Dear Government, U.S. Business Doesn’t Need You

It’s not Washington’s job to help out private enterprise. Pro or con?

Pro: We Don’t Want Your Kind of Help

Why does anyone think that business needs government help? If assistance from a large central government were really necessary for economic growth and job creation, the U.S. could never have blossomed from an agrarian economy into an industrial giant. Yet that 19th century growth miracle (the population alone soared from 5 million to 76 million) happened without "help" from Washington.

Many people think business needs Uncle Sam’s help to get out of the current economic mess. But wait, that mess was caused by government intervention in the first place. The solution, therefore, cannot be more of the same poison that sickened the economy—whether it comes in the form of runaway spending, mortgage promotion, import quotas, tax favors, or other forms of "welfare for business."

Take job creation, for example. President Barack Obama, Congress, and state governments all claim to have solutions for high unemployment. But high jobless rates are easily traceable to government programs that hamstring investment, product development, manufacturing, global free trade, and everything else that makes for a healthy economy.

Jobs are created by private businesses when they expand production, launch new products, and develop new markets. Government’s proper task is to protect the rights of these job creators (and the people who fill the jobs). That means enforcing laws against embezzlement, fraud, breach of contract, and all the other crimes and civil wrongs that violate the right to free, voluntary trade.

After that, government’s No. 1 priority is to butt out. Our lawmakers need to be pondering how to roll back the programs that stifle job creation. From Federal Reserve-driven currency manipulation that fogs up the economic prediction windshield to costly and demoralizing regulations such as Sarbanes-Oxley that treat businesspeople as guilty until certified innocent and on to runaway "stimulus" spending that sucks capital out of the private sector, government "help" actually kills business initiative.

If Washington wants to help business, it should focus on providing the freedom businesspeople need to succeed.

Con: Washington Can Empower Business

The federal government not only should but must help business stimulate the economy, especially in these difficult times.

Let’s be clear on what government should and should not do.

First, it should focus on the No. 1 concern of most companies: the uncertainty that hangs over the economy.

Corporate executives, investors, and entrepreneurs have serious concerns about the rules and regulations being written to implement the sweeping new health-care and financial-services laws: the Patient Protection & Affordable Care Act and Dodd-Frank Wall Street Reform & Consumer Protection Act. This uncertainly is stifling investment. And gridlock in Congress means they can’t effectively plan for the future tax structure and government expenditures. So they wait.

The best way for government to help private enterprise is by taking a step back, clearing the fog, and assuring executives and investors of stability in the nation’s tax and policy structure, allowing them to invest with confidence.

Politicians need to put America first and stop their partisan carping and pandering to special interests and campaign contributors.

Washington should also prove itself capable of managing its own affairs and put its fiscal house in order. How can Washington tell business what to do when it can’t manage its own finances, when its own experts don’t understand certain statutes (including the federal tax code), and when it’s constantly changing things?

By laying out a course of action and sticking to it, rather than zigzagging whenever the political winds change, Washington can encourage companies and investors to get back in the game.

Washington also needs to close loopholes and lower corporate tax rates, as the President has said, and show the business community that it intends to maintain a level playing field so all companies and industries—not just a select few—have incentives to innovate and expand.

Finally, Washington needs to create conditions in which America’s entrepreneurial spirit can thrive—rewarding venture capitalists who are willing to risk their money on somebody else’s dreams and establishing policies that encourage banks to expand lending.

Opinions and conclusions expressed in the Debate Room do not necessarily reflect the views of Bloomberg Businessweek, Businessweek.com, or Bloomberg LP.

Reader Comments

seven2521

Due to all the government regulations, one good example would be the minimum wage laws, hiring and even firing employees has become so expensive in America, that businesses have to look somewhere else, like China.

If you want businesses and the economy to thrive and spark innovation, let them. Business people, the real ones not the ones with Washington pull (I'm looking at you Solyndra), know better than bureaucrats.

Steve Stoddard

Tom: Government’s proper task is to protect the rights of these job creators (and the people who fill the jobs). That means enforcing laws against embezzlement, fraud, breach of contract, and all the other crimes and civil wrongs that violate the right to free, voluntary trade. After that, government’s No. 1 priority is to butt out.

Harold: The best way for government to help private enterprise is by taking a step back, clearing the fog, and assuring executives and investors of stability in the nation’s tax and policy structure, allowing them to invest with confidence.

