Schumpeter
Corporate America is mending fences with the nation’s chief executive. Tentatively
TO MANY American capitalists, Barack Obama has been simply the “most anti-business president ever”. For much of this year it has been hard to find an American boss with a good word to say about him. Some of those who supported his election have groused the loudest. In July the head of the Business Roundtable, a trade association for business, accused Mr Obama of creating an “increasingly hostile environment for investment and job creation”. The US Chamber of Commerce, another business lobby, complained that the White House “vilified industries”, among other crimes against prosperity. Corporate America was a leading source of funds for the Republicans who seized control of the House of Representatives last month.
Nonetheless, the mood has changed. Business leaders have been fulsome in their praise for the deal Mr Obama struck with Republicans in Congress on December 7th to extend the “Bush tax cuts” for two more years. This deal does nothing to address America’s long-term budget woes, but the Chamber said it would “go a long way toward helping our economy break out of this slump and begin creating American jobs”.
Could this be the start of a happier relationship between business and the nation’s chief executive? Naturally Democrats, who want to see Mr Obama re-elected, hope so. More important, smoother relations with the White House might persuade firms to stop worrying so much about political uncertainty and start creating jobs. There have been encouraging signs. Granted, the White House has not yet hired a corporate bigwig to fill a senior post, as expected. But a trade deal with South Korea has been revived, and the president’s recent trip to India delighted the bosses who went with him. They applauded his determination to talk about business with the Indians. They also liked the way he listened to their concerns. Hitherto, Mr Obama tended to treat the corporate bosses he met as little more than backdrops for photo opportunities. Even the ones who voted for him hated that.
Whether the new sweet talk blossoms into a lasting romance will depend a lot on whether the economy recovers. That is largely beyond Mr Obama’s control. But an important test will be how the president responds to the “Roadmap for Growth”, a wide-ranging policy document published on December 8th by the Business Roundtable. Heavily influenced by companies such as Dow Chemical, whose recently published “Advanced Manufacturing Plan” makes many of the same proposals, the new manifesto enjoys broad support in the boardrooms of big firms. Scores of bosses jetted, drove or walked to Washington, DC, to mark the launch.
The roadmap includes a measure of self-serving guff about the evils of shareholder democracy. For example, its authors abhor Congress’s recent decision to give shareholders a say in how much chief executives are paid. But taken as a whole, the roadmap appears to be a genuine attempt to be constructive. It is non-partisan, which helps. Mr Obama’s efforts to improve America’s lousy public education system are acknowledged, though so too is the fact that far more needs to be done. (America came 26th in a new OECD ranking of high-school maths scores, its students easily outsmarted by swots in Shanghai and Singapore.)
The Business Roundtable, whose members are typically big, internationally-oriented firms, is gung-ho for globalisation. The Chamber of Commerce, whose members include plenty of small, domestically-focused firms, is not quite so enthusiastic. But overall, business is pushing Mr Obama to promote free trade, and he seems more receptive than in the past. Last month’s election has made this easier. Mr Obama will probably have more luck moving trade deals through a Republican-dominated House than the old Democratic-run one, even if a few nationalistic tea-partiers object. He could add to his South Korean success by asking Congress to ratify stalled deals with Colombia and Panama. He could also pursue new bilateral deals and, above all, try to resurrect the Doha round of global trade talks.
Red tape and taxes
Three other proposals in the Business Roundtable’s roadmap also merit Mr Obama’s serious consideration. The first is its suggestion that, when designing new regulations, the administration should talk more with the firms that will be affected. Businesspeople fret that some parts of the executive branch—notably the Environmental Protection Agency—pay scant heed to the costs they impose. Forthcoming rules on air pollutants, for example, worry them a lot.
The second idea is to overhaul tort law so that American firms no longer suffer dramatically higher legal costs than their competitors in other countries. That was never going to happen while the lawyer-loving Democrats ran Congress, but the proposal now offers Mr Obama a chance to do something bipartisan.
The third idea is to reform America’s monstrously complicated tax system. Congressional Democrats talked about doing this before Mr Obama was elected, but never did. As the Business Roundtable points out, America has the second-highest rate of corporate tax in the OECD. A lower rate would make corporate America more competitive. Mr Obama should also broaden the tax base and slash the number of exemptions and loopholes.
Mr Obama has long complained that businesspeople misunderstand him. They blame him for the rotten economy when really, in his view, they should blame his predecessor. Mr Obama insists that he is as pro-business as any previous occupant of the White House. Now is his chance to prove it.
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