CAN BUSINESS
GOVERN
AMERICA?
90.0%
Rising Productivity,
Stagnating Compensation
80.0%
Hourly
Productivity
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
Median Hourly
Compensation
10.0%
0.0%
1973 1977 1981 1985 1989 1993 1997 2001 2005 2009
-10.0%
-20.0%
Median Male Hourly
Compensation
Policy Feudalism
Prosperous Societies Need
a lot of Government
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Crucial Characteristics are very high levels of
Complexity and Interdependence. Knowledge
generation and innovation are central to expanding
prosperity
Public Goods
Huge Externalities, both Positive and Negative
Macro-Stabilization
Information Asymmetries and Myopia
State Capacity Needed to Guard Against Capture (rentseeking)
Eric Johnston, President of the U.S.
Chamber of Commerce, 1942-1946
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Collective bargaining is “an established and
useful reality.”
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Business should support the new capitalism,
“stripped of the ancient prejudices against
organized labor, government activity, and
community planning.”
Factors Conducive to Business
Support for the Mixed Economy I
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OPPORTUNITY (“Organizational Slack”)
Limited foreign competition
 Managerial autonomy (“stakeholder capitalism”)
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ADVANTAGE
Perceived benefits of public goods
 Competitive edge (e.g. large firms and regulation)
 Possibilities for rent-seeking
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Factors Conducive to Business
Support for the Mixed Economy II
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CONSTRAINT
Countervailing Power (e.g. Unions)
 Strong and Legitimate (Post-War) State
 Party System (e.g. moderation of the GOP)
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U.S. Business and Neo-Liberalism
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Declining Opportunity
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Declining Advantage in a Globalized Economy
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Financialization and “Shareholder Value”
Shortened Tenure of CEOs
Edge over domestic competitors less relevant
Increased incentives to free-ride
Declining Constraint
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Weak unions
Weak state (gridlock, obstruction and drift)
Permissive GOP
The Politics of Drift
Cloture Filings to End Senate Filibusters, 1921-2010
140
105
70
35
0
“In all cases where
justice or the general
good might require new
laws to be passed, or
active measures to be
pursued, the
fundamental principle of
free government would
be reversed. It would be
no longer the majority
that would rule: the
power would be
transferred to the
minority.”
—James
Madison,
Federalist #58
Mann and Ornstein
“The Republican Party is an insurgent outlier. It
has become ideologically extreme;
contemptuous of the inherited social and
economic policy regime; scornful of
compromise; unpersuaded by conventional
understandings of facts, evidence, and science;
and dismissive of the legitimacy of its political
opposition, all but declaring war on the
government.”
A Tale of Two Associations:
The Business Roundtable and
the U.S. Chamber of Commerce
BR: Elite Network
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Very Powerful in the 1970s and early 1980s; “Learjet
Lobbying”; resistant to overt partisanship
By early 1990s neither non-partisanship nor reliance on
sustained direct action by “corporate leaders” remain
viable organizing principles
A weakened BR now focuses on issues directly
influencing the bottom lines of member firms (e.g. tax
treatment of foreign earnings) and personally beneficial
to CEOs (e.g. resisting closer regulation of stock
options and corporate governance)
In 2010 the BR appoints a former GOP governor (John
Engler) as its new President
USCC: Delegated Governance
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Turn to Moderation in the Early 1990s leads to
Backlash (John Boehner: It is “the Chamber’s
duty to categorically oppose everything that
Clinton was in favor of.”)
New Leadership (Donohue) aggressive
practitioner of organized combat.
Much more conservative policy agenda
 Tight linkages to GOP
 Huge Expansion of Resources
 Willing Supporter of Rent-seeking (and a Rent-seeker
Itself!)
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Chamber of Commerce Lobbying
1998-2012
Average Income
(After taxes, including public
and private benefits; 2007 dollars)
18%
Top 1 %’s Share (Excl. Capital Gains)
16%
1973*
14%
Final Year**
12%
10%
8%
6%
4%
2%
%
Non-US
Finland,
France,
Australia,
Norway, Sweden Germany, Italy, Canada, N.Z.,
Netherlands
U.K.
United States
*1974 for Germany and Italy, 1975 for Portugal, 1981 for Spain
**2002 Australia, 2000 Canada, 2004 Finland, 2006 France, 1995 Germany, 2004 Italy, 1999 Netherlands, 2006 Norway, 2005
Japan, New Zealand, Portugal, Singapore, Spain, 2009 Sweden, 1995 Switzerland, 2005 U.K., 2008 U.S.
“It would be popular for me to stand
up and say I’m going to give you
government money to pay for your
college, but I’m not going to promise
that. Don’t just go to one that has the
highest price. Go to one that has a
little lower price where you can get a
good education. And hopefully you’ll
find that. And don’t expect the
government to forgive the debt that
you take on.” –
Mitt Romney, March 2012
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ADDITIONAL SLIDES….
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