The Chief Business of America Once Again Must Be Business

The presidency of Calvin Coolidge was not perfect, he could have done more to address key societal changes in America-but like the hedgehog who knows "one big thing," "Silent Cal" got it right when he said in a speech to the American Society of Newspaper Editors, "the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world."

I doubt most U.S. elites today would agree with Cal. Some argue that the business of America is fairness; others freedom; still others, whatever individual "right" people want to champion. And even among those who concede that the business of America is indeed business, some paint private enterprise as the fountainhead of capitalist predation, greed, and despoliation to be checked and remedied by fervent anti-corporate regulation, starting with breaking up big corporations and ending with socializing much of the U.S. economy.

Because the chief business of America for most of its history has been private enterprise (in contrast to much of the rest of the world, where the chief business has been propping up royalty, serving oligarchs, or preserving tradition), the United States has become the largest and most prosperous economy in the world. And despite what the growth naysayers may say, its chief business has enabled the American Dream.

But since the 1960s, we've drifted away from that proud tradition. Growth is no longer "the good word," as President John F. Kennedy's economic advisor James Tobin once stated. Now, redistribution and fairness are paramount. Business is no longer lionized, but demonized. And unlike when successful entrepreneurs like Carnegie, Edison, and Ford were national heroes, today's leading entrepreneurs, like Bezos, Musk, and Zuckerberg, are mocked or scorned.

This rejection of business has been led by an elite clique of economists, public intellectuals, and policy advocates-primarily liberals and progressives, but increasingly conservatives-who have come to view a wide range of pressing societal problems-from inequality to worker dislocation to carbon pollution-as evidence that the American economic system is fatally flawed. In their despair and dismay, they have settled on a new, countervailing creed in which business, especially big business, is something to be rejected, regulated, and in certain cases replaced with government-owned enterprises and nonprofits. They take inspiration from Europe, where the private economy operates under a heavy blanket of technocratic regulations that are intended to provide comfort but instead inhibit growth.

With Trump in the White House and Republicans in control of both branches of Congress, it is time to reject this failed framing and get back to making business America's business again. Policymakers' top priorities should be supporting business innovation, productivity, and competitiveness.

This does not mean turning a blind eye to businesses' misdeeds. Businesses that break the law, like individuals, should be punished. Nor does making business America's business again mean equating everything that business does as being in the national interest. Businesses that seek a low road to success by keeping wages as low as possible deserve no support. Nor does it even mean that profits are the goal. Profits are merely the means to productivity, innovation, and competitiveness, and the reward for them.

After the left turn of the Great Society in the 1960s and 70s, the free-market wing of the Reagan-era "New Right" made a critical mistake. In their zeal to turn America back toward being about business, they went too far, blindly asserting that profits were inherently good, regardless of how they were made, and that all business activities were equally good. ("Potato chips, computer chips what's the difference?") Market fundamentalists like Milton Friedman became the new gurus (he even had his own PBS special), telling us that businesses had only one stakeholder-its shareholders-and if they only pursued profit maximization, then utopia would result. Gordon Gekko, the antihero of the 1987 film Wall Street, spoke for the new conservatives when he said, "greed is good."

But to the extent that they thought they were channeling Coolidge, they were in fact bastardizing his vision. Coolidge never went as far in free-market idolatry as the Republican party prior to Donald Trump. In fact, in that same speech to the American Society of Newspaper Editors where he talked about the business of America, he went on to say :

Of course, the accumulation of wealth cannot be justified as the chief end of existence. But we are compelled to recognize it as a means to well nigh every desirable achievement. So long as wealth is made the means and not the end, we need not greatly fear it… But it calls for additional effort to avoid even the appearance of the evil of selfishness.

Say what you will about Coolidge, but he was a statesman, and he expected capitalists to be statesmen, too. Wealth was a means to a greater public interest.

The embrace of market-fundamentalist "Friedman-ism" from the Reagan administration through the end of Bush II led to enormous problems, including the financialization of the economy, reduced investment in capital goods, offshoring U.S. manufacturing, excessive growth in income inequality, and don't forget the housing bubble and Great Recession. These and other societal problems generated the radical pendulum swing to the left that we now see in the anti-business, anti-growth, anti-meritocracy strains of the progressive movement that holds sway in the Democratic Party, and in part contributed to Kamala's Harris' stunning defeat.

What we need now is a new, bipartisan Coolidge-ism where the chief business of America once again is business, and where profits are understood to be the reward businesses earn for doing what needs to be done: boosting productivity, bringing a cornucopia of innovations to the market, and prevailing over America's competitors in global markets (particularly China). With those goals in mind, not all profits and economic activities are the same. Hedge funds and other sorts of financial casino-like operations are not the same as making jet airplanes, producing life-saving drugs, or building cars. The former adds little or no value to the economy, as it is mostly about someone winning bets and many others losing bets. And in many cases, when financiers apply pressure on corporations to generate short-term returns, they do outright harm to the economy.

If we are to again embrace business as the American ethos, we need to make sure that the social contract rewards companies that bring innovations to market based on science and technological research and development; that boost productivity, even if in so doing they put weaker firms out of business and lay off workers; that fight like hell for global market share, especially against competing Chinese firms; and that keep and grow as many high-value jobs here at home as is economically feasible.

And as we do that, we need to stop the nonsense of claiming that all profits are evil, as in, "The only reason this company is doing X is to boost profits." Yes, profits are the main reason most companies do what they do, just like the only reason most people exercise is to be healthier. Profits are not evil. For the most part, profits are a company's reward for successfully providing goods or services that consumers want. It's hard for a company to make profits if consumers don't want to buy what it is selling. So, next time you hear that "Big Oil," "Big Pharma," "Big Tech," or Big Whatever Else are only doing something to make profits, thank them instead of berating them, because if they were doing something to lose money, we'd all be paying the price.

This means it is time for government to stop focusing on how it can tie down big businesses, Gulliver-like, or replace them with state-run enterprises. Proponents mask their agenda by talking about being pro-market and protecting consumers, workers, and small business. But this is a ruse. Washington needs to focus on limiting the harm it does to business and expand its efforts to help business achieve goals that are in the national interest, such as producing more advanced goods and services in the United States and investing for the long term in transformative innovation.

Finally, if the business of America is to once again be business, we need more people in Washington who have had at least some private-sector experience. (I don't put government-relations employment in that category.) It doesn't have to be much, but it should be more than the typical path of going to an Ivy League college, joining a global non-profit, working on the Hill, moving to a DC-based law firm, working in an administration, and finally capping it off in a well-healed global advisory firm, with a think tank fellowship on the side. No, I mean working outside of Washington, DC, in some kind of real business, at least for a little while, to develop a first-hand understanding of why economic policy goals should be grounded in pragmatism and should enable the engines of growth-businesses-to do well.

Having business experience does not make one a genius, and certainly it does not automatically mean one understands the incredible complexity of politics and the public policy process. There is nothing worse than assuming that, just because someone has been in business, they understand policy, too. But, in general, more business experience is an antidote to the current broad-based ideological framing that passes for pragmatism in Washington. We need pragmatists who are focused on making the American economy work, and that means people who understand how business and industry work, and how government can help or hinder the economy.

So, to paraphrase Coolidge, so long as business and profits are made the means and not the end, we need not greatly fear them. In fact, we should support them.

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