“Ye shall know them by their fruits. Do men gather grapes of thorns, or figs of thistles?”
President Obama’s op-ed in Tuesday’s Wall Street Journal has once again caused some on the Professional Left to question his committment to old-fashioned liberalism.
Lynn Parramore wrote:
Today in the WSJ we catch a glimpse of the administration’s stance on regulation, and it’s not a pretty picture…
The op ed, with its neo-liberal celebration of America’s great ‘free’ market (never mind that what we’ve got is a market captured by oligopolies) perpetuates the specious proposition that if we could just rein in the evil regulators, everything would be much better.
In the op-ed Obama tried to assure American businesses—which have criticized him mercilessly—that he and his administration have received their message about regulation:
…we are…making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb.
Who could be against that? Obama argues for regulatory equilibrium:
…throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.
Yet many on the right have criticized Obama for stifling growth through excessive regulations. Obama addressed that criticism at the end:
Despite a lot of heated rhetoric, our efforts over the past two years to modernize our regulations have led to smarter—and in some cases tougher—rules to protect our health, safety and environment. Yet according to current estimates of their economic impact, the benefits of these regulations exceed their costs by billions of dollars.
Yes, we have all heard the rhetoric: Too much job-killing regulation.
But it’s hard to argue with this: The business-hating socialist—President Obama—is presiding over an almost unprecedented Age of Prosperity, at least if you happen to own stock in a company listed on the S&P 500:
And the Commerce Department, in case you forgot, reported two months ago that annualized third-quarter profits for American businesses amounted to about $1.7 trillion, the highest ever recorded. Ever. Really.
But don’t forget about those darn job-killing regulations.
Again, Lynn Parramore from the left:
Free market fundamentalists have been pushing the idea that regulation is the enemy through a variety of dishonest arguments, from the notion that regulators ‘just don’t understand’ fancy financial instruments and should stay out of it to the particularly offensive canard that regulators kill jobs. Never mind that it was the unregulated financial sector that threw millions out of work in the Great Recession. In the Alice-in-Wonderland world of free market mythology, people lost their jobs because the darned government just wouldn’t stop abusing big business.
And from the right: The president of the U.S. Chamber of Commerce suggested last week that due to the Republican takeover of the House, the Obama administration is “likely to turn to the regulatory agencies.” He followed that with this:
The resulting regulatory tsunami poses, in our view, the single biggest challenge to jobs, our global competitiveness, and the future of American enterprise.
Wow! The “single biggest challenge“?
And as Reuters reported last month, Ivan Seidenberg of the Business Roundtable,
has been critical of the Obama administration in the past, charging that its zeal for regulation was creating uncertainty that was making it harder for businesses to raise capital and create jobs.
Oh, yeah? Then why did I read in The New York Times that multinational companies operating—and creating jobs—in China tolerate a regulatory system much more onerous than ours?
The article revealed that companies like General Electric are reluctant to criticize the Chinese for manifestly unfair trade practices for fear that Chinese regulators will punish them for their insubordination. As the Times put it—and you should read this carefully:
Chinese laws are often just a few pages in length, even on complex industrial or financial subjects. That leaves broad discretion to regulators on enforcing regulations that may help some companies and penalize others.
Regulators also have the authority in every industry to approve foreign investments, and even demand a say in details like what equipment will be purchased by foreign investors for their factories. Regulators have long used their involvement in the minutiae of corporate management, and their ability to delay even minor decisions, as a way to discipline companies for taking stances at odds with Chinese policy.
Now, some anti-regulatory apologist needs to explain to me just how campanies—that supposedly have trouble raising capital to do business in America—can raise capital to compete in an environment like that? We are, after all and for God’s sake, talking about China, an authoritarian—some say totalitarian—state.
In another Times article, China Drawing High-Tech Research From U.S., we find that despite the potentially punitive regulatory structure in China, American high-tech businesses are now rushing there to do business.
Much of the rush is based on the gargantuan market available. “China has become the world’s largest auto market,” the paper said. “The country is also the biggest market for desktop computers and has the most Internet users,” it continued. And then it pointed out:
Not just drawn by China’s markets, Western companies are also attracted to China’s huge reservoirs of cheap, highly skilled engineers — and the subsidies offered by many Chinese cities and regions, particularly for green energy companies.
Ahh. There it is: cheap labor. You see, a multitude of regulatory sins can be overcome by cheap labor. And in China, even the engineers work for beer money.
But it’s not just cheap labor that attracts American businesses. Gifts from the Chinese government help a lot.
In yet another Times article we have the story of Evergreen Solar, a Massachusetts company that is (was) the third-largest maker of solar panels in America. The company achieved that distinction partly through assistance from the government of Massachusetts in the form of $43 million. But that wasn’t enough:
…now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.
“Much higher government support“? The Times interviewed the chief executive of Evergreen Solar, Michael El-Hillow, and reported:
Mr. El-Hillow said that he was desperate to avoid layoffs at the Devens [Massachusetts] factory. But he said Chinese state-owned banks and municipal governments were offering unbeatable assistance to Chinese solar panel companies.
Factory labor is cheap in China, where monthly wages average less than $300. That compares to a statewide average of more than $5,400 a month for Massachusetts factory workers. But labor is a tiny share of the cost of running a high-tech solar panel factory, Mr. El-Hillow said. China’s real advantage lies in the ability of solar panel companies to form partnerships with local governments and then obtain loans at very low interest rates from state-owned banks.
We can expect Mr. El-Hillow and Evergreen Solar to soon sell their Chinese-manufactured solar panels back to us. Hopefully, there will still be someone here with money to buy them.
Is this what it has come to? Is this what American businesses want from us? We have to stop regulating them and slash the wages of our workers and subsidize profit-making ventures through low-interest loans or else? Or else these capitalist patriots will pick up and move to a Communist country where they can “partnership” with an autocratic government that has unlimited power to destroy them through regulation?
Let me quote again the original Times story about the threat to American businesses China represents:
[Chinese] regulators have long used their involvement in the minutiae of corporate management, and their ability to delay even minor decisions, as a way to discipline companies for taking stances at odds with Chinese policy.
As I listen to the complaints about “excessive” regulation on American business here at home—I have actually heard conservatives say that too much American regulation forces companies to move to China!—and as I think about why President Obama felt it necessary to reassure businesses that he means them no harm, I wonder why American companies are killing jobs here at home and fleeing to an authoritarian land.
No, I don’t really wonder. For too many capitalists, profits trump patriotism every time.