The National Catholic Review
The Editors
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When Standard and Poor’s lowered its rating on U.S. sovereign debt to AA+, a period of frightening volatility seized stock markets. Confusion in the euro zone, rioting in Britain and a weak recovery in the United States sent stock prices plunging worldwide. As the incapacity of governments and international institutions to meet the current crisis is openly debated, few have looked to business leaders for the contributions they might make to economic stability and recovery. But they have the resources to play a significant role in reviving the U.S. economy. American banks and corporations hold between $4 trillion and $5 trillion in reserves. With government options limited, the time has come for corporate and financial leaders to take some responsibility for the common good in a way they did not during the 2008 crash.

In past financial panics, financiers like J. P. Morgan persuaded their peers to take steps to avoid catastrophe and create a structure of regulation to smooth out economic cycles in the future. Henry Ford understood that workers needed decent wages to be able to buy his Model T’s; and David Packard and William Hewlett made their company a model of equity where management and labor alike shared in the profits and losses of the business cycle. For decades profit-sharing made millionaires of workers at Proctor & Gamble. And who did not take heart from Aaron Feuerstein, the Polartec manufacturer, who paid his Malden Mills employees while their plant was rebuilt following a fire? The recovery of General Motors and Chrysler, moreover, demonstrates that in collaboration with government and labor American enterprise can revive in ways that not only save but create jobs. Enlightened business leadership is part of the American story.

America still has wealthy businesspeople with a sense of justice and the public good, people like Warren Buffet, Bill Gates and Patriotic Millionaires for Fiscal Strength, who lobby for higher taxes for people like themselves. Unfortunately, the icons of the zeitgeist have been the extravagant and imperious Donald Trump (“You’re fired!”); and “Neutron” Jack Welch (General Electric) and “Chainsaw” Al Dunlap (Sunbeam), who were infamous for raising profits by cutting jobs. Then there are the no-show titans of Wall Street who failed even to attend President Barack Obama’s post-crisis speech on financial reform.

Conventional wisdom, however, is an obstacle to responsible business involvement in economic recovery. The public is told that banks do not make loans and businesses do not invest because there is no demand. But there is little or no demand because there is no liquidity. We are told the housing market will not bounce back because of weakness in demand, but government funds to prevent foreclosure go unspent, and lenders insist on foreclosing on householders who are making full payments after the value of their homes has fallen. We are told businesses will not invest because of economic uncertainty, but uncertainty is a vague rationale; and the financial sector tends to bless as certainty only rules that are most advantageous to itself. Furthermore, certainty has also become a code word for lax regulation, the kind of careless oversight that led to the 2008 financial crisis.

Conventional wisdom is a defeatist oracle. It prevents Americans from seizing the opportunities to rebuild the economy. What is lacking in many quarters of corporate America today is goodwill and courage: the goodwill to spend and negotiate for win-win solutions, the courage to invest, despite uncertainty, and be job-creators. The American story suggests that business can work for the common good.

The current economic impasse is due in no small part to business models with little or no sense of social responsibility as integral to the business enterprise. Pope Benedict XVI was right in identifying a deficit of trust as the root cause of the 2008 financial crisis; and he was correct in arguing that the remedy lies in an economy where capital is utilized for the common good as well as for private profit. Bankers and business executives should heed his plea for investment in projects in which not just executives and shareholders but all the stakeholders profit.

Avenues are open for cooperation between private enterprise and government. With some corrections, unspent federal funds to prevent home foreclosures could be made into a workable program. A joint government-business infrastructure bank to rebuild the country’s failing roads, bridges, airports and power and water systems could spur an economic upturn. Banking and business can make other moves on their own. Loans to small businesses, which have been starved for cash, for example, could help revive the sinking job market.

It is past time that business and capital play a responsible role in the new American story.

Comments

REDNUNS | 9/15/2011 - 6:57am

It seems that exhortations to patriotic fervor and service are limited to calls for voluntary valor on the part of largely poor, undereducated, and otherwise ill-served young men and women who will dutifully go to suffer, be maimed or die in Iraq or Afganhistan. Is this the only current politically correct call to patriotism? Why haven't big businesses, their over paid CEOs and profit-making shareholders been called to the patriotic service of putting our country back to work? Too few have paid the price of these wars. Is no one else capable of such sacrifice and valor in the face our great economic need. The democracy is truly at great risk.

wang yuhang | 9/6/2011 - 9:32pm
The American story suggests that business can work for the common good. Buy I don't much care what people give to charity. We need less charity and more publicly supported endeavours. http://www.uggbaileybuttontriplet.us

Big Government and Kenyesian economics are a complete failure, they always have been.  The Government and the Catholic Church should not be forcing their agenda/beliefs on people with the "Social Justice" slogan.  Jesus never did!  It violates a human's right to life and liberty by denying their free will.
C Walter Mattingly | 9/2/2011 - 8:18am
Vince, you're right, it is correct to say half of Americans paid no income tax last year, not that they paid no taxes (on cigarettes, gas, etc.) Social security, however, is not a tax; it is part annuity, part welfare program (disproportionately larger return for the lower income retiree and also other benefits compared to the higher middle income earner), and 100% unfunded by anything other than government IOUs. But of course democrats, with their soak the rich proposal, are not really concerned about deficits but rather playing the class envy card for votes. Only 18% of revenue lost to the Bush tax cuts comes from the wealthy, who pay a greater percentage of income than they have before the Bush cuts. Elimninating those to the upper middle class as well ($83K and above) would recover 67%. That's what Simpson Bowles did, largely through eliminating deductions for cadillac health insurance, etc,  and that's why Obama ducked it-SB affected too many of his union constituents riding their various boondoggles. It's politically popular to say "Make them pay more taxes"; just not the prosperous middle class where the larger problem resides; too many democratic votes there. The liberal hypocrisy thing again, pretending to be interested in the deficit while jockeying for votes by protecting constituents' boondoggles instead.
Terry, true charity has not been destroyed by social justice but rather by failed entitlement programs that run contrary to human nature, which as a result have produced more harm than good. That information is as old as the young Moynihan. A true social justice program, for instance, would provide parents of chronically failing inner city public schools a voucher choice to improve the lot of their children, but as America pointed out (at least they pointed it out before President Obama came to office and said "Let there be no vouchers," at which point the editors seem to have become more passive on the issue), unions and their financially supported elected representatives have successfully killed off this important social justice movement, at least up to this point. Many other such examples.
TERRY CHAMBERLAIN | 8/31/2011 - 11:58pm
The more I read your magazine, the more I find it has many similarities with the New York Times, which is not a compliment!  Big Government and Kenyesian economics are a complete failure, they always have been.  The Government and the Catholic Church should not be forcing their agenda/beliefs on people with the "Social Justice" slogan.  Jesus never did!  It violates a human's right to life and liberty by denying their free will.  Businesses will continue to hold large reserves until confidence is restored in the business climate.  The crash of 2008 was largely based upon housing which was the RESULT of SOCIAL JUSTICE by giving mortgages to people who could not afford them (thank you DODD/FRANK). 

