Martin Rosensky of Silver Spring, Maryland wrote this letter to the editor of the Washington Post on October 5, 2010:
In his Oct. 3 op-ed, “The Moynihan feast,” George F. Will stated that “liberal politics produces a culture of dependency and a government riddled with rent-seeking — the manipulation of government power for private advantage.”
If you change “liberal politics” to “conservative politics” and “private advantage” to “corporate advantage” in the above sentence, would not that capture conservative politics to a T?
This got me thinking – why do liberals hate corporate America so much? In fact, I’m always shocked at the naivety of otherwise smart people about what a “corporation” actually is. I’ve never met Martin, but he reads George Will so he must be smart (George and I agree on most political issues, but he’s so much smarter than I am I really can’t read his stuff. Plus, when the Nats moved from RFK to Nationals Park, his seats didn’t move an inch and mine got pushed out a section. Still bitter. But, I digress). Liberals seem to view corporations as some living being that makes money at the expense of other people. This misconception used to annoy me, but when I read Martin’s letter I realized that perhaps the issue is just lack of understanding. So, rather than vilify him the way he does corporations, I decided to do some ‘splaining.
A large company like, say, IBM, is comprised of, first and foremost, of a bunch of employees. Some of them make a lot of money and some make less, based on a free market determination of their value. The CEO makes more than the guy sweeping the halls at night. But, the guy who sweeps the floors is “profiting” from IBM’s success and would suffer by the failure many liberals would wish upon it (by losing his job). And, today, the floor sweeper is getting very generous benefits, including healthcare (benefits he will soon lose under Obamacare – more on that in my next blog entry). IBM is owned by public shareholders, which are primarily large mutual funds, whose underlying shareholders (through IRAs, 401(k)’s, and pension funds, but often directly as well) are individuals, increasingly middle class individuals. So, when IBM does well and their stock price goes up, middle class shareholders do well. IBM also pays a $0.65/share dividend (up from $0.12 ten years ago), which is often a critical source of income for older Americans living on fixed income from their retirement savings (parenthetically, President Obama is proposing to increase taxes on dividends, which will cause companies to cut them and those same older folks will lose income overnight; oh, but, wait, Obama will never raise taxes on people making less than the $250,000 per year; yeah, right).
I think perhaps the liberal aversion to “corporate America” stems from the high pay the top execs get. This was confirmed by my liberal friend Jami when she commented on my “Swing and a Miss” blog (on Facebook) with some blather about Wall Street bonuses. But, hey, I absolutely agree that too many public boards became too cozy with management and too many execs got paid too much for lousy performance. I think investor activism has helped with that problem and I think we’re moving in the right direction with regulations on the composition of public boards, compensation committees, and audit committees (see – I’m not against all regulation). But regulating executive pay with a “pay czar” as the current President is doing is one of the most gallactically stupid ideas I’ve ever heard. It will ensure that the best executives go do something else with their talents where pay is not regulated and the lousy ones with no other options will stick it out and live with the lower regulated pay. Dumb dumb dumb.
But, there’s no way around the fact that the private sector is the only growth engine for the economy. So, like it or not, all of our fortunes are tied to the success of corporations. Thus, it is self-defeating for anyone to assail the United States business community or root against American corporations while simultaneously lamenting high unemployment. It was the approach FDR took, starting in about 1930, and look what happened. It cost us about 10 more years of the Great Depression. It wasn’t until World War II, when he finally realized he had to embrace the business community to win the war that the economy turned around. There’s a great op-ed piece in the October 1st edition of the Wall Street Journal demonstrating with data I’d never seen before how FDR’s anti-business, anti-growth policies kept us in the depression for 10 years while the rest of the developed world started growing more robustly.
So, I hope a better understanding of just what a corporation is (a bunch of workers earning money to pay their bills, owned by a bunch of middle class shareholders through their 401(k) plans) will help this liberal allergy to corporate America. As I discussed in “A Swing and a Miss,” we need pro-growth policies to get people back to work. A good starting point is helping liberals understand that corporations are their ally in that effort, not their enemy.
Next up: Obamacare for Floor Sweepers