Conservative ideologues are still "stupid"

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Why CEOs can no longer advise politicians
By Mark S. Mizruchi, August 23, 2013

For those worried about the future of the United States, big business looks more like the problem than the solution. Large corporations are too powerful, the critics say, and have too much influence over Congress. Their pursuit of narrow self-interest, their success in gaining favors for themselves and their ability to stymie reforms all are seen as contributing to the gridlock in American politics. But it hasn't always been like this.

There was a time when large American corporations actually addressed the problems of American society: the three decades after World War II.

From 1945 through 1973, the leaders of American business played a central role in developing moderate and pragmatic solutions to the issues of the day. Acting through joint business organizations such as the Committee for Economic Development, they advocated full employment, accepted Keynesian economic policies (including increases in Social Security), supported large increases in funding for education and science, and made their peace with organized labor. In short, they rejected the traditional laissez faire perspective that had characterized most businesspeople since the 19th century.

The corporate leaders of that era were not liberals in an ideological sense, but they were pragmatic. Faced with a strong labor movement and a legitimate and popular government, the leaders determined that it was better to work with these institutions than to try to dismantle them.

One consequence was that right-wing elements were marginalized. Dwight Eisenhower privately referred to conservative ideologues of the time as "stupid." When the ideologues managed to nominate one of their own, Barry Goldwater, for president in 1964, many corporations defected to the Democrats. Despite problems during the postwar decades - including continuing poverty, racism and social turmoil - real income nearly doubled for the average family, inequality was at historic lows, and the political system functioned in a more effective manner.

This began to change in the 1970s. Faced with increasing foreign competition, an inflationary economy, growing antibusiness sentiment and increased regulation, the business community went on the offensive in the political sphere, at the bargaining table and in the courts. Large corporations allied themselves with the conservatives they had previously shunned. This tougher strategy quickly yielded benefits. Business was able to reduce government regulation, weaken organized labor, thwart initiatives by consumer and environmental activists, and change tax policy to favor businesses.

But these victories came at a cost. Business unity began to fray, leading to defeats, such as the tax reform of 1986, which eliminated deductions for some businesses. Firms also became unable to act collectively to address problems of mutual concern. In the 1990s, large corporations, facing rapidly rising health care costs, initially supported the Clinton health care plan, but internal divisions and pressure from congressional Republicans led them to backtrack. A decade later, corporate leaders, despite concerns about budget deficits and debt, could not agree on a tax strategy and were unable to mount an alternative to President George W. Bush's tax cuts.

The corporate elite has remained ineffectual in the Obama years. Some business groups are pleading for more balanced solutions to the deficit, including tax increases, but Republicans in Congress have ignored them. Democrats and Republicans could desperately use business leaders who are organized and strong enough to mediate disputes between left and right, but no such group exists.

American society faces difficult times. The economy has not fully recovered from the financial crisis. The nation's infrastructure continues to decay. A large proportion of Americans leave school without sufficient skills or education. And continued inaction on global warming threatens to cause irreparable damage to the environment.

In earlier decades, the leading members of the corporate community organized and proposed solutions to problems no less vexing than these. But the corporate elite of those years were moderate and pragmatic because they faced an American voting public that demanded it. Today's CEOs can be better leaders of their companies and the country - but it will take a push from the rest of us.
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