Seamanship Quotation

“In political activity, then, men sail a boundless and bottomless sea; there is neither harbour for shelter nor floor for anchorage, neither starting-place nor appointed destination.”
— from Michael Oakeshott's
Political Education” (1951)

Wednesday, August 3, 2011

Austerity politics and business confidence

The economic recovery has lavishly rewarded those already at the top and made it much more difficult for tens of millions of other voters to realize the American dream. Observations like that get into politics and turn business leaders off.

Yet, the business community’s favorite, if not exclusive political voice, the Republican Party presently sees political advantage in polarizing America’s mass democracy. They portray the Democrats—the oldest political party in the union—as European social democrats and would happily privatize social insurance rather than ever raise a tax. With global capitalism starting to look more and more like an idea designed for China’s future, not America’s, business planners complain about political uncertainty and wait for the restoration of “business confidence.”

It’s not good enough that governments—local, state, and national—are entering a long, fraught period of austerity. They want assurances that scrambling politicians won’t talk themselves into doing anything to disrupt their world view. Without that assurance, many will sit on their hands and talk about grand expansion plans suspended in save files. Kevin Carmichael in The Globe and Mail captured these sentiments under the headline “Tax uncertainty handcuffs U.S. firms.”

“I could hire another 15 or 20 people, but I’m scared to death to do it because I’m afraid some tax change will come through,” said Clint Greenleaf, chief executive officer of Greenleaf Book Group LLC, a publisher based in Austin, Tex.

“It stifles growth,” Mr. Greenleaf said of Washington’s inability to come up with a coherent approach to taxes. “I’m not going to leverage the future of my 50 employees on the hope that the government won’t hurt me in the future.”

Is that what’s left of the legendary animal spirit of American entrepreneurship?

Did the 20th-century offer business a sure thing? Did American business then not notice that real socialists actually won elections in the United States, that both Roosevelts and, occasionally, a majority of Americans actually believed that elected governments, not business should drive economic reform?

Today, a majority of Americans say America is on the “wrong track.” Not long ago, a majority of Americans worried that American business was on the wrong track. And there was a time when the best and brightest sought public service—not MBAs.

The climate for business generally has never been better than it is now. In Canada, one political party stood for lower corporate taxes across the board and won a majority this spring. Developed and emerging economies all tackled the recession with measures to restore the private sector. Every Washington bipartisan commission that has addressed the US structural deficit has called for more intelligent growth incentives for business and for lower corporate tax rates.

Unless Mr. Greenleaf is worried about a particularly egregious tax loophole his business relies on or, in fact, has no strong commercial reason to hire more people right now, he should welcome, not worry about tax reform in Washington.

Waiting for things to calm down in Washington is na├»ve. Politics don’t slow down in difficult times. It could, as likely, get more radical and not limit itself to trimming entitlements and cutting bureaucracy.

How revenues are raised is as open to change as how revenues are spent. Unless mainstream business finds ways, with government, to restore shared prosperity, government, with others, will ultimately try other people’s ideas.

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