Gregg Sherrill - CEO of Tenneco - has a good op-ed in the W$J today about the need for businessmen to be more full-throated in responding to attacks on the free market from our current leftist government: Speaking Up For American Capitalism Business, in the dual role that politicians try to fashion for it—providing funds to government, and all too often serving as a scapegoat—has taken a pounding on Capitol Hill and at the White House. For the most part, the business community has remained relatively silent. In my view, we simply have not tried hard enough to make our case.
The reaction is partially understandable. We were hit from several directions at once, and the financial crisis turned so quickly into a collapse of demand that our primary concern was just to survive and work our way out of the rubble. Our focus turned inward.
Because the financial crisis and resulting recession caused so much pain, a bashing of our entire free enterprise system may have been inevitable. My fear is that by remaining quiet in the face of this onslaught, we have allowed it to intensify. In fact, other than those companies that were a part of the system of easy credit and disguised risk that so spectacularly collapsed, American business as a whole has nothing whatsoever to apologize for.
The good news is that despite the political cacophony, and our silence, most Americans still instinctively understand this.
Hear, hear; and all that, but...by some magical process, American politics is filled with people hostile to government, regardless of which party is in charge of the White House. Why is that? Sherrill offers some answers:
According to a recent analysis in The Economist magazine, the overwhelming majority of Americans say they prefer the free enterprise system to any collectivist alternative. In one such poll, as the Economist reports in a feature titled "The 70-30 Nation," the Pew Research Center asked respondents whether they were better off in a free market rather than a socialist economy "even though there may be severe ups and downs from time to time." Seventy percent said "Yes"
So why are the 30% in charge of the 70%? According to American Enterprise Institute President Arthur Brooks, the "game changer" was the economic crisis. As he writes in his book "The Battle," "the opportunity to expand the 30 percent coalition was not the Democratic sweep in 2008. It was the financial crisis of 2008-2009, which was used as a tool to attack the free enterprise system . . ."
Furthermore, Mr. Brooks argues that it's time to make "the moral case for free people and free markets." I couldn't agree more.
I can't argue with that, but I don't think American businessmen, especially those who run public companies, should get away with complaining that they are being unjustly attacked. I'm a free market kind of guy, but the behavior of the big league American capitalists during the financial crisis and the years leading up to it was positively embarrassing. How can you look at someone like GM's Rick Wagoner...or Lehman's Dick Fuld...or Merrill's Stan O'Neal...or anyone at Chrysler, Washington Mutual, Fannie/Freddie, Wachovia, or BP (which, just today, is being credibly accused of aiding the bogus "compassionate release" of Libya's Abdel al-Megrahi), and conclude that Big Business is behaving in a blameless manner?
These are guys who destroyed their companies, often in the face of clear warnings of danger. They didn't even carry out the most basic item on their list of tasks, which is to preserve shareholder value. And, then they walk away with multi-million dollar golden parachutes? What does that have to do with the free market? Absolutely nothing. The free market works when people have the space and the resources to succeed on their own and fail on their own. But, the failure part has been gradually legislated and regulated away. Instead, too many of America's businessmen are enthusiastic about their perks and power during good times; but, during bad times, they run to the government for protection - whether through bailouts, "stimulus," "green" subsidies or what have you.
And it gets worse. Health insurers and pharmaceutical companies enabled the passage of Obamacare. UPS has spent years trying to drag FedEx down to its level by seeking legislative mandates that it unionize its workforce. Tobacco companies "settled" lawsuits against them by paying $$ to the government, rather than to actual plaintiffs who had been harmed by their products. ADM and other ag-business titans seek out and receive billions for boondoggles like ethanol and farm supports that are politically sold to the public as supporting "family farms." And, so on.
And, that's not to mention the bad behavior of corporate titans, whether in the criminality of a Richard Scrushy (convicted of trying to buy a seat on a health care regulatory board), or the sheer tone deaf boorishness of, well, take your pick. I mean, what would possess a company like Chrysler to hire a man like Bob Nardelli as its CEO? And yet those are the sort of decisions that come naturally at the highest levels of American business.
The free market doesn't just mean business is free from legal or social responsibility. Call it noblesse oblige if you want, but the capitalists have social responsibilities that go beyond booking profits and making donations to the museum downtown. No, this isn't a call for "socially responsible" investing or "proxy access" or other leftist reforms (as if they care about business!). But, it is a call for business elites to at least pretend they live in the world with the rest of us. Surely, their education and sophistication has taught them that their bad behavior will be seized on by hostile elements in the media, government and society. Surely, they are aware that their bad behavior will reflect badly on the rest of us who are just trying to make a buck.
What we really have now is an increasingly unfettered social democracy where business elites protect their own interests through government fiat, rather than through innovation and competition. Sherrill is right that there are very few among his peers who makes the moral case for free markets. That's because many of them don't know what that case is, since it's been so long since they worked within a free market.