Individual responsibility and TRUE charity has been destroyed by government intervention, entitlement programs, and yes..."SOCIAL JUSTICE"!
Vince Killoran | 8/28/2011 - 11:59pm
The old "half of Americans don't pay taxes" myth, huh?  It's not true but conservatives keep circulating the falsehood.  There are plenty of taxes out there-you are referring to federal taxes only but don't mention the fact that there are social security, state & local taxes, etc.

In fact, we have a fairly regressive tax system in the U.S.  See Jonathan Chait's "No, Half of All Workers Aren't Freeloaders" In THE NEW REPUBLIC (http://www.tnr.com/blog/jonathan-chait/87204/no-half-all-workers-arent-freeloaders).

As for the labor movement, I couldn't disagree more, but we've been around on this one many times. I would add this: the Bishops seem to disagree with your assessment of the labor movement.

Time to move on from this post.
C Walter Mattingly | 8/28/2011 - 10:21pm
I agree with you, although the half who pay no taxes can hardly complain that the rich, who pay disproportionately a larger share, don't pay enough. That's a part, the smaller part, of the problem. The larger part is we spend too much. The plan that went a long way to solving that was discarded. 
All that happened with labor rights is that over the past 40 years or so the labor movement morphed from what was primarily a movement to assure the security of its workers into a self-interested corporation looking out for its enrichment at the expense of the American people. It lost the good will and respect of most of those. That's why democrats like Rahm Emanuel and Cuomo, etc, are reeling the excess of the movement in. Labor leaders have overreached and messed up bigtime.The next decade will be a difficult corrective for them, but they'll get there. Teachers need to recognize how their union leaders have undermined them, though, before that happens. 
Vince Killoran | 8/28/2011 - 10:57am
I don't like Obama much-he's a neo-liberal who has failed on the economy, labor rights, human rights, and the environment.

We don't pay enough taxes in the USA, especially the rich.

And now we are here.
C Walter Mattingly | 8/28/2011 - 4:20am
Then, Vince, you should be very happy. You've got the public school system you want and deserve, totally dominated by the unions and the government, absolutely raking it in in terms of monies spent per student, with bureaucrats sucking so much of the money and keeping it from reaching the teachers and students (50% of public school money does not make it to the teachers or direct classroom support; 80% does in the parochial school system,), and the totally predictable terrible performance. And what do they want? More money, of course.  And look at the tax system, where the wealthy, who used to pay 40% more as a percentage of the total tax bill than their percentage of the income represnted (ration of 1.4:1) before the Bush tax cuts, who now pay 60% more of the total tax bill than their percentage of income(1.6:1). As opposed to the increased share the wealthy pay, unbelieveably, the average American earner, one of the wealthiest in the world, paid zero income taxes last year. So what is the rallying cry? Raise the taxes on the wealthy, but not me, who pays zero income tax. Tax that guy over there, I want to continue paying nothing.
Only in America.
We, or I and some here at least, talk about all of Obama's violations of his word, etc, but his great failure was to turn his back on his own bipartisan commission's tax reform recommendations. To be sure, the extremes of both parties, Pelosi and Demint, railed against it, but Obama had support from the middle as well as the right and left from such as Senator Coburn. It would have raised taxes and cut spending with a 1:3 ratio and done away with so many things that got us into trouble, such as mortgage subsidy of tax deductions for your McMansions and all other houses that contributed to inflating house prices beyond their worth and the recent collapse. It would have ended the cadillac health plan deduction boondoggle, the ethanol boondogggle, the oil boondoggle, and so many of the special interest boondoggles that the Daschles and Murthas and Shelbys of the world have reimplanted since Reagan romoved so many in 1986.. It would have taken a great leader, but Obama, lacking the spine Reagan had to do the unpopular right thing, even though he had both houses and a looming crisis, simply didn't have it Unlike Bush sr, who faced with a growing deficit broke his word by raising taxes for the good of the country, knowing it would cost him the support of his base and likely the election, did the right for the future of the country,
Obama, being more narcissistic and self-absorbed, walked away. In my opinion taking his integrity as well as brighter prospects for America with him.
And now here we are.
 
Vince Killoran | 8/27/2011 - 4:13pm
I'm not a liberal Walter: I'm a socialist.

I don't much care what people give to charity.  We need less charity and more publicly supported endeavours.

