HAWAII, May 31, 2012 — As congressional candidates square off in primaries across America, one of the most frequently invoked justifications for choosing one party personality over another is “business experience.” We’ve all heard the campaign tagline a million times: “So-and-so’s years of experience in business will help turn around our government and put our nation back on track.” But does experience running a company really make a candidate more qualified for office?
Thinking Carefully About Policy and Profits
In the early days of the Republic, America was a sparsely populated, largely agrarian nation. Legislators often served short careers in office and usually introduced inchoate laws – that is, bills they expected to pass on an as-needed basis. Congressional workload was light to moderate, with most legislators using family members as staff and the topics which came before committees were ones which could be resolved with minimal technical experience.
Today, Congress is a vastly different institution from its origins. Immense expertise on a dizzying array of matters is in high demand as Congress insists on legislating increasingly complex matters ranging from domestic economics to international affairs to even advanced scientific research.
The rise of the “2,000-page bill” introductions along with an already confusing myriad of existing laws, regulations, agency traditions and licensing regimes often force legislators to depend on lobbyists and expert staff members to know what needs to be done. Amidst this chaotic environment, it is argued that a candidate with prior business experience will be the best to handle the so-called “gridlock” of Washington and serve America.
The problem, however, with candidates with business backgrounds – especially those with big business experience – is that running a company well is not the same thing as running a government. In a business, profit-seeking is the core of any successful company. While a company that expands its production and increases its profits may be extremely popular among shareholders, a government that increases its tax revenues and upgrades its operations using “business methods” is essentially becoming better at stealing from taxpayers and more efficient at bossing people around.
As the ancient Greek author Thucydides famously warned in History of the Peloponnesian War, “as the power of Hellas grew, and the acquisition of wealth became more an object, the revenues of the states increasing, tyrannies were by their means established almost everywhere.” Said another way: Want government to help you and your friends get rich? Then use government to rig the market!
Consider this: In a total free market absent any government, no taxes exist; therefore, where revenues minus costs equal profits, money made by businesses goes to paying wages (purchase of labor) and investing in more business (purchase of capital).
Since a free market also has no government-controlled central bank to artificially dilate or contract the money supply through interest rates, the amount of money in the market is relatively stable and combined with increasing efficiency of production, the more “free” a market is, the cheaper products get and ultimately, profits fall.
Frenzied Policymaking For The Love of Money
All this goes to say that if I were the president of a multinational corporation, the last thing that I would want is lower taxes, smaller government, less spending and anti-inflationary monetary policy. Why? Wider profits – that is, more money accrued – follow inflation.
We all know that the biggest cash burner is government itself. Higher consumption means prices rise; as prices rise, people need more cash in their wallets at any given time; higher demand for cash means a need for more credit, which means the central bank must accommodate with lower interest rates to artificially sustain demand. In turn, investors pursue riskier assets such as stocks and so called “venture capital” projects as a means for short term profits.
As government consumption and government issue of credit increase, the need for increasingly larger short term profits becomes infinite. Savings becomes a thing to be feared rather than embraced, and policies designed to retard savings and increase consumer spending to sustain profits becomes a must.
As Charles Conant argued in The Economic Basis of Imperialism (1898), personal savings retard profits, and as the economy superheats, pro-big business candidates and legislators tell constituents they support “business friendly policies” but don’t realize they’re actually advocating inflation, not more wealth generation.
“It is the excess of saving, with the resulting accumulation of unconsumed goods, in the great industrialized countries, which is one of the world maladies of the economic situation today,” Conant chillingly wrote. “For the means of finding new productive employments for capital, therefore, it is necessary that the great industrial countries should turn to countries which have not felt the pulse of modern progress … Asia and Africa are the most promising of these countries … The United States cannot afford to adhere to a policy of isolation while other nations are reaching out for the command of these new markets.”
Sound familiar? Though written in 1898, it reminds of the classic talking points of nearly every candidate running for office in 2012. The need for ever increasing profits and market controls necessarily demands a hyperactive domestic and foreign policy, both in funding development and in attacking “enemies” so as to ensure savings never get in the way of making money.
It’s no wonder that Jesus warned that the root of all evil is the love of money. If I were interested only in profits, profits, profits, I’d probably want our government to shove individual mandates down people’s throats at home and be the policeman of the world abroad. But what I’m interested in is freedom.
Now, for the record and the benefit of my Republican and Libertarian friends reading this article, I am not against profit-seeking, nor am I against business. But what I do warn against is the use of government as a means to increase profits. Using government for the sake of “helping business” is less a matter of helping the market and more a matter of cartelization for the sake of a few.
In the short term, government may be used to create the illusion of the increase of profit, but in the long, it only results in destruction for all. As Rose Wilder Lane warns, “A ‘planned economy’ destroys Government because when men use force in an attempt to control productive energies, they have no means of knowing real costs, and these costs automatically increase at an increasing rate until the people can no longer pay them.”
Whenever someone running for office promises something, I as a political scientist know that whatever they propose to deliver can only come at the expense of someone else. Candidates running for office should run on their propensity to respect the Constitution and to stay as much as possible out of the lives and wallets of the American people.
Don’t give me a “business experience” candidate. I don’t want what’s best for the Fortune 500 companies, I want what’s best for my family and for my neighbors. What is profitable for the few is not always beneficial to the many.
If a candidate wants my endorsement, they should be interested in one thing and one thing only: making sure that government stays off my back.
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