This decade, let's focus on the future for a change

December 26, 2010|By Jay Hancock

You didn't need to be Ralph Nader or Michael Moore to be deeply disturbed by corporate behavior over the past decade. Bristling libertarians and bouncy chamber-of-commerce types alike — if they are thoughtful and honest — have questioned their convictions and changed their assumptions.

So have pro-business newspaper columnists.

The Enron scandal "had little to do" with stock options, I wrote in 2002. I supported the sale of the nonprofit CareFirst BlueCross BlueShield to the for-profit WellPoint Inc. the same year. "Recessions are not obsolete, but they seem rarer," I wrote in 2003.

All those assertions, as well as other howlers I'll reserve to save space and pride, were wrong.

Stock options and executive compensation were huge factors in the Enron meltdown, the mortgage disaster and a hundred botch-ups in between. WellPoint was later found to be canceling medical coverage on flimsy grounds for thousands of customers. And there has been a bull market in recessions lately, and it's far from clear that another one doesn't loom.

Here was the thinking from 10 years ago that made sense to many: Lightly regulated banks and businesses, armed with new information from computers and the Internet, would invest more efficiently, smooth the traditional cycles of boom and bust, and enrich themselves and society.

At least one part came true: A few people got very, very rich. Society, however, didn't do so well, and the country is still seeking a foundation from which to launch new progress.

But some things are still as true now as they seemed in 2000.

Business is the critical economic factor. Business drives the technological innovation that keeps America strong. Business is most of the economy. Business and its employees and retirees pay most of the taxes that finance the government services Americans demand.

The trick is the same as it was a decade ago — how to unleash corporate energies without letting them go berserk but without hobbling them, either.

One of the lessons from the early 2000s is that not all regulation is anti-business. Heftier capital requirements for Wall Street and a government crackdown on mortgages for people with no income would have turned out to be very pro-business indeed, even though corporate America would have hated such moves at the time.

But that hardly means all business regulation is beneficial. The best prescription for policymakers and corporate leaders is to stop focusing on short-term results and look at the likely consequences a decade or more in the future.

Short-term thinking gave us dealmakers obsessed with getting the deal done rather than evaluating whether it made sense. It produced executives worried about the next quarter, not the next decade. It caused corporations to boost today's profits by delaying capital investment and research and development.

It made CEOs slash work forces, even if it meant crippling the company for the future.

Government was poisoned with the same mind-set. Congress cut taxes to get re-elected and left the deficits to posterity. Government promised unsustainable medical and retirement benefits without taking steps to pay for them. It handed out billions in corporate welfare and wasted $700 billion and counting on the war in Iraq.

Planning for the future is the essence of conservatism. It's quite striking that those who called themselves conservatives and ran the country for most of the decade did such a poor job of it.

I did write a few true columns. America's ethanol subsidies still make up one of the dumbest government programs ever. Sen. Barbara A. Mikulski is not a great role model for investing in the stock market. Maryland's electricity deregulation didn't turn out so great.

But I hereby abjure and denounce any column that stated or implied that what's good for the S&P 500 next quarter is good for America.

No free enterprise is really free. You need the right government rules to make it work: property rights, courts, national defense, stable currency — to furnish "peace, easy taxes and a tolerable administration of justice," as Adam Smith put it.

The rules set in place in the coming years need to focus government and business alike on the next decade, not the next election or quarter.

jay.hancock@baltsun.com

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.