BTW, Dick Cheney makes too much money.
C Walter Mattingly | 8/27/2011 - 2:48pm
Vince,
Well stated as a liberal. No, as a liberal you would tend not to send money to the IRS, nor to needy charities for that matter, nor give blood or your time at the food bank as your conservative counterpart does, but rather give 40% less of your time and money to the needy generally (See Nicholas Kristof, Bleeding Heart Tightwads, NYTimes, 12/20/08) because charitable giving and works are not your responsibility, but the government's, which sends that portion of taxes collected not siphoned off by bureaucrats to various worthy (we hope) causes. Conservatives, likely believing it is their personal responsibility to help the needy, pony up and walk the walk while their liberal counterparts walk away, as it's the government's reponsibility, not theirs. Like nasty ole Dick Cheney in 2005, making 9 million mostly in stock options and giving 6 million, 67%, to charitable causes such as schools for inner city DC kids, while Joe Biden, talking up help for the needy, making only $300K, gave $367, .14 of 1%, less than the typical McDonald's assistant manager, to charitble causes, according to tax records.
"Personal giving is a shared commitment"? How about sharing it with your conservative brothers, who are carrying their load and yours?
Vince Killoran | 8/26/2011 - 10:19pm
"[F]ocus on your own citizenship and role and send in a voluntary check to the IRS."

You don't really get the citizenship thing do you? Citizenship is a shared commitment not a reading out your credit card to a 800 number operator while locked away in your McMansion reading Ayn Rand.

Why would I send a "voluntary" check to the IRS? We have representation; we have taxation.  We need more democracry, less big money, and more economic justice. The editor's call for social responsibility is spot on.
Thomas Halloran | 8/25/2011 - 6:40pm

“Conventional wisdom, however, is an obstacle …. The public is told …. We are told …We are told….”


Some year twelve students (in a well respected Jesuit school in Sydney, Australia) are being told that the firm and household diagram which is used in economic textbooks is “unscientific” because it overlooks the fact that there are two kinds of firms: those that produce basic goods and those that produce capital goods which are used in the production of the basic goods. Basic goods are consumed directly and more or less immediately; capital goods are only consumed indirectly over a longer, often indeterminate, period of time. The students are told that because there are two kinds of firms a “truly scientific analysis” requires an understanding of the relationship between two distinct economic circuits.  The basic circuit is the flow of consumer goods and can be understood as a rate (so much every so often) and the producer circuit is the flow of capital goods and can be understood as a series of accelerators (speeding up, slowing down, or even maintaining) the rate of flow in the basic circuit.  The purpose of economic analysis and policy is to monitor the relationship between the circuits in changing contexts.


Moreover, these students are able, by simple observation, to verify what they are being told. They are convinced that the single circuit of firms and households as presented in the standard textbook is indeed unscientific and seems to explain why the economy operates about as efficiently as trying to ride a standard pushbike up a steep hill. Think of a variable speed pushbike and the way it is possible to “shift gears” and change the amount of effort required to pedal when faced with a hill or a valley and make for a more leisurely, less taxing ride.  The rider of a standard pushbike doesn’t have such freedom!  And with freedom comes responsibility.


It provides a fresh perspective on "capitalism".  To be sure, finance plays a part but as one—and definitely not the only one—of five variables in a scientific understanding of economics. 


 “Conventional wisdom” (even if it be papal) needs to be reoriented by a scientific understanding of the dynamic nature of the productive process.  In that context, “goodwill”, “courage” and “trust”, far from being the sole prerogative of government or big business can be democratic.


 

John Lyons | 8/25/2011 - 4:46pm
Fine, focus on your own citizenship and role and send in a voluntary check to the IRS. In fact, I think every Democrat should show the way and send in 20% of their net income to the IRS.

If you refuse to unless your ideological opponents do as well.... what does that say about the concept of doing the right thing"?

As for taxing the rich and Buffett... he's not the target of any tax hike on 'the rich'. he's the excuse. The hammer and all the changes of human behavior will fall on the upper middle classes (because that's where the liquid cash in incomes are) whereas the mega-rich don't have huge annual incomes but do have huge net worths (it's just tied up in stock and bonds and real estate).

But all this does is get us distracted as we play Robin Hood. No one yet on this site has done the math and shown us how taxing the rich will guarantee a permanent raise in tax revenue or how their proposed spending plans will wean the current poor off permanent dependency. Until you do this or even think it through and try to do the math, you aren't being serious.
ed gleason | 8/25/2011 - 3:33pm
Buffet just invested 5 billion in BofA 5  at 6% dividend, netting 300 million a year @ a tax rate of 15% and we hear calls for voluntary tax payments and the rich  fleeing to Bangladesh?  
James Collins | 8/25/2011 - 3:14pm
If the government took Warren Buffett's word on taxing the rich, the first thing Buffett would do is hire a bunch of tax lawyers to help him avoid the tax. That is why he doesn't just make out a check to the IRS and pay it voluntarily. That is what GE has done. They have almost 400 tax lawyers to help them avoid paying any tax.
Vince Killoran | 8/25/2011 - 2:18pm
"Wealth creators"?!  That's a good one.  I prefer to focus on the role of the Citizen and building up the civic realm.


John's post is alarmist and his paean to the idyllic market is utopian (and not in the good way).
John Lyons | 8/25/2011 - 1:53pm
Ed, I care because unlike you, I see that economics is not a zero sum game. I care because I know enough about human history and the market to realize that tax codes and regulatory constraints do dis-incentivize wealth creators from growing the pie!

Buffett's billions are not INCOME so Warren being "for" a hike in payroll or income taxes is without pain for himself - he won't be affected by tax hikes on income at all...but plenty of up and coming entreprenuers and job creators will be. And since they make the jobs which create the middle class in the first place, whatever hurts them, hurts "the poor"! 

I care because I can do basic math. Merely hauling in more tax revenue, even if we could eliminiate the budget deficit entirely through taxing the rich alone, will not work long term because there's not enough money that will sit still to be targetted in the upper 5%. So taxing the evil rich will necessarily mean taxing the middle class....which will kill it. And they just so happen to make up 80% of all donors to charities...which do the lions share of direct heavy lifting to help...the poor.

