certainty, confidence, David Cote, FDR, Honeywell, John Kasich, Meet The Press, Obama, outsourcing, press conference, regulation, roundtable, taxes, union busting
Whenever I see a discussion about the real crisis this country faces—that would be unemployment, not the manufactured one over the deficit– a couple of words keep coming up from the alleged smartest guys in the room, confidence and certainty. Businesses would hire, so it’s said, if they had either or both.
President Obama referred to it in a recent press conference:
“What we need to do is to restore business confidence and the confidence of the American people that we’re on track — that we’re not going to get there right away, that this is a tough slog, but that we still are moving forward.”
It came up again yesterday in a roundtable discussion about jobs on Meet the Press. Just as an aside, two members of this roundtable were Ohio Governor John Kasich and Honeywell CEO David Cote. It has been estimated that Kasich’s budget cuts in Ohio could lead to over 50, 000 layoffs. Mr. Cote’s history at Honeywell, where his 2010 compensation topped $20 million, has been one of outsourcing and union-busting. Just the two opinions you want on what to do about unemployment, right?
Mr. Kasich and Mr. Cote, who also sits on the board at JP Morgan Chase, spoke about the need for businesses to have certainty. Certainty about taxes and regulation. Certainty meaning lower taxes and less regulation, naturally.
In August of 1934, President Franklin Roosevelt addressed the same issues we face today. Here’s what FDR had to say about confidence:
“In one year and five months, the people of the United States have received at least a partial answer to their demands for action; and neither the demand nor the action has reached the end of the road.
But, my friends, action may be delayed by two types of individuals. Let me cite examples: First, there is the man whose objectives are wholly right and wholly progressive but who declines to cooperate or even to discuss methods of arriving at the objectives because he insists on his own methods and nobody’s else.
The other type to which I refer is the kind of individual who demands some message to the people of the United States that will restore what he calls “confidence.” When I hear this I cannot help but remember the pleas that were made by government and certain types of so-called “big business” all through the years 1930, 1931 and 1932, that the only thing lacking in the United States was confidence.
Before I left on my trip on the first of July, I received two letters from important men, both of them pleading that I say something to restore confidence. To both of them I wrote identical answers: “What would you like to have me say?” From one of them I have received no reply at all in six weeks. I take it that he is still wondering how to answer. The other man wrote me frankly that in his judgment the way to restore confidence was for me to tell the people of the United States that all supervision by all forms of Government, Federal and State, over all forms of human activity called business should be forthwith abolished.
Now, my friends, in other words, that man was frank enough to imply that he would repeal all laws, State or national, which regulate business—that a utility could henceforth charge any rate, unreasonable or otherwise; that the railroads could go back to rebates and other secret agreements; that the processors of food stuffs could disregard all rules of health and of good faith; that the unregulated wild-cat banking of a century ago could be restored; that fraudulent securities and watered stock could be palmed off on the public; that stock manipulation which caused panics and enriched insiders could go unchecked. In fact, my friends, if we were to listen to him and his type, the old law of the tooth and the claw would reign in our Nation once more.
The people of the United States will not restore that ancient order. There is no lack of confidence on the part of those business men, farmers and workers who clearly read the signs of the times. Sound economic improvement comes from the improved conditions of the whole population and not a small fraction thereof.
Those who would measure confidence in this country in the future must look first to the average citizen.”
Confidence, schmonfidence. Businesses don’t need either confidence or certainty, they need customers. Those would-be customers need jobs. We’ve had 30+ years of low taxes and less regulation. If those were the engines of job creation we’d have more jobs than we do people.
Gene Gaik said:
Interesting Craig. I just spent a few minutes going back through a number of your blog posts and it seems you are a big fan of FDR. Does this mean that you too are a Progressive? Just curious since there are many in this country that feel that confidence is key to economic growth. Whether you like business people or not, they need to know what the rules are going to be five years from now so can they can take action today. I am pretty sure that regardless of the policy, business people will find a way to make money. Capitalism, after all, is what made this country great and it will make it great again.
Yes, I’m a Roosevelt fan. My parents, aunts, and uncles grew up during the Great Depression. My Mom got a job because of the WPA and two of my uncles were in the CCC so I was kind of raised on what FDR did to put them to work. Plus, a lot of his quotes and speeches are relevant to what’s going on today. I’m not big on labels but I suppose progressive fits best.
I don’t have any dislike for people in business, if you don’t count Wall Street in that number, but I don’t buy the confidence argument and the focus on stability in taxes and regulation. Businesses hire based on the demand for their product or service not because of what the corporate tax rate is today or will be five years from now, and I think we learned not too long ago what the lack of proper regulation can lead to. Yes, capitalism made this country great, but completely free markets and de-regulation in the financial sector nearly brought it to its knees. There has to be a balance between what’s good for business and what’s good for the people so both can prosper.