Pro-Job and Anti-Business

The consummate candidate, Tim Pawlenty’s Twitter feed lit up during last night’s (hilarious) first Republican primary debate, with gems like this:

You can’t be pro-job and anti-business.

Ah, truisms packed with assumptions and oversimplifications: it really is campaign season again! Pawlenty’s zinger is technically true because businesses create jobs, you see. But is any mainstream political ideology actually anti-business, as in, for limiting businesses as the engines of profit generation and job creation?

Certainly not. What Democrats actually oppose, and Republicans like Pawlenty actually favor, is the notion that businesses should be entitled to even illegitimate profits that come at the expense of consumers and the larger market. Slowing Dodd-Frank, for example, isn’t about jobs. It’s about giving sophisticated players a freer hand to profit at the expense of others.

Maybe this translates into fewer jobs (presumably companies bloated by fraud have to spend the money somewhere); but it also translates into minimizing small-scale customer exploitation, and helping to avoid the kind of systemic risk that, over the past three years, simply murdered the jobs market. Antifraud regulation is something we’re generally comfortable with, as not anti-business, but pro-consumer, and pro-corporate responsibility. Maybe Tim wants to have a debate about the proper role of regulation; but don’t for a moment let him convince you it’s actually about jobs.

Advertisements

40 comments

  1. “But is any mainstream political ideology actually anti-business, as in, for limiting businesses as the engines of profit generation and job creation?”

    Um…yes. The American Left has been openly hostile to business for decades. The easiest way to spot this? Look for a liberal compliment of business that doesn’t come with a qualification. They simply can’t do it. There’s somethign built into their DNA that refuses to allow them to fully trust business. I assume it’s got something to do with their relationship with unions.

    1. oneiroi · ·

      And Republicans just play religion with the invisible hand…

      I think qualifications are good.

  2. Any of that substance, or just invective?

  3. Name three pro-business policies not aimed at niche markets that Democrats have advocated for in the last two years.

      1. There are a lot of good policies in there but unfortunately almost all of them are temporary and/or make-work. There’s no signal of a long-term decision to actually support businesses in a sustainable way.

  4. Hahahaha. For serious? Sigh. I’m afraid this is a game I can’t play for fear of indulging your premise.

  5. It should be pretty easy. I could name 10 pro-business policies of the GOP without breaking a sweat.

  6. Cool! I’ll wait.

  7. You first Ames, I insist.

  8. No. This is the functional equivalent of the Republican word-counting game: “he never said ‘exceptionalism!'” “he used first-person words too much!” etc. More, it doesn’t go to your point about how “liberals” are “openly hostile” to business anyways, because that’s not an accusation capable of proof or disproof. It’s just polemic.

  9. I would call a lack of pro-business policies to be hostile. So if you could name a few policies that would obviously weaken my case.

    Liberals usually focus on the labor and/or consumera and characterize them as victims or potential victims which is why they favor heavy regulation. Compound that with the sort of economic populism that the left is known for and you have a decidely anti-business climate.

  10. Right. So, it’s just polemic.

    I’ll give you one. Dodd-Frank ratified functionally implemented a ban on certain types of hyper-costly securities suits.

    1. I’d have to see the exact provision but one concession in that enormously bad bill strikes me as trying to polish turd.

  11. Can you explain to me why regulating off-book derivative transactions is a bad thing?

    1. I don’t know that it is without reading the provision – I’m just saying if they actually created some good regulation they really buried it in the middle of a horrible bill.

    2. So you don’t like Dodd-Frank but haven’t read it and don’t know why. Correct?

      1. I have read several non-partisan summaries of Dodd-Frank. But it’s a very large bill (848 pages) with a lot of provisions. My overall opinion and the opinion of a lot of my coworkers whose opinions I trust is that the bill as a whole is terrible.

        You are talking about one specific one. If you want to give me a reference number I’ll be hapy to give you a more educated opinion on that one provision.

  12. Can you go into why it’s “terrible”? You’re not giving me a lot to go on.

    Oh, Section 929P(b).

    1. It creates a lot more beuacracy to oversee the financial industry but two of the biggest culprits in the last financial meltdown, Fannie and Freddie, were left untouched. Also, there aren’t really any rules in place for a lot of these situations and it’s dependent on councils and opinions and legislators. Even liberals have criticized how the people doing the oversight could be easily influenced, which is probably a good point considering that the bill’s sponsors are two of the biggest recipients of financial lobbying dollars in Congress (and all around scumbags – but I digress).