It looks like both debaters actually agree on the basic idea that the government needs to back away. Their disagreement must be over "how far?"

I think it should back off gradually, in steps--starting by summarily abolishing the EPA, the DOE, the FTC, FDA, SEC, and the Federal Reserve. That should give us some breathing room, so that the government can then back off some more.

Peter Trnkoczy

Under Hitler and Mussulini all business activities were controlled by the State:
The State told the business owners what to produce, how much to pay for raw material, from whom to buy it and to whom to sell it, and for how much. The hiring of workers was done through a government hiring agency. In such an "economy" no business forcasting is possible. Volks, we are almost there; it's called Fascism.

Heinz Schmitz

When I tell people how I make money online the first thing I hear from them is: "Are you allowed to do that?" I think that is really telling. There is a climate of fear out here, fear of government interference and punitive action by lawyers that truly hampers and discourages new business growth.

RS

"How can Washington tell business what to do when it can’t manage its own finances, when its own experts don’t understand certain statutes (including the federal tax code), and when it’s constantly changing things?"

Answer: It can't. The presumption that government "experts" can know how to better invest a person's limited resources better than the private individual themselves do is demonstrably untrue. Individual freedom means the ability to choose the values that are important to you, not have them chosen for you by elected officials and government bureaucrats. Moreover, the standard of living gained through the division of labor and exchange (i.e. true job creation) requires that people be free to choose the types of specializations that match their own goals, something that no one else can do for you. When Ayn Rand said that a "free mind and a free market are corollaries." it was the relationship between each individual's choice of productive activities and their ability to exchange and reap the benefits of those choices that she was referring to.


Jeff

There are only three proper roles for government: law enforcement/police, the judiciary/courts and the armed forces. These three branches of governments' primary job is to protect individual rights. That should give people an idea how far back the cutting needs to be done.

Miguel Castro Jr.

Yes. However, we cannot allow the goverment to be run by U.S. business or foreign business. We need to mind "our" business.

"Profits, prosperity, and friendship will give themselves form if we focus on the social and ecological sustainability of the purpose, process, and products to which we dedicate our life's energy." --Miguel Castro Jr.

Brianna

When I was growing up, there was only one thing I counted on being "handed" to me by government. It wasn't health care and it wasn't welfare; all I'd expected was a stable political and economic clime in which to pursue my own goals. Now I see that climate disintegrating around me, and whenever I look for the cause I am always able to trace it to a government who is so eager to "help" me that it has forgotten to do the one thing it actually can do to help me: maintain law and order and defend my rights. I am not completely averse to state or local governments meddling somewhat in economics, but for the federal government I think the Objectivists are quite right: We need a separation of state and economics, in the same way and for the same reason as we have separation of church and state. Originally the Bill of Rights was designed only to restrict the federal government, not the states, on the principle that if a state passed a bad law, the people would still be free to vote with their feet. Pass an amendment banning economic involvement by the federal government and only the federal government, and at least give us the option of voting against bad economic meddling by the states with our feet.

Carl Svanberg

I agree with Thomas Bowden. Corporate America does not need any help from the government. Great businessmen like Steve Jobs and Bill Gates only need to be left free to be able to succeed, to create wealth, a profitable enterprise which creates thousands or millions of jobs. All the government has to do, if it really wants to "help" business is to do its job: Protect the rights of the individual, the right to life, liberty and the pursuit of happiness. That includes the rights of the businessmen to start businesses, make profits, invest their money and profits as they see fit.

C. Jeffery Small

Thomas Bowden can point to more than a century of steady progress that occurred in this country without any substantial form of government involvement in the economy. Furthermore, he could have gone on to show that it was the government's interference, starting in 1913 with the Federal Reserve Act and continuing with a steady stream of increasing business regulations, that has demonstrably led to the cycle of depressions and recessions that have since plagued us. His solution to economic and job growth, which calls for getting the government out of the way so that businesses can once again function properly in a competitive capital marketplace, is backed up by considerable historical fact.

In contrast, Harold Sirkin, without evidence, simply asserts, as though it were self-evidently true, that: "The federal government not only should but must help business stimulate the economy, especially in these difficult times." The rest of his comments rest upon the acceptance of this single unsupported and unsupportable statement.