So yes, I care about killing the goose that lays the golden egg. I care about the government spooking entreprenuers and small businesses to SIT on their cash rather than risk it being stolen via taxes and regulatory burdens. I care because the math shows that the Federal Government can't replace the market, it can't simultaneously support 60% of the nation's citizenry via wealth transfers while depending on the 40% of wealth producers to stay in the game.

You seem blithely unaware of the danger of ever higher government spending and what 'cash flow" means. I'm advising caution and taking out foot off the accelerator and putting attention towards de-leveraging and local creation of wealth vs. ever greater local, state, and national dependence on wealth transfers which themselves are increasingly dependent on the Federal Government successfully selling bonds.

Because if I'm right, we'll wake up on day soon and the Federal cash flow will be curtailed by 40% and your precious wealth transfers will cease and we will have fire and riots and blood in the streets because the bottom 2/5th of the country were weaned off self-reliance onto dependency with zero backups. 

If you're "right" that the rich can be taxed at 20-40% more, then we'll see the wealthy taking their assets and know-how and fleeing the country.... and then the doomsday scenario will still happen due to simple cash flow issues.  
John Lyons | 8/25/2011 - 11:30am
Ed, if taxing the rich can occur without the rich either fleeing after the first fleecing or without the rich corporations merely raising prices to offset the hit to their profits the tax hike represents, I'm all ears.

If the windfall revenue from a 'tax the rich' scheme is used not just to maintain the status quo via food stamps and other band aids which do nothing but keep 1/5th of the country on life support (and do nothing to make them financially healthy), then these one-time 'tax the rich' gimmicks will only result in a delay of the inevitable.

Or do you think taxing rich individuals who make more than $200,000 per year won't result in them making immediate life style and business decisions that allow them to avoid most of the financial hit? You really think those folk got rich in the first place by just sitting still and taking liabilities on the chin? Really?

Let's flip this around. Why 'can't' we just cut off all federal wealth transfers to the bottom 5th percent of the nation? Apart from the morality of instantly hurting the poor, what's the trump argument of politicians and economists? That these millions of people will not take that sudden loss of income sitting down, that they just won't "take it" and go meekly but will probably burn our cities and suburbs to the ground, right? This all premised on the assumption that human beings are free actors who rarely will "take one for the team". Since it's taken on faith by the Left that the poor WILL RIOT should money be cut...why is it also taken on faith by the Left that the rich won't?

ed gleason | 8/24/2011 - 4:31pm
John Lyons says; "show us evil tea partiers the way to salvation"

nobody on Commonweal blog  believes that TPers are either evil or rich. some like myself  might believe they are misinformed but  absolutely none believe they are rich. .
John Lyons | 8/24/2011 - 4:01pm
Guys, if you really believe 'corporations" have all the money in the world such that taxing it will result in a balanced budget (down from $1.7 trillion in borrowing this year and the foreseeable future) and can reduce the federal debt from $14 trillion to zero over the next 10-20 years.... feel free to show us the tax rates that would be required and the tax brackets that would be required to accomplish this.

Keep in mind of course that the upper 2 quintilles (the evil rich) are rich enough to emmigrate to foreign countries and take their wealth creation industries, ideas and activities with them, so even IF you can show how this works on paper, it may not work in the real world (and we're always told liberal progressives are so sophisticated and intelligent and based in reality not magical thinking, right?)


On the other hand, since Democrats are generally in favor of higher taxes why not promote a voluntary, ideologically based movement whereby ONLY registered Democrats send in an additional 20-30% of their net income to the US Treasury to pay for all this government? We're talking 48% of the public and certainly a plurality of all the 'evil rich' as well, so surely you could single handedly show us evil tea partiers the way to salvation by your good example. Think of it like how you wanted the USA to unilaterially disarm from nuclear weapons back in the 1980s.... you guys can voluntarily pay more taxes and show us the way to fiscal salvation.
Andrew Baribeau | 8/24/2011 - 11:37am
I couldn't agree more with the premise of the article.  It's absolutely time for "Big Business" to step up and play its proper role in helping America get back on her feet.  For no other reason than to ensure a prosperous future.  These companies including its executives and shareholders wouldn't be in such a favorable position today if it weren't for their blessed existence in this wonderfully free and abundant country.  If they want to remain viable in the long run then it's time to get creative and give back to the one that has given them so much...America!!!

However I don't see anything that would suggest there's a chance of this happening since the evolution of our economy has placed profit as the ultimate bechmark for success.  Pope Benedict described the culture perfectly.  The profit motive and common good are mutually exclusive goals in corporate boardrooms across America.  We know all the examples from several industries including Big Pharma, Oil, Auto, Media, etc where profit is at the expense of people or the common good.  Simply put, the common good doesn't raise revenue or cut expense and thereby not of interest to an investor, executive or board member.


Let's remember corporations are ultimately about the people that work there and until those people begin to value the common good over profit, I don't see Big Business making the contribution that we so desperately need.  I can only hope to be proven wrong!

John Lyons | 8/24/2011 - 10:32am
Suppose America magazine blog got a lump sum of $3,500,000 from an estate gift and decided to help the President and hires not just 1 but 100 new employees. It decides to pay them all a base salariy of $35,000 each. Now, what's the business model of America magazine/blog like that it can recoup $3,500,000 over the course of this coming year such that next year it won't be forced to fire all these new employees?

If a company selling widgets or clothing or car parts sees no actual demand for their products beyond what they currently produce with the people they currently have on staff (and whose expenses to the employer in terms of health care alone and compliance with government regulations will only go up over time), they can't justify hiring new staff lest they simply waste money and don't actually make a profit.

In other words, capitalism is a system of economics that favors those who understand basic math and accept reality. Socialism is a system of government which typically favors command economies (crony capitalism) which ignores mathematics until the reality that wealth really isn't the same thing as money dawns on them...too late.

