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The Spectacle Blog
James Pethokoukis reports that at a recent jobs summit with business leaders, CEOs told Obama that his economic agenda and giant programs may in fact be hindering jobs recovery.
CEOs are saying as much amongst themselves. At a recent symposium, Intel boss Paul Otellini, a contributor to both parties, expressed concern about the “amount of variability in the system” created by the state of policy flux in healthcare, energy and tax policy. “It is very difficult to make a hiring decision,” he said. General Electric chief executive Jeffery Immelt, a strong supporter of Obama’s cap-and-trade proposal, added he would just like to “know what the rules are.”
All in all, a disturbing replay of the 1930s when FDR’s big changes left business reeling with uncertainty and confusion. The “devil you don’t know” and all that.
That is very similar to what business leaders were saying during the Great Depression. But there's one key difference, which is that businessmen are much better at playing the game and shaping the rules today.
When businesses are afraid to invest and hire because they don't "know what the rules are," it's called regime uncertainty. Regime uncertainty's role in exarcerbating and extending the Great Depression has been carefully examined by the economic historian Robert Higgs, most notably in a 1997 paper by the name "Regime Uncertainty (pdf)." Higgs presents poll data and anecdotes from the businessmen of that era, who sounded frighteningly similar to the Immelts nad Otellinis of today.
For instance, Higgs notes a 1939 Fortune poll that found that 65 percent of a sample of business executives agreed that the policies of the Roosevelt administration "have so affected the confidence of businessmen that recovery has been seriously held back." A 1941 Fortune poll indicated even deeper sources of uncertainty: almost 93 percent of businessmen expected that in the case of a war (which looked increasingly likely, obviously) the postwar regime would be one with significantly weakened propert rights. Fully 40 percent thought that the US regime would be a "semi-socialized society in which there will be very little room for the profit system to operate" or "a complete economic dictatorship along fascist or communist lines."
Of course, both the executives of the Great Depression and those of today have it in their best interests to stoke fears about the influence of government, so that they are better able to exert their own influence. Surely a 1941 executive in the know didn't really think that we were going to end up with a fascist dictator, just as Immelt, a big-time Obama supporter [Immelt actually donated to the McCain campaignm as a commentator pointed out. GE overall, however, broke two thirds for Democrats in 2008. --JL], doesn't think that Obama's going to destroy the private sector.
But Higgs presents another poll that highlights an interesting difference. A majority of businessmen, according to another Fortune poll, thought that the administration had such disregard for business and contracts that it could not be trusted even in the rearmament process. As Higgs explained, "[e]vidently, many business executives so distrusted the Roosevelt administration that they would rather forgo potentially lucrative munitions contracts than deal with the administration."
Contrast that with the actions of Immelt. At every turn, GE has been begging to deal with the administration on everything from the stimulus and the bailouts to cap and trade. It's not that GE and the others are afraid that the Obama administration is incorrigibly antibusiness, as the Depression businessmen thought of the Roosevelt administration. Instead, it's that they are terrified that the fruits of their lobbying will be wasted and Obama's programs will benefit someone else, and not themselves.
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More Blog Posts by Joseph Lawler
http://spectator.org/blog/2009/12/03/business-leaders-obamanomics-i
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Pingback| 12.3.09 @ 10:53AM
Twitter Trackbacks for The American Spectator : AmSpecBlog : Business Leaders: Obama links to this page. Here’s an excerpt:
Ken (Old Texican)| 12.3.09 @ 11:03AM
Mr. Lawler
The huge change in 2009 seems to be the "big business" guys being sucked into the statist grab-bag of bennies. They are "feeding the alligator".
...or feeding the bears...
Pick your metaphor.
They remind me of the Prussian manufacturers of years past. That didn't turn out so well did it?
Tim| 12.3.09 @ 1:13PM
Looks to me like big business is very comfortable with big government. With an army of lawyers and lobbyists at your command you can do profitibale work no matter who is in power in DC.
All that regulation keeps the small fish from getting bigger or causin problems.
glevy| 12.3.09 @ 11:25AM
I still find it funny how most educated and bright people feel that a firgurehead like the American president has the power to destroy/fix the economy.
Check out my blog to see what this fairly bright/educated person thinks caused this whole mess!