It is time for all American citizens who are truly interested in seeing a change in our economic course to question the single erroneous assumption that government is the source of capital formation, jobs and wealth creation. It is the exact opposite that is true. If you wish to play a role in improving your future, then let your government representatives know that the single thing you expect from them is to:

Get out of our way!

Michael Caution

I'm with Thomas Bowden on this one. People need to check their thinking in regard to government action. Whenever there is a problem most people automatically think, "They ought to do 'something' about that." But that "something" is exactly the problem that created the mess in the first place. We need to stop thinking that government should do "something" but instead what it should not be doing. What's something it should stop doing? More freedom leads to more productivity.

Paul Cohen

The current crisis is brought about from one specific action: spending. No amount of "helping private enterprise" or "putting America first" "or closing loopholes" (who created them in the first place?) will solve this problem.

And the only way to decide what type of spending should be cut is to grasp that any spending not focused on protecting individual rights should be cut first. Individual rights provide the context for reducing spending. The next step would be to apply the same principle to regulations. Then, finally we can get back to the prescribed powers defined in Article 1 Section 8 of the US Constitution.

Loyd Eskildson

Why the debate? China's economy is roaring ahead; our is floundering. China's economy features government 'guidance' and support for business; our is 'hands off.' Wake up and smell the roses!

Richard.fitzpatrick

The modern economy cannot function without an effective government that intervenes in the economy to boost aggregate demand when it lags, as it is now. This is basic fiscal policy that has been in place in modern industrial democracies at least since the end of World War II but the point seems to elude both of your panelists and the commentators. The free enterprise system that most of us across the political spectrum favor is dependent on effective regulatory role of governments--from local zoning boards to federal food enforcement. The failure of the economy in recent years is, in many respects, due to a federal regulatory response that has been far too accommodating to monied interests and not empowered to assert itself.

Dr. Donald Kiss

The government needs to get out of the way. The 20th century was America's experiment with welfare-regulatory statism, and it has failed just as miserably here as it has elsewhere.

Bill Odum

To arbitrarily refuse the help of Government is stupid. The national highway system exists, the Internet exists because of government intervention. In the present, deteriorating pipelines; water, gas, oil pipelines are causing spills because of the lack of universal government regulation and support. Public health is threatened because 80% of ethical drugs are made in either India or China, without proper supervision. Bring that industry back to the U. S.; yes, if need be, with government assistance. China is outdoing the U. S. in solar energy production. A major U. S. manufacturer, with years of experience in thin films, is building a plant in China. O.K. But give that company the incentive to build another in the U. S. The media today shouts President Obama do this, don't do that as if he were Superman. Congress, industry, and the voting public must work together instead of indulging in political sabotage. President Obama is absolutely correct; the U. S. can't wait 14 month for election. Republican candidates are a very active part of this sabotage. When we are in a boat in deep water, isn't it stupid to shoot holes in the boat?

Fernando Villamar

The con position article is ludicrous. It basically says businesses need government to correct all the problems that are caused by government. That's like saying to a healthy person, let me break your arm so that I can fix it for you and you will see how much you need me. How about you leave me alone and don't break my arm in the first place?

Frank Manella

The question is "When hasn't the government, any government, helped business?"

History is nothing but the spectacle of business manipulating government for its own ends. Whether it's Britan in India or Malaysia, or the US in the "banana republics"--remember those?

Colman Pigott

I believe that this is a government by, for, and of the people. Majority rule is why we have the laws on the books that regulate commerce. I don't know what is meant by the statement "government needs to get out of the way"--out of the way of what? How is government in the way? Doesn't the government protect patents and copyrights and business symbols or logos? How many inventors would there be without those government protections? Praising China as a business model is a mighty strange thing to do for someone that is a 'government needs to get out of the way' person. Government needs to protect our intellectual property that the Chinese Communists steal, then sell back to us. It's all government in China and they don't have a Bill of Rights. I wouldn't be holding China up like a shining example. Dictatorships and authoritarian rule can keep the company running smooth. Look at all those kingdoms that sell us oil. No interference from democraticly elected leaders or a free press. America is dynamic and no other country will match our creativity, precisely because we are free. It's a mess I know, but it's the only way to go!

Seriously Dood

Wait...BW's idea of a debate on economic policy is pitting a lawyer who couldn't find work except at the Ayn Rand Institue against a senior partner at BCG? Really?