The problem we face is largely of a political nature - IOUs made which we can not possibly pay off because there's not enough wealth in the planet with which to pay off these trillions of dollars of liabilities....UNLESS we allow the dollar to devalue (hyperinflation) to the point where on paper we can indeed pay off our bills...but with worthless paper.

Look at the whole health care bruhaha...what's better? To have health "insurance" or to be "insured" but have no access to actual medical care because doctors have been priced out of practice....or to not have health insurance or 'coverage' but have plenty of actual doctors and medical services available?

Look at what happened in Maryland when they passed a Millionare tax with the liberal expectation of reaping an 'additional' $100 million from their millionaries... only to discover that a whopping 1/3rd of these folk simply moved their primary residences to other states resulting not in a windfall but a serious budgetary hole. How is that not going to happen if we tax "the rich" more? How will they not simply "go galt"?
C Walter Mattingly | 8/24/2011 - 9:06am
Tom,
Obama is in political trouble, but don't underestimate his massive dollars and political skills. The problem the president has is he must figure out a way not to run on his record. If he can uvercome that problem, run on something other than his record, he can win.
And blacks have nowhere to go. Take Maxine Waters, whom you mention. She may excoriate him as Travis Smiley does, but what is she going to do? If  Obama and his D.A. are voted out of office, she and her husband might get investigated for their suspected manipulation of bank regulators to get them to bail out their busted bank and save their investment. This could result in a fine or worse for Maxine and/or her husband. Currently the democrats have managed to sideline the investigation, but a republican administration would not. And that's Obama's current approach: liberals are stuck with him. Unions, with all their money, are becoming desperate. It's not so much Gov Walker but Mayor Rahm Emanuel, who is busting unions in Chicago, and Gov Cuomo who is doing the same in NY. They will be desperate to hold on to their boondoggles and will huff, complain, pony up hundreds of millions and register legal and illegal voters like last time. And Obama knows how to do what gets him votes. How else can you explain his railing against frightening captive terrorist murders who endanger innocent citizens by waterboarding, and then assenting to shooting an unarmed and nonresistive terrorist murder in the head and dumping him in the ocean as crab bait? One plausible explanation: both were vote-getters. Kevin Clarke and the editors at America deserve credit suggesting this hypocrisy.
The other problem is that the best, most highly qualified republican presidential possibility, Mitch Daniels, chose not to run. While the current candidates would be an improvement to Obama-that after all is not saying much- they don't for the most part have Obama's TV presence, nor the dollars of the unions and the felon Soros behind them. Replacing him is not in the bag by any means. 
C Walter Mattingly | 8/24/2011 - 8:23am
Vince, I really have little to say to the essay itself as it seems based on a naive and misconceived premise, so I addressed the problems and causes of a debt-burdened and stagnant economy at the heart of the issue.  If you are an ethical CEO, you have a fiduciary responsibility to your stockholders, your employees, and your customers. Anything that would threaten or harm that very vulnerable relationship, such as GM caving in to seriously inflated employee demands, would be a violation of that trust. (In the end, a main failure of GM leadership, to the ultimate detriment of its employees, customers, and stockholders by the destruction of the company, while Caterpillar thrived because leadership stood up to union greed.)  If you can employ your resources to produce a product your customers will buy at a price that is competitive, you tend move forward and do it. If any of those crucial components are missing or put into doubt by harmful or incompetent government policies or any other reason, you don't. That's one reason why Germany, with no national minimum wage, is at an advantage for certain low-cost manufacturing items vs the US. That is miniscule of course compared to SE Asia and its hard working and lower paid workforce, but it is the same principle. 
It is also unwise to blow off as you do the uncontrolled immigration of a largely Hispanic population in the US compared with the controlled immigration of a largely Asian one in Canada. Here in the US, the unemployment in the Asian population is 7.9%; in the Hispanic population, it's 12%. That means 50% more are receiving various public assistance and 50% less are taxpaying citizens among Hispanics than among Asians. Whatever the eleemosynary benefit, the comparative economic benefit to Canada and burden to the US is a no-brainer.
Greed certainly did play a part in the economic crisis, but there were far more greedy felons in the middle class, general population than there were in Wall Street. (Contrary to the belief of most liberals, greed is not limited to the wealthy.) But a far larger part was played by bad government actions, both of regulation and deregulation. What enabled the risk takers to take large risks was the foolish federal guarantee of 100% of the balance on residential mortgage loans by Fannie and Freddie, making it a heads I win tails you lose game to the lender. Couple that with the Clinton administration giving the bankers the green light, followed up by Barney's demand, against republican opposition, that banks, Fannie, and Freddie make negative amortization loans, no down payment loans, and liar loans, and you have a perfect storm of bad government regulatory actions. And do you know the percentage of Alt A loans made in which the borrower overstated his income by 25% or more, a felony fraud? 57%.
Tens of thousands of felony frauds. That's the real reason Obama and the democrats did not go after mortgage felons. For every Wall Street felon he could find, he would probably have to prosecute dozens of fraudulent union or former union votes-er, members, and many other middle class ones as well.
It may be that other countries can manage government programs better than the US. Take our public primary and secondary education schools, which are of course along with the military the major exclusively government controlled programs in the country. Despite spending more than any other country per student until very recently (the administration's devaluation of the dollar puts us in only the top 10% now) we have 3rd quartile performance. Who seeing this, the Barney-Fannie-Freddie disaster, or Amtrack and its horrendous deficits, could have much confidence in turning things over to our government?
And when we do have our top Asian graduate students move on to open new companies and new jobs, where in North America do you think they will locate? In the US, where the corporate income tax rate is 36%, or Canada, where this year it is 16.5% and next year will be 15%? Unless of course you can hook into the ethanol boondoggle, in which case the taxpayer will pay you billions and receive next to nothing of benefit in return. We had a good bipartisna proposal from the president's own commission that would have raised taxes and cut spending, reformed many of the tax boondoggles, and lowered the corporate tax rate, but the extremes of both parties were against it. With real presidential leadership, we might have gone forward with it and been off to dealing effectively with our deficit. But then again that would have required genuine, Reagan-like leadership from the top. Obama simply ducked the problem and the recommendations of his own commission. Hence the current impass.
On the Canadian system, while we do see a third of a million Canadians fleeing to the hospitals set up on the US side of the Canadian border to escape Canadian healthcare and no Americans doing the same in Canada, it is worth noting what Canadians see as their greatest fiscal nightmare, threatening the entire economy. Yep, rocketing, out of control health care costs threaten the financial future of the country.
Vince, we agree on something. The Obama/Bush bailout of the banks, GM, and others was a tragic error. When Sweden had a similar problem, they let the banks go belly-up, stepped in and recapitalized and ran them for a short while, and then sold them back to the private capital markets. That, the immense error of government guarantees of the majority of home mortgages coupled with Barney and others demanding that banks make what all bankers knew to be poor riskloans, and tax policies that inflated the price of homes, have dug a huge hole for our economy. Government regulations and deregulations, basically government, was the ground of the mortgage blowup. 
I personally would do away with all the Bush tax cuts for those earning $83K or more. That would go a long way to recover 2/3 of the lost revenue; limiting that to the high earners would solve less than a fifth, the reason that democrats can be validly accused of playing class warfare games for envy votes. But in place of a Merkel, we are led by an academic whose served as an adjunct lecturer and social worker who reads speeches from a teleprompter very well and is simply, and not surprisingly, in way over his head. President Obama is very bright, but lacks experience, wisdom, and to an extent, integrity. Replacing him with a straight shooter who is genuinely qualified, such as Merkel, would go a long way toward restoring us to the right path. 
Enough, but to omit so many relevant factors, as you do, would result in an erroneous conclusion. 
Tom Maher | 8/23/2011 - 5:53pm
Walter Mattingly (#11)

