Please Stop Calling the Republicans the "Business-Friendly Party," As If They Were the Only Game in Town.

It’s a truism of American politics that the Republican Party is the “business friendly” party, largely because of the GOP's definition of the term as adherence to two ideas: 

1. Lower taxes, and
2. Less regulation.

The GOP's devotion to these two laissez-faire economic principles approaches the religious. In today's political climate, it's heresy to question them. And their fanaticism on the subject has led to the perception, shared by Republicans and non-Republicans alike, that the GOP has a monopoly on being good for business.

But there’s something fundamentally wrong with this equation. According to the GOP's definition, "business friendly" translates to “give ‘em what they want whenever they ask for it whether or not it’s good for them." By that logic, the parent who lets their kid subsist on pixie sticks and Hershey’s Kisses is a “kid friendly” parent. Furthermore, even leaving out all the arguments one could make about Bill Clinton and Barack Obama being among the most “business friendly” Presidents we’ve had, the Democrats’ model of public/private cooperation is, in the long run, better not only for the majority of Americans, but for business itself. 

Under its current corporate configuration, American business is fundamentally unable to look ahead. Admittedly, this accusation sounds counter-intuitive. After all, the existence of venture capital is, by definition, based on the ability to look ahead, and all the major banks and investment houses have projections/forecasting departments staffed by uncounted numbers of analysts whose job it is to do nothing BUT “look ahead.”

But by ahead, I mean way ahead. Rarely does one read projections that go much beyond the next quarter or fiscal year. Forget about thirty-, twenty-, or even ten-year projections. It’s all about short-term gain, and, again because of the corporate structure of most American businesses, there's good reason for this shortsightedness.

First, investors won’t wait decades for a return. They want returns soon, if not now. And this isn’t unreasonable, considering that most American investors are over 65 (retirees make up the largest group of investors, and the median age of the retired investor is 67). If they take too long a view, they’ll be dead before they realize it.  

Secondly, corporations are run not by proprietors, but by employees. CEOs are just as much employees as are the guys on the assembly line (albeit they do own more of the company). They serve at the pleasure of the directors and the shareholders. They aren’t thinking about their legacy, or about a business they can pass down to their children. They collect a paycheck and stock options, and, all too often, couldn't care less about what happens after they go as long as they get theirs. If the meltdown of 2008 showed us nothing else, it showed that far too many corporate executives operate under the “IBG” principle: “When the chickens come home to roost, it won’t matter, because I’ll Be Gone.” Apres moi, le deluge. 

This is why the government—a disinterested entity which does not function like a business, and, indeed, shouldn’t, and which exists not to turn a quick buck, but to look ahead for future generations of Americans—needs to take an active role. And in doing so, be a better friend to business than business is itself.

This isn’t a new idea. The government has been in the incubator business for a long time. The prime engine of 19^th century economic expansion was the railroads, which provide an excellent example of public/private collaboration. The railroads simply would not have happened were it not for the government pushing their development, providing the land, the capital, the protection (both financial and physical), and, frequently, the labor itself (such as Chinese immigrants brought here at the taxpayers’ expense, or prison chain-gangs).

As corrupt as the process of building them was—and it most certainly was, rife with sweetheart deals, kickbacks, and plain old-fashioned bribery and influence-peddling—the railroads did get built. And the ability to move vast amounts of people and products across unimaginable distances at unprecedented speed laid the groundwork for America’s 20^th century industrial primacy.  

This model provided the United States with the prime engine of economic expansion again in the 20^th century with the postwar construction of the federal Eisenhower Interstate Highway System. Again, the process was fraught with corruption, backroom deals, and shady dealing on the part of major corporations like General Motors, Firestone, and Standard Oil (all of whom had good reasons for wanting highways, not streetcars or light rail, to be built). But once again, public empowerment of the private sector had worked, again generating millions of jobs and trillions in revenue.

Massive investment in physical infrastructure isn't the only way government helps business. Virtually all of the major technological advances of the last 50 years have either been directly created, or heavily subsidized, by the federal government: microwave ovens being just one small, but lucrative, example of gadgets generated by the space program that subsequently made it to the commercial sphere. The research which eventually led  to the Information Revolution conducted at Bell Labs, the Xerox Research Facility at Palo Alto, MIT, Stanford, Harvard, etc., was funded, in large part, by your tax dollars. And profitably. Even if not immediately.

Think of the Internet. In the late 1960’s when the idea of computers exchanging data was first murkily emerging, the smart money wouldn’t have touched it any more than they would have touched a plutonium-coated leper. Most Americans didn’t know what a computer was. It was science fiction, and capital doesn’t mess around with science fiction. Thankfully, the U.S.Government (specifically, the U.S. Military, which recognized its potential as a means of military communication) funded that research, which led to the development of the prime engines of economic expansion in the 21^th century. Pretty good return on the initial investment of your tax dollars, even if it did take forty years.  

It should be clear to even the most casual observer that the Next Big Thing—the next engine of economic growth—is going to be renewable, sustainable energy. The added urgency to developing alternative energy is that not only will it be profitable--it'll be necessary. 

The first reason for this is that we’re running out of oil. Opinions differ as to when “peak oil” production, and the subsequent decline, is going to kick in. Many industry professionals believe we’ve hit peak oil already. But no one in the industry seriously doubts we’re approaching that point. Oil- shale refining, drilling in wilderness preserves, and other schemes to squeeze yet more oil out of the ground are short-term band-aids. The clock is ticking on oil. 

And secondly, the bad publicity is becoming intolerable. No serious person really doubts that rampant fossil fuel consumption is contributing, in terrifying ways, to global climate change and compromising our health. Alternative energy—wind, solar, plant-based, you name it—is going to be the juggernaut that carries us forward.

But again, the IBG-driven short-sightedness of American business leadership kicks in. In the short term, it's cheaper to just keep doing things the way we're doing them now. Peak oil may not hit for a few decades yet, and when it does—ten, twenty or thirty years down the pike—the suits now calling the shots will either be retired or dead. And it won’t be their problem.

Inevitably, when one makes this argument, Solyndra gets thrown up as, at worst, an example of bald-faced corruption on the part of the Obama administration, or at best, as an example of why the government should stay out. But supporting Solyndra, and companies like it, is what the government should do, precisely because it’s not the (immediately) profitable move, but because it’s the responsible move.

American business needs the government—not merely for the resources that an entity the size of the government can throw behind new ventures, but to save it business from itself. American business needs an entity that is not dependent upon shareholder approval or animated by the corporate “get rich now” ethos to originate and support what the “smart money” won’t touch until it becomes irresistible not to. American business needs the long-term vision of the government—an entity which is not beholden to shareholders, but to the future of the American people.