The U.S. Anti-Business Epidemic

Don Watkins and Yaron Brook, 08.17.10, 04:49 PM EDT
Obama is no friend to industry--but who is today?

Ever since business groups such as the Chamber of Commerce and the Business Roundtable started attacking the president's policies for throttling their ability to produce, political commentators have been asking: "Is Obama anti-business?"

That might seem about as debatable as heliocentrism. Why, then, have Obama's critics found it so hard to make their case?

They call Obama a socialist--his defenders say he resisted calls to nationalize the banks and socialize health care. They say Obama has grown government "too much"--his defenders say he's merely trying to cope with an economic emergency and provide markets with some "sound oversight." Sure, they concede, the president's rhetoric has sometimes crossed the line, but at the end of the day, he's a pro-business guy.

All of which raises the question: What does it mean to be pro-business anyway?

One place to look for an answer is Ayn Rand's 1957 novel Atlas Shrugged, a perennial favorite among American entrepreneurs, and a pro-business work if there ever was one.

From an executive who runs a transcontinental railroad to an industrialist who creates a metal stronger and lighter than steel, the heroes of Atlas are producers--individuals who use their intelligence to create vast amounts of wealth. Whereas many people think of business as a humdrum affair of paper-shuffling and pencil-pushing, Rand's work dramatizes the incredible ingenuity, discipline and risk-taking that business requires.

Today "pro-business" often gets equated with assuaging the desires of the business lobby. But Atlas excoriates those "businessmen" who spend their time liquoring up politicians to coax favors or crush competitors. What it celebrates is the activity of business--the process of production and trade that has taken us from mud huts to Manhattan. The true producer Rand shows, makes just one demand of Washington: "Get the hell out of my way!"

Atlas shows that what business requires from politicians is not favors but freedom. To the extent producers are free to act on their judgment, they generate the kind of wealth that has lifted the West (and much of the East) out of poverty. To the extent they are forced to take orders from bureaucrats, the result is stagnation.

The economic system fully geared to the life of producers is complete, unregulated, laissez-faire capitalism--a total separation of state and economics, where the government protects each individual's inalienable rights, including his rights to property and to freedom of contract and trade, and otherwise "gets the hell out of the way." That's what it means to be pro-business.

By this standard, Barack "At a Certain Point You've Made Enough Money" Obama is obviously anti-business. But many people are under the impression that Obama's critics are pro-business. Nothing could be further from the truth.

One of the myths that arose following the financial crisis was that America pre-Obama was something close to a free market. According to this narrative, anyone who supports the status quo circa 2007 is a champion of capitalism.

But by 2007 the number of federal agencies and commissions riding roughshod over a businessman's rights had already mushroomed to more than 100, including the IRS, SEC, EPA, FTC, FDA, FCC, USDA, FDIC, OHSA. These agencies were enforcing an unprecedented 73,000 pages of regulations, and their budgets had swelled to record levels. This included 2002's draconian Sarbanes-Oxley, passed by the Senate 99-0 and signed into law by the supposedly pro-capitalist President Bush.

This vast government control of production and trade is the opposite of capitalism. Yet how many of these anti-business laws and regulations have Obama's critics vowed to repeal? None of any consequence.

What's more, despite an avalanche of evidence that the prime culprits in the financial crisis were the Fed's low interest rates, government housing policy, and too-big-to-fail, Republicans have joined Democrats in blaming America's "free market," and vow, in Mitch McConnell's words, to "rein in Wall Street to prevent another crisis."

While Republicans often express admiration for Ayn Rand, the one thing they refuse to rein in is today's massive regulatory-welfare state. To the extent they oppose Obama, it's not on the grounds that businessmen have a right to function free from government coercion, but on the grounds that the amount of coercion Obama advocates goes a little too far.

None of this is to deny that in the short term, the threat Obama poses to business vastly outstrips the threat posed by most of his critics. But if Americans are looking for a pro-business alternative--one that defends America's original capitalist system--they won't find it in today's political establishment.

Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. Don Watkins is an analyst there.