      If I am reading the Section you cited correctly it is simply clarifying the jurisdiction of the courts in securities cases. Are you seeing something I don’t?

      1. …two of the biggest culprits in the last financial meltdown, Fannie and Freddie…

        I don’t think that’s accurate. The FCIC report concluded that Freddie and Fannie “contributed to the crisis, but were not a primary cause”, and where’re they did contribute was mostly in attempting to live up to the practices and expectations of the private market. (p. xxvi)

        1. I didn’t say they caused it or were a primary contributor – I said they were two of the biggest culprits – there is a difference in those statements. The most concise analysis i’ve read is this one from last year;

          http://www.theatlantic.com/business/archive/2010/06/did-fannie-and-freddie-cause-the-housing-bubble/57664/

          “So were the GSEs the only cause of the housing bubble? Of course not. But it doesn’t make any sense to say that they weren’t a central cause or didn’t play a major role. If you look at their enormous quantity of originations over the past decade, their presence is undeniable. And if you look at the losses they’ve sustained since then — which have led to a $148 billion bailout so far — it’s hard to keep a straight face and say they paid enough attention to risk.”

          1. Based again on the FCIC report (p. 178-87), it’s hard to see what F&F could have done differently to prevent the crisis. They came late to the party, and the conditions of the market were such that they could either join it or become marginalized. The much greater problem was that the market itself was not supervised well enough.

            1. So the solution was to dramatically increase their presence and provide no real oversight?

              1. The solution is properly regulated financial markets. It seems difficult to blame the individual actors as long as what they were doing was legal and following the logic of the market.

  13. Hey now, Dodd’s a good guy, at least. Several good friends used to be on his staff.

    And, well, yes and no to the rest. Title XIV?

    The section I flagged states that courts can hear antifraud suits brought by the Commission to redress foreign-centered fraud. This is a codification of a major Supreme Court decision, which held that private litigants couldn’t bring those claims, but left the Commission’s authority unclear. Dodd-Frank declines to overrule the decision, which the plaintiff’s bar wanted very badly, and multinational corporations feared. Pro business!!

    The rest of your points are weird. It doesn’t create a whole lot of new bureaucracy: an administrative unit within the Fed, sure. Other major substantive reforms are kicked to the Securities Exchange Commission, and the Commodity Futures Trading Commission, with the understanding that they, as subject-matter experts, will promulgate implementing regulations. Are you saying you don’t trust the SEC/CFTC? Doesn’t that just collapse to a problem with government, generally, and not this bill?

    1. I would strongly disagree about Dodd. His hands were very dirty when he was forced out of the senate.

      As for the bill, without turning this into a fisking battle I would say the broadest point is that it does nothing to address the problems with Fannie and Freddie. They are still holding something like 95% of the housing loans in this country (my wife and I actually got a letter just this week informing us that our loan had been sold to Fannie). This is a HUGE problem that should have been addressed forst, but of course with the Dodd being the biggest recipient of F &F’s lobbying dollars, this was never going to be likely.

      I guess if codifying a SCOTUS decision is the win you want to claim for pro-business Democrats, feel free. It’s pretty nuanced though and doesn’t really do much to increase the ability for businesses to be successful in the moving forward sense.

  14. Did you read Title XIV?

    Also, maybe exempting companies from frequent, expensive, and increasingly common lawsuits isn’t the sort of thing you’re looking for, but it is the sort of thing that actually matters.

    Moreover, so wait. The only problem you have with the bill that you can put words to is that it doesn’t do enough. Right?

    1. Preventing those lawsuits essentially allows companies to maintain the status quo because they shouldn’t be getting sued in the first place. While I will admit that eliminating those lawsuits it ‘business’friendly’ you’re also assuming that frivolous lawsuits were a previously legitimate cost of doing business. I guess I should be more specific in that i was looking for policies that allow businesses to actually move forward.

      The bill should have killed or severely reduced in size fannie & freddie. by allowing them to survive at their bloated, government-subsidized size they undercut private industry. That reads as harm. Addtionally, the regulatory framework that was created has poor oversight and is short on formal rules. That ambiguity makes it hard for companies to comply and to plan ahead. That translates into overly-cautious investment in hiring, R&D, etc. that reads as more harm.