Whipstick Lane| 12.3.09 @ 11:41AM
Immelt is a conservative, voted for McCain and has said so many times. Why insist on the misinformed meme that he's some "big-time" Obama supporter? Find something else to complain about.
JP| 12.3.09 @ 12:41PM
Whipstick,
"Immelt is a conservative, voted for McCain and has said so many times. Why insist on the misinformed meme that he's some "big-time" Obama supporter?"
Nice strawman. Lawler never said Immelt voted for Obama, or he wasn't conservative. How about debating the real issue - building a business model that depends on the taxpayer's largress?
Pingback| 12.3.09 @ 11:43AM
The American Spectator : AmSpecBlog : Business Leaders … « Noya Khobor links to this page. Here’s an excerpt:
Lazy Jack| 12.3.09 @ 11:43AM
Below is a note I wrote in February 2009 on the eve of passage of the stimulus bill. As discussions grow about another round of Keynesian trapdoor, I will leave it to you to decide if my comments proved right, or wrong.
Two weeks ago in Tokyo: Credit flu and bird flu. More people than usual wearing masks, and not the surgical kind. Last Week in Albuquerque: Calm and eerily quiet, as if the town were on strike. Last week here: Calls from a supplier in Europe, the voice had a hitch, wanting reassurance I could not give.
On Friday, during our company meeting, as I was girding our team for a long pull, one gentleman way in the back tentatively raised his had during the question and answer period. His question was simple and powerful: Does the stimulus mean anything for us and our jobs?
I will leave it to your prejudices to guess whether the question came from an engineer, a customer service professional, a machinist, a welder, an assembler, an IT professional, an accounting staffer, a manager, a warehouse person, a sales person, or an executive. Suffice it to say the question was poignant, appropriate, brilliant, and the answer; not so much.
I read much of the text of the bill during its development over the last few weeks, so I had some basis for an answer. As you have gathered from my correspondence, my feelings about the stimulus package could be categorized as negative. In the spirit of bi-partisanship and to boost morale I gave a positive spin a whirl. Here is roughly what I said:
Direct stimulus spending related to the majority of manufacturing businesses in this country represents a small portion of the bill and may come in late 2010 and 2011. To the extent that tax cuts and spending on teachers and government employees and unemployment benefits injects some cash into a few pocketbooks it will eventually trickle down to some basic materials businesses and manufacturers. I also expressed hope that the plan may restore some calm to the markets and help un-freeze the credit markets. My spin on it was more positive than it appears here, but as I looked at it in the days since, I cannot help but conclude the following:
For the average business owner any material impact will likely come after he or she has had to make the next two or three hard decisions about down-sizing. At that point economics should take over and begin driving a recovery. However, since we are now directing $878 billion in capital (in the form of government debt) at the problem, investment capital needed for small to large businesses just as the economy readies itself to turn around may not be there. In other words, a recovery that should have begun in 2010 may not occur or may be significantly weaker until some years later because investment capital will be scarcer than normal.
I gave an optimistic answer to our staff. I hope that answer proves to be the correct one. However, in the words of Milton Friedman: Put the government in charge of the Sahara and shortly you will have a sand shortage. Maybe the few Republican governors posturing about turning down the largesse have got it right.
For the sake of my teammate with the prescient question, I hope at least one of them will follow through. In the meantime, my team will soldier on.
Our legislators are ramping up to sell us another round, whether we need it or not. It appears to me that the concerns I voiced materialized. I do not think I need to add anything else about this next round. Do You?
Lazy Jack
www.thanksforthelaughs.wordpress.com
tj| 12.3.09 @ 11:53AM
http://theprecinctproject.wordpress.com/ read all the way to the bottom. VOTE EM OUT 2010/2012
We have to organize now for 2010... Lets Roll
Pingback| 12.3.09 @ 12:20PM
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Pasadena Phil| 12.3.09 @ 3:17PM
Back in the 1970's while in college, I once spent a weekend in the Boston Public Library reading newspapers from the 1930s. What jumped up at me was something that is never mentioned in the history books I read in school: that America then believed that the American free market democracy was dying or dead. That the future was going to be either communist or fascist. Joe Kennedy himself declared then that democracy was dead in Europe and probably in America. It's scary to think that we are taking that path again.
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I am a firm believer in the value of internationalization. When I was in college my experaince working with students and staff from other nations really opened up my mind to working outside of the US. I now live in Panama and run a successful buisness here.