KausFiles

Obama’s Charity Capitalism

What was the matter with Kansas: The weakest part of Obama’s grand Kansas manifesto was this passage, in which the President worries about how to “grow our middle class again” in a world where “huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world.”

And it will require American business leaders to understand that their obligations don’t just end with their shareholders. Andy Grove, the former CEO of Intel put it best: “There’s another obligation I feel personally,” he said, “given that everything I’ve achieved in my career and a lot of what Intel has achieved … were made possible by a climate of democracy, an economic climate and investment climate provided by … the United States.”

This broader obligation can take different forms. At a time when the cost of hiring workers in China is rising rapidly, it should mean more CEOs deciding that it’s time to bring jobs back to the United States – not just because it’s good for business, but because it’s good for the country that made their business and their personal success possible. [E.A.]

So we’ll retain middle class jobs in America because businessmen keep them here, at least in part, as an act of patriotic charity!

1) How likely is this to happen on the scale that is necessary? Something close to zero. It’s one thing to rely on the generosity of rich people when it comes to funding new hospital wings and small magazines. It’s another when it comes to the basic success of the American economy–which (reminder) has been reliably achieved over the centuries because we have relied on sturdy, universal drive of  self interest.

2) It’s pathetic if the mighty U.S. is really forced to beg corporations to produce here out of Warren-Buffetesque philanthropic urges. But it’s especially pathetic for American liberalism, which has always been most appealing when it stood up against the condescension of “alms givers”–but which now celebrates wealthy philanthropists with nauseating ease (a trend I blame, in very small part, on my old employer Slate, with its annual “Slate 60″ charity porn feature). “Giving back” is the credo of Hollywood celebrities, not New Deal liberals.  Democrats are supposed to be the party of government–government that establishes a foundation for the essential dignity of working people–not the party that sucks up to the Google guys and the Gates Foundation.

At least Elizabeth Warren only wanted rich businessmen to pay higher taxes. It’s a sign of liberalism’s humiliating inability to do enough with those taxes that left-wingers now seek to substitute The Giving Pledge.

3) A patriotic Charity Economy is a conveyor belt to corporatism! After all, what happens when the factory of celebrated businessman X who recognizes his patriotic obligation to employ Americans at $20 an hour is faced with competition from uncelebrated, selfish businessman Y who employs Chinese ex-peasants at $2 an hour? Businessman X is going to need trade protection and special treatment a “partnership” with government, sort of a pre-bailout bailout. Obama doesn’t seem to have a problem with this sort of cozy arrangment.

The president’s Charity Capitalism is just one of two unnecessary paths to corporatism contained in his Kansas speech. The other is his passing invocation of unionism as a means of “building” middle class wages. It used to be that unionized firms were considered more productive (because, for example, they gave employees an efficient internal ”voice). You don’t hear that argument much anymore. Now unions exist mostly where government has protected them, either because a) government is the employer or b) government has bailed them out when they’ve lost in the market to non-union or overseas competition–bailed them out through direct subsidies (the UAW) or regulations (Davis-Bacon construction workers).  If Wagner Act unions are going to continue to exist in the private sector, the government will seemingly have to find a way to favor unionized firms over the competition.**

There are a distressing number of  hard-to-avoid paths to corporatism–for example, if firms are too big to fail, and some are, they will by definition wind up as de facto arms of the government when they threaten to go bust.  And if we want to preserve what Andy Grove calls “the chain of experience that is so important in technological evolution,” we may need to prop up whole industries even when the market tells them to disappear. All the more reason not to create a gratuitous path to corporatism by trying to replace the profit motive with the Buffet motive as your core economic strategy.

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**– Obama certainly can’t rely on, say, the UAW’s ability to organize non-union Volkswagen workers–because the UAW will almost certainly fail at this if left to its own devices. What happens if VW’s (or Hyundai’s, or Honda’s) cheap American-made cars start putting GM on the ropes again?