With another three months of mediocre employment reports before the election, accusations about Bain Capital’s outsourcing strategies may be joined by a more radical concern: Is American big business sitting on $trillions in cash reserves in order to (a) embarrass Barack Obama and (b) get better investment terms from a Mitt Romney presidency?
Is this notion too conspiratorial, too European to surface in smart circles in the US, the most unruly mixed economy in the world?
If the commanding figures in American business acted effectively—in concert—to advance their vast economic interests, they would have quickly stopped last year’s game of chicken over the US debt ceiling; they would have vigorously backed Democrat and Republican moderates—and scorned extremists—on entitlements and pro-growth tax reform. They wouldn’t be financing $billion-plus campaigns for Romney and Obama, as well as the campaigns of dozens of extremists who promise to keep Washington paralyzed.
Furthermore, in a majority of American states where business is declining to announce new plants and new jobs, they’re harming not just unfeeling Barack Obama’s chances of re-election, they harming fervent pro-business Republican incumbents as well.
Animus toward Obama and $trillions in corporate cash reserves in today’s recovering economy, however, are making people wonder. Moira Herbst in The Guardian is suggesting that it be taxed away and spent productively by government.
Groupthink, if not candle-lite conspiracies, contributed mightily to the global financial catastrophe of 2007, and friends of business today place tremendous emphasis on the importance on business morale.
Keynes elevated the economic significance of the emotions of entrepreneurs in his expression “animal spirits” and, on balance, saw a bias toward action. If there’s money out there, they’d take extraordinary risks to get a profitable share of it.
This perspective argues in favor of public deficit spending when money out there is scarce (as it was in 2008). As well, however, it assumes that government can soon return to a more neutral stance because private “spirits” will soon return to finance future growth and innovation.
Free market economists can’t counter the idea that capitalists would “hoard” for partisan reasons or would sit on productive resources when profitable opportunities are available. If money had a political agenda, it couldn’t be efficient and, anyway, it would be cahoots with an oligarchy.
With these assumptions, economists can make rules, design quantitative models, and predict future overall economic growth. When the growth doesn’t show up, government’s can be questioned for spending too little. The argument revolves strictly around economic management. The mental state and motives of the economic players are supposed to be reasonably fixed, and supportive of economic growth.
Let’s play with a less reliable analogy:
To a bird-watcher and a farmer, capitalists seem to act like clouds of birds over fields of grain. “The climate of opinion” in the cloud forms and reforms in an instant; no one bird is in charge, no one descents. No central intelligence is at play. Still, we know they will tire and get hungry; they’ll land, but we can’t say where.
The resting state of our capitalists’ “animal spirits” needn’t be constant. The bias for growth and risk-taking that charged the vibrant early years of Keynes’s life may not be as robust in the Atlantic economies of today. Indeed, Keynes’s generation of policy-makers might feel more sure of themselves now in Asia’s growth centers.
Putting in power in Washington an alternative ideology that believes America can still grow as aggressively as it did when it was young, without positive support and incentives from Washington, would be quite an experiment and, therefore, is not likely what business leaders actually have in mind.
Conceivably, fear and partisanship in big business are depressing economic recovery and may contribute to the election of a Republican president. However, that doesn’t constitute a conspiracy or a harbinger of what will happen next.
Moods change; in six months, the same glass half full may look irresistible, whoever is president.