      And this is just a cursory glance. It’s such a large bill with far-reaching implications that there could be far more potential for bad in there that the market just hasn’t realized yet. This is always the larger problem with huge legislation and one reason I wish Congress would check their egos and legislate in a more incremental fashion.

    2. Sorry, I meant to jump back in on this. “Shouldn’t be getting sued in the first place” may be true, but absent some jurisdictional ban, you can’t really fiat the trial bar sitting this one out. I’m defense bar, so trust me when I say: frivolous lawsuits are a legitimate cost of doing business. It’s called, my going rate :).

      I see you’re going at it above on the Fannie/Freddie thing. Realize that they’re just a small part of a much larger problem. Well-regulated capital markets are necessary predicates to a stable nation in the modern age. Your blanket attacks on it bill — “poor oversight and short on formal rules” — don’t really touch on that conclusion, but allow you to make enough general assertions, I guess, to stay in the game regardless. That’s not good enough.

      Realize that regulation is a two-step. A lot of Dodd-Frank expresses a general regulatory mandate and then kicks it to the agencies to promulgate formal rules. That’s the way it’s always been done. Does it make the transition rough? Yes (we’re waiting, for example, for the SEC/CFTC to promulgate some pretty important rules). Does it lead to better regulation, eventually? Yes. If you, like me, are a practitioner in this field, you’ll know that our bread-and-butter is composed of implementing regulations (Rule 10b-5, Regulation D, etc.)… NOT statutes. And that’s how it should be, too.

      1. “Realize that they’re just a small part of a much larger problem.”

        You DO realize they control somethign like 95% of the home loans in this country…right?

        1. They’re also about to be wound down.

          http://www.treasury.gov/press-center/press-releases/Pages/tg1059.aspx

          So I guess that’s another one of the pro-business initiatives you asked for.

          1. If that stuff gets implemented it would definitiely be a pro-business step. Unfortunately I am concerned that lobbying pressure will prevent implementation.

  15. Oh Mike… you wouldn’t let me slide with conclusory statements of general concern like:

    There are a lot of good policies in there but unfortunately almost all of them are temporary and/or make-work.

    And

    I am concerned that lobbying pressure will prevent implementation.

    So why should we let you, when all of those make clear that you probably don’t really know what you’re talking about, and are just trying to raise scurrilous objections to stay in the game?

    1. You’ll have to be a LOT more detailed on your objections to my points. Do you see the policies Oneiroi linked to as permanent or not specifically designed to solve a short-term problem verses long-term growth?

      Likewise, given the presence of F & F lobbying dollars in Congress it seems that the President’s intentions are only just hopes and dreams for the moment. Is there a majority willingness you can document in Congress to embrace those policie?

    2. oneiroi · ·

      I mean, they are temporary measures trying to combat a temporarily bad economy. I hope the thinking is, let’s worry about sinking ship before we worry about making it reach the moon.

      Once there, then we can address other issues. I think the policies needed then will probably be different than they are right now as the economic landscape I imagine will vastly change after the recession.

      1. But pro-business is pro-business. Those kinds of policies should work regardless of the current economy.

      2. oneiroi · ·

        I don’t know see it that way at all. Addressing a recession is different than addressing a stable or booming economy. And I don’t think the government should do the same thing in each instance.

        They talk a little bit about the temporary economic policies in the video here:

        http://www.cbsnews.com/stories/2011/05/06/earlyshow/main20059683.shtml?tag=exclsv

  16. So, to be clear, you would only be happy with the Democrats and Dodd-Frank if it…

    (1) Solved every financial problem ever,
    (2) Required no regulation, but was fully implemented on passage,
    (3) Demonstrated majority support,
    (4) Eliminated any chance of lobbyist influence, and,
    (5) Eliminated any chance of failure?

    Because as far as I can tell you’ve gone from “you hate business, and no I don’t need evidence!” to “your bill is terrible and generalities suffice to show why!” to “you may not hate business, and your bill may not be terrible, but you can’t solve ever problem yet, so there!”

    That about it?

    1. Actually, to be clear, i was responding to the links that Oneiroi provided, which discussed some completely different policy proposals, not Dodd-Frank.

%d bloggers like this: