I used to think that business leaders aligned themselves with the Republican Party because they thought conservative lawmakers would help them make more money. After all, making money is the only reason businesses exist in the first place, so why not invest in a political machine that helps achieve that prime directive. But a funny thing happened on the way to the bank: the tables got turned.
The relationship today between business interests and conservative politicians continues to be exploitative, there's no doubt about that. But the direction of the exploitation has shifted completely. In a spectacular 180 degree turnabout, businesses today are nothing but an impotent ATM machine for the increasingly rabid ranks of Republican politicians. One need look no further than the right-wing frenzy over deficit spending to understand that when CEOs support the GOP, they might as well be shooting themselves and their employees in the head. Paul Krugman makes the case.
Suddenly, creating jobs is out, inflicting pain is in. Condemning deficits and refusing to help a still-struggling economy has become the new fashion everywhere, including the United States, where 52 senators voted against extending aid to the unemployed despite the highest rate of long-term joblessness since the 1930s.
Many economists, myself included, regard this turn to austerity as a huge mistake. It raises memories of 1937, when F.D.R.’s premature attempt to balance the budget helped plunge a recovering economy back into severe recession. And here in Germany, a few scholars see parallels to the policies of Heinrich Brüning, the chancellor from 1930 to 1932, whose devotion to financial orthodoxy ended up sealing the doom of the Weimar Republic.
I work with several of the world's largest companies every day. They are each engaged in deep scenario modeling about the prospects of recovery. Up until recently, most have been projecting what we would generally call slow and steady recovery. They see government spending as a regrettable-but-necessary course of action, and attribute stimulus spending for having pulled us back from the brink of depression. They want more stimulus spending, not less. Like Krugman, they understand this is not the time to put our heads in the sand and pull back. Deficit hysteria is their single biggest worry.
That's because they all live in a world where investment spending and borrowing are essential elements. Most of them are perfectly comfortable with the ideas that you use credit to fuel expansion and bridge through tough periods where margins are being squeezed.
By aligning themselves with the "stern father" political ideology of the GOP, they unwittingly feed a policy stream that will cut their legs out from under them and their workers. They haven't thought through the fact that their support for intellectual light-weights like Richard Burr, who wouldn't understand an economic theory if it bit him on the ass, will undermine the recovery they need and push us into that most-feared of all scenarios, the deep double dip.
I wish businesses would stay out of politics altogether, but that's not going to happen. So my advice to business leaders who want to drive near-term and long-term value: get behind progressive Democrats, where the mind-set of policy is always "win-win." Because by getting behind conservative Republicans, all they're getting is screwed.
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