President Obama job approval numbers are cratering.  Obama's inept handling of economic  policy is catching up to him in a big way.  The daily Rasmussen presidential approval index of his job performance for today 8/23/2011 of likely voters is the lowest approval index of the Obama presidency at -26. 

This Presidencial approval index is derived from the percentage of people who strongly disapprove of the presidents job performance, which today was at 45%,  subtracted from the number of people who strongly approve of the presidents job performance which today was at 19%. 45% substracted from 19% is - 26.  The 19% was also the lowest strongly appoved percentage of his presidency.  This figure has been going down for the last several days and weeks. 

Obama is showing declines in support from his 2008 base especailly from independent voters.  The economic numbers coming in continue to be very negative especailly the unemploymenr figures which are growing worse.  Jobs are disappearing rather than being created.  

People are talking about Obama being worse than Jimmy Carter on the economy as the economic data shows.  But the continued downward trend of economic data and his job performance suggest he can not only lose the presieency in the 2012 but he could also help lose Democrat seats in Congress. 

The Democrat base itself is starting to loudly and publicly to complain to the president on the  economy .  Representative Maxine Waters, a black Congresswoman and strong Obama supporter, publicly complained to the president last week on black unempoyment which is now at over 14%, 5 % higher thatn the national average.  Black will likely always support the presedent but it goes to show as was actually said that black are angry about the economy.  Discontent over the economy is coming to a boil now wway before the elections  fourteen months away.  The intensity of discontent more like that toward Lyndon Johnson who  eight months before the 1968 election announce he would not run for re-election.  The economy is about to politiically explode and bring down the Obama presidency way before the 2012 election.  Obama is in real big political trouble.
David Burkett | 8/23/2011 - 3:44pm
I'm confused. Which shall it be?

"Government should get out of (our) way and let business alone."

"Government needs to do more to support (my) business."

"What regulations (or regulators') shall we cut?" FDA? AG? DEA? INS? FBI? FED (..... as if we could)....... 
Vince Killoran | 8/23/2011 - 2:21pm
We're off-topic Walter but I do agree that the terms of that bailout was a bad idea (see an insightful essay on this from THE NATION: http://www.thenation.com/blog/silence-lambs). The housing crisis and bailout was caused by Wall Street greed and compliant politicians.
C Walter Mattingly | 8/23/2011 - 1:23pm
Off again, Vince. What we had was a federal program with all sorts of incentives to artificially inflate the price of housing, along with Fannie and Freddie and directions from Barney to make bad loans to borrowers who couldn't afford them. And of course, Fannie and Freddie, read the taxpayer, guaranteed all those poor loans. The result? Check and see who owes the most money to the government-not the banks, but Fannie and Freddie, around 200 billion now and counting.
James Sheehan | 8/23/2011 - 11:14am
The business community has been given so much by the government it is time for them to produce jobs.   All those companies who CONTINUE to have the tax cuts as they earn large profits, should be forced to produce jobs, or revert to the old tax level.  If these tax cuts were a panacea, we would not be in  the position we are in now.  The tax cutrs and less regulation got us into this mess, and the people who created this mess think they now know the solution; go figure.
Edward Ray | 8/23/2011 - 10:58am
Milton Freidman once remarked that the two greatest threats to capitalism are university professors and corporate CEOs.  We have a university professor in the White House and men like Jeff Immelt, CEO of GE, advising him.  You can come to your own conclusions.

Small Businesses are the ones that primarily create jobs in the US.  Regulations (both current and future) are hampering thier ability to hire people for good paying jobs.  Only businesses I see going up are restaurants, bars, i.e. low wage jobs.  People will always need to eat, drink and piss/crap (waste disposal is another recession proof industry).  If you want people to hire remove the regulatory burden as this is the primary reason for lack of hiring, NOT taxes!
Vince Killoran | 8/23/2011 - 10:15am
Walter's trademark lengthy post is filled with the usual factoids and unsupported conclusions. As usual, all the country's woes lead back to Obama-a neoliberal who is incorrectly identified as a closet socialist time & again by Walter et al.

