Tenneco CEO’s Wall St. Journal on "American Capitalism"

by Linda Beale
crossposted with Ataxingmatter

Tenneco CEO’s Wall St. Journal on “American Capitalism”

Gregg Sherrill, the CEO of Tenneco, Inc., seems to think that Capitol Hill and the White House are “bashing” the “entire free enterprise system”–saying that the business world has “taken a pounding on Capitol Hill and at the White House” but except for the copmanies that were part of the “easy credit and disguised risk that so spectacularly collapsed”, American business “has nothing whatsoever to apologize for.” Speaking up for American Capitalism, Wall. St. Journal Op-Ed, Jul. 15, 2010, at A17.

But the op-ed is a straw man argument tilting at windmills.

First, Sherrill notes a study cited by The Economist that finds that most Americans “prefer the free enterprise system to any collectivist alternative.” Reading that, you’d think that there was a major debate in this country about switching from capitalism to socialism. But there’s no such thing going on. Nobody is pushing a socialist agenda, in which the government would permanently take over means of production. Many politicians are reluctant to speak out strongly for the traditional American values of a market that is regulated for the common good rather than allowing corporate titans (and their wealthy elite shareholders) set the laws to suit themselves. In fact, the push for the last four decades (dating from Reagan’s swearing in) has been the opposite–to change America’s system of tempered capitalism to one of no-holds-barred “free markets” along the lines espoused by the Chicago School’s Milt Friedman, who didn’t care much about democracy but did care a lot about starving government and letting capital have a free reign no matter what the detriment to ordinary folks.

Second, Sherrill himself explicitly acknowledges that business cannot function “without the appropriate regulation and incentives government can provide.” That is what tempered capitalism is all about–encouraging people to establish and run businesses but restraining the more harmful aspects of rent-seeking profitmaking. Key to decent democratic government is the role of government in protecting consumers from overweening corporate power and the public interest from the kind of reckless private greed that can lead to the “socialization of losses, privatization of gains” that we have seen in the causes of our Great Recession. Forty years of Reaganomics bred negative attitudes towards government regulation fostered within government itself and gave brutal, greed-is-good capitalism a chance to wreak havoc on the economy and on the lives of vulnerable Americans not in the elite upper quintile.

But most of the rhetoric in the piece is straight from the “starve the beast”, free marketarian guidebook of the Cato Institute and other think tanks pushing the Chicago School version of “free enterprise.” It uses the rhetoric of “the moral case for free people and free markets.” It argues against enlarging government “in a way that would fundamentally shift its level of involvement in our overall economy.” Yet Sherrill knows that there is no such thing as “free” enterprise–since without contracts and social networks and societal restraints, his corporation would be nothing but a local business, involved in a dog-eat-dog world with everybody enabled to act like the Mafia and exact whatever “protection payments” brute force permitted. He also knows that “free market” is not synonymous with “free people”–in fact, there is a good deal of tension between the two terms, since a people is only free when the democratic freedoms that underlie our way of life are not subordinated to the power of megalithic market enterprises. Unrestrained markets with monopoly players are antagonistic to genuine human freedom: labor is treated as quasi-property (remember Lochner) and wealth is treated as quasi-god.

And finally, he knows that there is no consideration in the offing for an enlargement of government in a way that would “fundamentally shift its involvement in the economy.” First, government is inherently “involved in the economy”, since government must make decisions about revenues, expenses, programs and public interest every day, and every decision about taxing, spending, punishing, rewarding and encouraging behavior has economic consequences. second, corporations like Tenneco push avidly for government to fundamentall shift its involvement in the economy with every lobbying dollar spent, which is intended to influence government to enact business and corporate-favorable programs. Subsidies of the oil industry that exist right now–that’s government involvement in the economy. And the oil companies are fighting to retain all of them. Implicit and explicit guarantees of the financial system–that’s an incredible involvement in the economy, providing cheap funding for banks. And investment banks clamored to be eligible for the largesse, even as their version of casino capitalism spun out of control. So while the rhetoric warns about government involvement, the reality cozies up to government subsidies and merely frowns when government involvement means acting to balance the relationship between business and consumer, as in the fight against the consumer protection agency provisions of the financial reform legislation and the intensive lobbying by the auto dealer industry for an exemption (i.e., for permission to go on ripping off auto consumers as they have frequently been doing).

But the most pernicious part of Sherrill’s op-ed is his warning that “people will buy into the false perception that government can fix our current crisis, which will lead to policies making our economic recovery more difficult.” Business can’t fix the crisis alone, because business as usual has become too short-sighted and too intent on rentier profits. However, government, with economic stimuli targeted to those at the bottom who are hurt the most, can do much to avert the harm of the Great Recession for its people and to provide a path for a sustainable economy out of the recession. But this blather about fearing that people will depend too much on government covers an agenda on the right to make sure that government isn’t there to make a difference for the people, so that Big Business can continue its self-interested focus without the kinds of restraints that make democracy and the economy sustainable.

Buyer beware. Much that comes in the guise of setting the record straight about American capitalism is just more of the same attempt to mislead Americans into distrust of their government and reliance on Big Business instead.