Robert

Goverment must get out of the way of businesses untill the businesses begin to encroach on the reasons that make governments exist. Governments work for the people and the businesses work for shareholders--people, trusts, unknown entities.

Squeezebox

TEA = Terrible Education in America. Ayn Rand is burning in Hell. America's prosperity until 1865 was based on owning human beings and making it illegal to withhold your labor. All of the revolutions of the past 200 years have been over how people have been treated, often in the name of money. I'm not Communist, not even close, but every horse needs a rein and every economic system needs moderation. Captialism has done wonderful things for us in the past 100 years, but just as an engine needs a governor, capitalism needs regulation. The trick is to know how much is beneficial and how much is a hindrance. We also need to stop developing nations from cheating on trade treaties such as China and the WTO. Mercantilism, such as what's committed by the Chinese, is a self-punishing crime, but it takes too long.

Factchecker

The writers are using congressional regulations as a smokescreen. In reality while laws and mandates are uncertain, it's always been the case. Obamacare has been watered down and the industry itself was there to lobby. In the 1950s we had a 90% tax rate and in the 1970s we had a 70% tax, of course loopholes did abound, and nobody advocates those.

The so-called laissez-faire capitalism was very much well and alive in the early 20th century, welfare non-existent, even government pensions.

Capitalism is a double-edged sword -- the theory is that human beings are greedy and look after self interest, and eventually with an empowered middle class, folks lose money and consumers win or lose. However, in recent years that has not worked, and corporations are being creative to suck the money for themselves while screwing the consumer for losses.

I'm very surprised people are looking at the Chinese -- yeah sure lower the minimum wage, which hasn't been raised until recently (inflation adjusted) because businsses will go to socialist China. Amazing, ain't it?

factchecker

For the record, state governments never claimed to have the answer; they are cash strapped. Stating it may complete your point, but it's inaccurate, and I agree with the author that laws are enacted with uncertainty; however that isn't the problem. It's one thing to smartly regulate which big business doesn't like, and it's another to have vauge laws like durbin, insider trading laws that make you wonder whether congress gets a free pass and you don't.

Dr. Louise F Montgomery

Interesting that no one in this discussion talked about our history of corporate welfare. Let me introduce you to some ideas that may be new to you.

Surely in your history and/or economics classes, you learned about tariffs to protect American businesses, giving land to railroads and other instances of corporate welfare. In case you don't know the history of corporate welfare, here's a tidbit and link.
"(Howard) Zinn notes how in the 19th century government subsidized canals, the merchant marine, and before and during the War of Northern Aggression gave about 100 million free acres of land to the railroad barons “along with considerable loans to keep” them in business. It was the largest ever giveaway until Paulson’s-engineered Wall Street one, and as stated above, lots more is coming, and much of it still ahead.

Democrats back it more than Republicans. Another long-standing tradition from the republic’s beginning, as Zinn again noted. He cited Democrat Grover Cleveland vetoing “a bill to give (a mere) $100,000 to Texas farmers to help them buy seed grain during a drought, saying (dismissively): ‘Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character.’ ” However, in the same year he gave wealthy bondholders $5 million by pricing them $28 above market value. “Rugged individualism” he called it to make it on our own with a little government intervention for assistance. Only for business. Never the public.

After WW II, military Keynesianism became dogma. Aircraft and other defense industries had to be saved and another Depression avoided. The oil industry got its depletion allowance. Chrysler was resurrected from the dead. Continental Illinois Bank was taken over until sold to Bank of America. Business was shored up overall by the 1971 Emergency Loan Guarantee Act. Post-9/11, the Air Transportation Safety and Stabilization Act was for the airlines. Today it’s rescuing Wall Street and major banks, Fannie, Freddie, AIG, the auto giants, and any other “too big to fail” company. Generous government handouts to revive America’s business, or at least that’s the hope behind them." http://www.houseofpaine.org/bonziebean/blog/?p=206
Be sure to read down the page to this subhead: Handouts to Business: the American Way of Life

One of AgriBusinesses' biggest contemporary subsidies is ethanol production -- cumulative ethanol subsidies between 2005 and 2009 were US$17 billion, the Ethanol entry in wikipedia says.

So when you guys say you want government out of business, I think a previous poster had it right: You want no regulation but plenty of subsidies, no quality standards, etc.

Maybe you'd be happier in China.

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