Instead of addressing the structural factors at work in a nation's culture and economy he chooses single factors to explain everything (e.g., Merkel magically catapulted Germany to the top; Canada's Asian immigrants are the reason it has a sound economy).

These countries-and others-have universal health care, paid maternity leave, robust labor movements and left-wing parties.  When the '08 recession hit they had the necessary regulation of financial institutions in place to stave off the worst excesses of the downturn. There is a long-standing national commitment in place to economic security that we simply don't have in the US (although Merkel has attempted to dismantle some of this).

It's no wonder that the gap between the wealthiest and poorest is far less in these countries.
C Walter Mattingly | 8/23/2011 - 7:15am
Vince points out that several countries which are in better economic shape than the US have more governmental regulation and interference in their economies. Two of them, Australia and Canada, have immense natural resources, as does Kuwait and
Bahrain, but Germany does not. It's worth looking at some of the major differences.
Germany has Angela Merkel, one of the wisest and most talented leaders in the world.
The US, on the other hand, has Barack Obama.
Take dealing with the economic crisis. Germany under Merkel immediately came up with a sizeable economic stimulus program and a large cut in government spending and welfare payments. The result, as expected: an economic boost and recovery.
Obama also came up with a sizeable stimulus also, but instead of cutting spending he reneged on his word to air health care before the American people on CNN and rammed thru an expansive and questionable health care plan which was so rushed and poorly conceived that it may well be declared unconstitutional. While Merkel's Germany has done relatively well, leading Western nations in growth, Obama's US, burdened with a huge new entitlement, is setting new records on food stamp and unemployment numbers. 
Germany also differs from the US in that unlike the US, it has no national minimum wage. This has contributed to its strong export base in manufacturing, one reason they can keep jobs in Germany being they can compete better on wages than the US.  (The downside is that about 20% of working German residents make under $650/month, far less than a McDonald's cashier.) 
Yet there is one huge and vital segment of the country we can point to in which we have had virtually total government and union control for many years, as much or more  than these 3 countries: primary and secondary education. Until the recent and continuing devaluation of the dollar, we spent more than any other nation in the world per student, and today remain in the top 10%. The result? Third quartile performance. Obama's recommended solution: spend more of course. And we don't have to worry so much about being outperformed in education by these 3 countries, which we are, but rather the majority of developed nations, most of whom spend a fraction of what we do. Clearly we don't do too well with government and union control. More proof? Check out the history of manufacturers nonunion Caterpillar and union dominated GM. Despite the bankruptcy, the US taxpayer is on the hook for all the old Cadillac pension and benefit boondoggles.
You may want more such most expensive and poorly performing socialistic boondoggles, but the country has run out of playing sugar daddy-except for such as the sugar industry, which we of course foolishly subsidize along with ethanol and tobacco. But that's another story.
And it goes on. Canada controls illegal immigration, and the largest of the ethnic immigrant groups in Canada are Asians, who are the best educated, cohesive, and most successful ethnic group there as they are here. President Obama, on the other hand, has just created a back-door amnesty for illegal Hispanic immigrants. Why? His moral and ethical imperative is his reelection. Hispanic votes trump law and the prosperity of the law-abiding citizenry. The one thing he must avoid at all costs is running on his record. But there are votes for sale, and he has proven to be as good a vote getter as he has proven by his record to be a poor leader. He is a good Chicago Daley style machine politico. That is President Obama's overriding priority. And the nation suffers the consequences.
Tom Maher | 8/23/2011 - 12:36am

Ed Gleason (# 8)

GM is was called "Government Motors"  becasue the Obama stimulus made the U.S. government for awhile the majority controlling stockholder of the company.  The same with Chrysler   The second biggest block of shareholders were the unions.  However even under government control both GM and Chrysler drastically cut divions and product line and laid off very high percentages of their workforces.  For either company to have a chance at survivng in the very competitve and mature automobile market drastic cutbacks i were necessary.  So this allowed many jobs to be saved while many jobs were lost. 

Otherwise all these companies you list are also financial institutions and therefore recived TARP money (bailout money) or loans from the Federal Reserve to ensure their fiancial units' remained solvent after the 2008 financial meltdown.  But this is not the Obama stimulus.

Other highly subsisdized "green" companies were technically private but were never commercially viable and closed down when their subsidies stopped.  This was really a government created enterprise which failed.  We had a green company in Danvers Massachusetts which was featured as the big government investment in the "new green economy". The state also invested tens of millions in it.  It closed all operations in Masschusetts last week and moved to China. So the few job created by heavy subsidy were all lost. It was a very bad investment.  So we had big government investments with actual net job losses in less than two years.  So you could say the governemnt was trying to create private jobs by direct government investment but failed.  Private Investments should be left to private investment bankers (Wall Street). They are much better at spotting  viable companies like Apple and Google which produce products and services and jobs by the ton.  
 
Hey why is it that all the jobs are still moving to China even after very lavish subsidy from the federal government?  Is there something about the U.S. business climate I wonder? 

Tom Maher | 8/23/2011 - 12:31am

Ed Gleason (# 8)

GM is was called "Government Motors"  becasue the Obama stimulus made the U.S. government for awhile the majority controlling stockholder of the company.  The same with Chrysler   The second biggest block of shareholders were the unions.  However even under government control both GM and Chrysler drastically cut divions and product line and laid off very high percentages of their workforces.  For either company to have a chance at survivng in the very competitve and mature automobile market drastic cutbacks i were necessary.  So this allowed many jobs to be saved while many jobs were lost. 

Otherwise all these companies you list are also financial institutions and therefore recived TARP money (bailout money) or loans from the Federal Reserve to ensure their fiancial units' remained solvent after the 2008 financial meltdown.  But this is not the Obama stimulus.

