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Mike Lux

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The Future of American Business

Posted: 07/25/2012 12:40 pm

Even though this administration has done a great many things to help business over the last three plus years, President Obama is criticized angrily by Republicans, some members of the business community, and even some Democrats for not being "friendly enough" to business. At the same time, coming from the left, Bill Scher stirred up a lot of controversy among progressives when he a wrote a guest editorial for the New York Times called How Liberals Win, arguing in it that liberals could not win social progress without working in some regards with elements of the business community. Somewhere between these two controversies is a fascinating story about the future of business in American politics.

The business community itself is fundamentally split between (a) the big incumbent companies who have, in industry after industry, come to dominate the marketplace, and whose lobbyists have an iron grip on the levers of power in the federal government; and (b) up and coming entrepreneurs and struggling small businesses who are trying to gain traction and build successful enterprises in the face of the most challenging economic circumstances in many decades.

On the first side, you have either one or just a few companies controlling overwhelming amounts of the markets they are in: in banking, retail, electronics, office supplies, oil, coal, natural gas, book sales, agribusiness and food products, health insurance, cigarettes, fast food, media, several kinds of technology products, defense and aeronautics, beer, and a wide array of other areas a half dozen or less companies control over 50 percent of the market. These companies have DC lobbyists who make sure their companies get tax breaks, subsidies, and most of the government procurement and contracting deals; and they have high powered legal firms who keep the Department of Justice's anti-trust and anti-fraud divisions from paying them any mind. These companies, no matter how coddled they are by government policy makers, tend to be highly offended by any hint that the government might in any way take away their precious tax loopholes, hold them accountable, or look more closely at the way they do their business -- witness the Wall Street trader who compared Obama to a Nazi for threatening to close one of his favorite tax loopholes. Or witness Wall Street bankers in general, even with Tim Geithner and Eric Holder treating them with kid gloves too much of the time, going off in a huff and moving most of their campaign contributions to the Republican side in this election.

On the other side, you have the businesses that are trying to survive and get a toehold in the marketplace in spite of the array of forces lined against them. Banking consolidation and speculation has meant the amount of loan money going out to small businesses has shrunk dramatically. Government contractors overwhelmingly go to a few big contractors who get job after job, and government procurement follows the same pattern. Job losses, the collapse in housing prices, and depressed local wages mean most small businesses don't have customers with disposable income able to buy nearly as much as they used to. Local retail stores face brutal competition from a monopolistic leviathan in Walmart. Amazon and Barnes & Noble are killing local bookstores. Local hardware stores have to compete against Home Depot. The big incumbent mega-businesses are squeezing out the small and medium sized firms in industry after industry, and are making it tougher and tougher for innovators and entrepreneurs to even get started. In many industries, like energy, the big business incumbents are actively trying to squeeze the life out of the up and coming innovators such as the solar and wind energy firms trying to get into the marketplace.

When Scher did his New York Times piece, he got criticized by some of my fellow progressives for being willing to work with corporate America and "kowtow to our corporate overlords", but Bill was just making what is an obvious point to anyone who has been in the trenches of public policy debates at the national level: progressives all by themselves can rarely pass new legislation. To pass any bill in Congress right now, you have to divide the business community and get some allies there. If the winds of change keep blowing, and Occupy-style movements are successful at fundamentally shifting the political dynamic, maybe that changes -- I certainly hope so. But in the meantime, progressives are going to have to form alliances with different sectors of the business community.

Those kinds of alliances would take two forms. The first is strictly short term, on an issue by issue basis, where certain corporate interests line up with progressive interests. This can happen on big broad issues like health care reform, which many businesses will benefit from, or on narrower issues such as the swipe fee fight I have been involved in over the last couple of years, where the retail industry joined forces with consumer advocates like me to fight the big banks.

The second kind of alliance is one that hasn't been built, at least not for a long time, but it has the potential for a longer term, deeper alliance between the progressive movement and some of the business community. Progressives should be firmly on the side of the non-incumbent, non-monopolistic business sector: the small businesses and the innovative entrepreneur vs. the big businesses trying to snuff out all their competition. We should be on the side of community bankers and credit unions against the biggest banks. We should be on the side of the solar and wind producers against big oil and coal. We should be on the side of the independent bookstore against Amazon. We should be on the side of the local hardware stores and retailers against the big box stores. We should be on the side of truck farmers and organic farmers and small farms in general against the power of big agribusiness. We should be on the side of the up and coming software entrepreneur trying to compete with Apple. We should be on the side of the manufacturing companies still making things here in America instead of out-sourcing to cheap labor overseas.

This is what pro-Wall Street Democrats never got when they criticized the president's campaign for raising questions about Bain. The focus on Bain has nothing whatsoever to do with being anti-business. The problem with Bain is the kind of business it did: they out-sourced and off-shored, they cavalierly laid thousands of people off, they stripped pensions and health care benefits, they loaded good companies up with bad debt, they manipulated the tax code -- all in the name of short term profit. The kind of businesses Democrats should be and in many cases are supporting are those that will produce good jobs and help expand a more prosperous middle class.

Progressives should absolutely be pro-business, but the business interests we support and build coalitions with should be the kinds of businesses that build, not tear down, the middle class in this country. And when big corporate interests abuse their workers, their consumers, and the public trust in general, we should go against them every time.

 

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