Folly of corporate bashing
The Barack Obama administration spent its first two years bashing Wall Street and America Inc. This led to some harsh words between the White House and the US Chamber of Commerce. It seemed a good populist move by the administration given the backlash against Big Business following the global credit crisis.
But it backfired spectacularly. So much so that the reshuffle in the White House that followed the midterm elections was driven in large part by a need to jettison the authors of this policy – Rahm Emanuel and the like.
What was wrong with the strategy? First, anti-business sentiment is hard to sustain in the US. Support for capitalism, the market and the right of a person to keep the fruits of his gains from both is strongly ingrained. The Economist wrote an essay on why it was so “unrewarding” for US politicians to bash the rich, that Americans are tolerant of income inequality and prefer to bash the state instead (see).
Second, such strong negative vibes from the presidency muddied the policy waters as far as US corporate interests were concerned. This added to an existing inclination to put off investment. US firms now sit on, depending on who you talk to, $ 1.8 trillion to 2.2 trillion in cash that they are refusing to spend and invest – at least in the US. Realizing he’s not going to create jobs if the US corporate sector will not invest, Obama has now shifted tack, but its still an uphill task to win their trust again.
The Manmohan Singh government is in a similar dilemma. There is open contempt for the United Progressive Alliance government in corporate circles – and the feeling is mutual by most accounts.
It is not so much that the Indian government has bashed the corporate class in public as much as that its policy environment has been all about welfare schemes and not about helping India Inc to grow better and stronger.
This is particularly destructive in India. Corporate India is the single largest provider of government taxes, the largest creator of jobs, the largest source of capital investment. The list goes on. Hurt them and everything else goes haywire.
But that is what the government has done. Left-oriented do nothing types like A.K. Anthony hold sway. And, from what one hears, the broad line is that economic reforms lose votes so put them all on hold. But zero jobs, falling government expenditure and supply bottleneck-created inflation cost even more votes – and they will occur if the new Company Raj is not given its due.
At least the government seems to have recognized that bashing business in public doesn’t get too many points in India. In a way strangely similar to that of the US, Indians are respectful of their business community. Richard Edelman of the PR firm of the same last name recently spoke about his company’s “Trust Barometer” and how it has tracked public sentiment for government, media and the like in the so-called BRIC countries.
He told the Indian Express, “The business of business is to do business, make profit. Seventy per cent of our respondents in India said yes to that. India is not like China or Brazil, which say business has a social responsibility. India is a very free market. The other thing we saw in India is that contrary to what we have witnessed elsewhere, CEOs in India are the most credible people.” (See).
Indians may be the world’s most pro-business public, at least for a major country. Liechtensteiners may have even stronger positive views. But Indian views are unusual, even for what is probably a largely urban sample group, given the degree of poverty still evident in the country. It may simply reflect the age – one where government and media are in free fall when it comes to respect and business is seen to be doing everything constructive in the New India.
Which, to be fair, is close to the truth.