Tuesday, March 29, 2011

Business: Friend or Foe

Popular progressive author Joe Bageant just died, and Alternet had this to say about his oeuvre.

The recipient of high praise from luminaries such as Studs Terkel and Howard Zinn, Bageant was one of AlterNet's most popular essayists for his work on the corporate takeover of American democracy, the destruction of the middle-class over the past four decades and the plight of Redneck America.

But here is noted capitalist Richard Branson urging folk to start a business, yes, right here in the middle of recession when asset prices are low and talented people are available. Says he:

Start-ups and small firms are the engine of the economy and account for nearly 60pc of private sector jobs. To allow them to flourish, we must ensure we create an economy where it is easier for new companies and innovations to develop.

And then Branson goes on to give would-be entrepreneurs a few tips and tricks for business success.

[Business] is a risky game where one needs to be brave, focused and sometimes lucky. Throughout my career I have made decisions using my instinct, but I have also worked hard at making decisions work. As I look back, a few key patterns keep re-emerging.

You need to surround yourself with trusted and talented people. Setting up businesses takes an enormous amount of time and energy. It is easier to make the big commitments when you are surrounded by people you trust and like. Keeping my many good chief executives and managing directors happy – and finding new ones to start the next ventures – is one of my full-time jobs.

So, on the one hand, we have the progressives telling us that the corporations are ruining America and killing the middle class. On the other hand we have successful entrepreneur Branson telling us that business is all about trust and talent and hard work. Who are we to believe?

There is an answer to this, and it illuminates the fundamental error at the center of the progressive world view. Let us look at the idea of the "corporate takeover of American democracy." Now why would that be possible? It is only possible if government has the power to play winners and losers with corporations. It is only possible if the political system allows corporations to buy influence from politicians.

Back in the old days of mercantilism, the common sense notion was that the government had its work cut out to make business strong. Monopolies and tariffs protected business and the nation from piratical raids. Then the classical economists came along and showed that the mercantilist model was wrong. Mercantilism was a system of thievery, what we now call a crony capitalism that favored the well-connected and prevented new entrants from starting up new businesses and competing with the established firms. The best thing for government to do was to stay out of subsidies and penalties for corporations large and small because they would always end up favoring the best-connected.

But then came the progressives. They wanted to take money from the corporations and give it to the workers. But that meant that government arrogated to itself the power to meddle with corporations, and that meant that politicians could buy votes with subsidies and privileges. So now we have General Electric paying zero corporate income taxes. And now we have automobile companies in receivership, bankrupted by the "benefits" they were forced to pay to their employees.

When the progressives worry about the destruction of the middle class in the last 40 years, they are speaking in code. They are telling us that the union-boosted workers in the private sector reached a peak in prosperity back in 1970, and haven't been able to squeeze anything more out of the system since. After all, the population of union-strong Metro Detroit reached 4 million in the 1970 census and hasn't changed since.

It's understandable that the progressives should be angry. Their vision of the way the world works is in the process of smashing to smithereens. It is built on the ancient way of force and feud, bullying the weak and grabbing tribute to hand out to your supporters. Real business, real prosperity comes from refusing the temptations of power and forming economic relationships of trust and friendship, rewarding the talented, and serving the consumer, just like Richard Branson says.

But before we get to the Branson economy, we are going to have to fight out of the tangled mess of privilege and subsidy left over from the progressive years. Many people will suffer as this unjust system unravels.

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