Other highly subsisdized "green" companies were technically private but were never commercially viable and closed down when their subsidies stopped.  This was really a government created enterprise which failed.  We had a green company in Danvers Massachusetts which was featured as the big government investment in the "new green economy". The state also invested tens of millions in it.  It closed all operations in Masschusetts last week and moved to China. So the few job created by heavy subsidy were all lost. It was a very bad investment.  So we had big government investments with actual net job losses in less than two years.  So you could say the governemnt was trying to create private jobs by direct government investment but failed.  Private Investments should be left to investment bankers.
 
Hey why is it that all the jobs are still moving to China even after very lavish subsidy from the federal government?  Is there something about the U.S. business climate I wonder? 

ed gleason | 8/22/2011 - 11:35pm
 But the federal government has not bothered to help private businesses in any way."
Tom M  ... say hello to GM, Chrysler, Goldman, Bof A both Morgans, Citi,  and on and on.
yet the  GOP refuses to continue the SS tax holiday 2%.. because this will give the undeserving middle class more spending money.   
Jim Lein | 8/22/2011 - 10:42pm
And, oh yes, increasing taxes on those least economically vulnerable.  If we don't do this at least to some degree, we will have more cuts in jobs, retirement plans, unemployment compensation, more lost homes, and so on - less spending by the more vulnerable, and things will get ever worse.  But no.  We must honor the Pledge of Allegiance to Uncle Grover (Norquist).  No tax increases for the wealthiest, preferably no taxes at all for the wealthiest.  The point of a better distribution of wealth is that the unwealthy will spend it - daily - and start the economy moving again. 
Jim Lein | 8/22/2011 - 10:30pm
The wealthy are not creating jobs in large part because of insufficient demand for goods.  Why should they produce more if people aren't buying what they now produce?
Eighty percent of the economy is driven by demand, by spending. When the top one percent has 40 percent of the wealth, the other 99 percent can't be effective spenders.  Regulations aren't holding the wealthy back. Their wealth is holding them back; their wealth is pooled and is not circulating, is not buying the goods that they could produce if there was demand for them.  

Our economy does best when tax revenues are 21-22 percent of the national budget.  Now tax revenues are under 15 percent.  No wonder things are stalled.  No wonder a stimulus was needed.  Better, though, and more predictable and stabilizing, increasing tax revenues by about one-third.       
Tom Maher | 8/22/2011 - 10:12pm
Individual businesses are not responsible for nationwide economic conditions and are not able on their own or collectively to change macro economic conditions.  No business can affrod to hire people when there  is not enough demand in the foreseeable future.  Businesses can not create confidence in the economy and their own future prospects as seen by creditors.

Only the Federal Reserve or the federal government are big enough to change macro economic conditions where businesses can begin to expand and hire. But the federal government has not bothered to help private businesses in any way.  Businesses are actually frequently attacked by the President himself whose  clear preference is to rasie taxes, increase all types of regulatory costs and increase employment in the public sector at the local, state and federal level. This neglect of the private sector in favor of the the public sector has causes few private sector jobs to be created and many to be eliminated.   The Obama administartion anti-businesses economic policy have failed to enable private expansion and job creation.
Tomas Faranda | 8/22/2011 - 9:42pm
As a 20 year plus subscriber, I am still waiting to see an article or opinion piece that reflects a deeper understanding of economics and business then your continuous idea that ever higher taxes on the wealthy is required for the commonweal.

It would have been a good start if you'd properly spelled Mr. Buffett's name (and his personal life and views on population control and abortion don't happen to fit my own definition of "a sense of justice and the public good").

But you didn't and your editorial went downhill from there. Do you realize that Buffett's NYT op ed last week, suggesting the 'mega rich" pay a percentage amount of taxes equal to their 1993 percent, will only raise an additional $9 billion? And that this year's budget deficit is $1.6 trillion?

How do you know that "What is lacking in many quarters of corporate America today is goodwill". That's an awfully broad and damning statement. How about lack of goodwill among politicians? Or among entrenched, tunnel-vision Jesuits?

I could go on and on, but what's the use. 

It's easy and sounds noble to use the term "common good", but just what is your definition of the "common good"?  
ed gleason | 8/22/2011 - 6:51pm
Jim Collins is right about the 2 trillion hoarded overseas waiting on the GOP promise of no tax. They would use it if brought back tax free,to buy cheap companies, pay dividends and bonuses.  and do more lay-offs on the company they buy . I say let it back with a tax break .not zero,  if it would be used for job growth. Jim, I'm all for class war as long it is non violent, .but when  used as a FOX News talking point like USA  is Czarist Russia, that's  a laugh.
Vince Killoran | 8/22/2011 - 2:34pm
AMERICA's editors make some sensible suggestions. In fact, the healthiest economies around (e.g., Canada, Australia, Germany) have much more regulation, more government investment, & more just social safety nets.
James Collins | 8/22/2011 - 2:28pm
It is time, time for government to get out of the way and let the risk takers and entrepreneurs do what they do best, create jobs and wealth. The government is spitting out new regulations at an unprecedented rate. All of these will cost many, many dollars and disincentivise the people who can make jobs happen. The Obama administration is busy truning the 2,500 word healthcare bill into over 200,000 pages o new regulations and untold new costs and paterwork and infinitum. We are spending an inordinate amount of our GDP on regulations. The EPA has usurped Congress and is out of control.

Just a few suggestions. Turn the oil companies  loose to drill in this country and off shore and bring more Canadian oil to this country. This will not only create many jobs it will also stop so much of our money from going overseas for oil. U. S. companies have one to two trillion dollars in profits overseas which are never coming back here because of the 35% tax rate. Cut that to one or two percent and that money will be invested here instead of overseas. Now that will be a real stimulus instead of the pork barrel stimulus of Obama's. Stop the class warfare rhetoric of the administration and the threatening and demagoguing of those who drive the growth businesses. Quit putting up more and more obstacles to growth and investment.

I can't believe you spoke up for that infrastructure investment bank. That will be one huge political football and decisions and money allocations will be made for every reason under the sun except the right ones. We do not need more politics.

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