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)

Friday, June 22, 2012

US business confidence can’t be the problem

Lord Keynes worried about their “animal spirits” and Obama’s Keynesians all worry, too. From day one, the Obama administration has worked to restore the confidence US business, beating back those who’d tax away their “excessive” gains, and restoring what they’d misplaced—especially bank credit and a measure of domestic consumer purchasing power.

Without the Cold War or a “weapons gap” to fill with massive public procurement, has any US recession president before Obama spent more public and personal political capital to get business moving again?

Nevertheless, big business champions say business is still unhappy. Otherwise, wouldn’t they be creating more jobs, be less excited about Mitt Romney, and be more alarmed about the radicals in Congress who threaten to risk another debt-ceiling crisis?

Business is disrespected; they’re bruised by tough times and the president just doesn’t get it. Hell, didn’t the cold bastard just say: “The private sector’s doing fine!”

Actually, at the top, “fine” doesn’t describe it. “Spectacular” would be closer to the mark.

Nestled in last Sunday’s business section of the New York Times was a discrete report by Nathaniel Popper on C.E.O compensation for 2011. It used survey data collected by Equilar Inc. In part, it offers easy cannon fodder for the Occupiers. More important, it adds to the puzzle: What more can we do to make this market economy work?

These points are striking:

—The median pay for the nation’s 200 top C.E.O.’s was $14.5 million
—The median pay raise was 5% in 2011
—The median amount of total compensation taken is stock options rose 10.7%
—Over 97% of the compensation strategies in the public companies was approved by shareholders
—89% of the 200 executives worked at companies that were too small to make the list the previous year


Those who “get it” tell us that American business is paralyzed by new regulations, taxes, and political incompetence and uncertainty. We are told that business executives are very well compensated because they actually make tough and creative decisions—that you’re fired if you’re not performing.  

What’s going on? Are they being paid more for making important decisions or not? If they’re making great decisions, where is the paralysis? Where are they being “job creators"?

Let’s keep assuming that business is rationale. On the basis of the evidence, then, America’s leading executives are investing very heavily in the growth prospects of their own companies and are making the kinds of decisions their shareholders very much like. 

Maybe the “animal spirit” is recovering nicely but can’t completely speak to the needs of the larger society?

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