffrey Immelt to President Obama's Council on Competitiveness and Jobs, big business interests are publicly reasserting their influence over government policy. While critics point to the Obama Administration's apparent shift in philosophy as a belated inevitability, touted pro-business policies may offer additional cosmetic results that portray a healthy economy in the short-term, but they will not fix America. The old mantra, "what is good for GM," or GE in this case, "is good for America," has become less true in far fewer situations thanks in part to our globalized economy. Consequently, US economic policies must be designed to address national interests by better reflecting realities faced by all businesses and the needs of the American People.
Yielding to the political view that businesses are citizens, and thus individuals, most "corporate people" would be interestingly enough considered psychotic due to their unrelenting pursuit of dollars without regard for the wellbeing of others and the manner by which they manipulate our perception of their more negative behaviors. From low level managers to CEO's, the individual decision makers responsible for a firm's activities will respond differently to this reality, but they are all affected in some way. Many will be blinded to the costly, destructive, and even lethal consequences of the decisions they make. Although the expertise of corporate leaders is essential for the development of solid economic policies, their views must be taken with a grain of salt as they are under pressure to maximize profits and minimize liabilities for their industries.
What benefits a corporation might just hurt a small business and vice verse. Meanwhile, not all small businesses create jobs or expand when they receive an additional tax benefit to do so, especially when they are one-man operations. This means tax breaks as a preferred economic policy cannot always help the economy, but they certainly can increase the National Debt. In tandem, removing trade barriers further pressures corporations to outsource their operations, unless the costs of governance, worker safety, pollution, and so on are displaced onto citizens, the environment, and businesses that cannot outsource. In essence, free trade policies create a tax on those who support our domestic economy instead of those simply access our economy. Where increased economic activity leads to larger tax revenues, increases in the standard of living, and better consumer prices, such a tax is welcome. Where it does not, it is bad policy.
GE is a corporate conglomerate that has had a long history marked by many positive, as well as negative, contributions to the US, so its CEO's input is extremely valuable. On the other hand, his perspective is only a piece of the puzzle while he must be an advocate for US interests, not GE interests. Governments exist to pursue the interests of its citizens. Although business may pursue profits to the benefit of their owners, businesses exist solely because they fulfill the demands of consumers. Consequently, governments must not mold their policies to reflect the interests of businesses; but rather, they should pursue policies that foster healthy business practices and economic growth, which addresses the needs of their citizens. Sometimes, this means businesses like GE have to adapt their business model to serve a particular market.
The failure of governments to govern, i.e. letting businesses govern governments, only encourages unhealthy business practices that are quite costly and difficult to correct. As this has happened in our society, our public servants must be willing to correct poor economic policy and bad business practices. If someone like Donald Trump is to be a national leader, he must be willing to slash subsidies to the real estate industry, for example, when they do not serve the broader interests of the US, i.e. when they encourage real estate bubbles and contribute to the National Debt. In other words, businessman must be willing to shoot themselves in the foot for the sake of America, if we are to build sound economic policies that address the short and long-term interests of our Country.
The United States government often fails to behave according to its interests, thus businesses have embraced some rather poor business practices in response and we have created a lack of long-term certainty. As such, restructuring has necessary costs while solid growth depends upon so much more than balancing budgets, cutting taxes, and ignoring social interests like pollution, safety, and wealth distribution as a function of income. Fixing our economy requires our officials to tap corporate executive and other economic experts, but these individuals must properly weigh the bias of their own background and offer solutions that reflect US interests, even when doing so goes against their business interests. Moreover, government should embrace policies that benefit corporations in the short and long-term, but government must not pursue policies that over tax its people or the businesses that do the most to support its economy.