If we want businesses to spend, gov't needs to do MORE, not less, to promote economic recovery (Paul Krugman)

Aw, corporate fat cats are feeling unloved.

"[W]hy are we hearing so much about the alleged harm being inflicted by an antibusiness climate? For the most part it’s the same old, same old: lobbyists trying to bully Washington into cutting taxes and dismantling regulations, while extracting bigger fees from their clients along the way."

-- Paul Krugman, in his NYT column today,

"Pity the Poor C.E.O.'s"

by Ken

The onslaught of aw-those-poor-rich-people propaganda is becoming smothering, and I've been noodling with a post on the subject. But thinking isn't easy in this heat, so I'm going to confine myself to this lovely instance Paul Krugman cites in his column today.

A key component of the psychotically grotesque legend being circulated by the usual Right-Wing Noise Machine and Infotainment News conglomeration is that those radical socialists of the Obama administration are shattering the economy with their mad-dog assault on big business. Of course here's Master Rahm thinking how could any government be more business-friendly than this one, and this is the thanks he gets.

Fortunately, our Professor Krugman got on the case of the supposed "antibusiness climate" and its purported negative effect on the economy. First he tries to cut through some of the denser myths.

Job creation has been disappointing, but first-quarter corporate profits were up 44 percent from a year earlier. Consumers are nervous, but the Dow, which was below 8,000 on the day President Obama was inaugurated, is now over 10,000. In a rational universe, American business would be very happy with Mr. Obama.

And he points out that the alleged effects of the administration's anti-business attitude are in fact the absolutely expectable products of a depressed economy. "Business spending is indeed low, but no lower than one would have expected given widespread overcapacity and weak consumer spending. Business leaders are feeling unloved, but giving them a group hug won’t cure what ails the economy." And then he makes a crucial distinction.

So where’s the evidence that an antibusiness climate is depressing spending? The answer, supposedly, is that this is what you hear when you talk to entrepreneurs. But don’t believe it. Yes, when you talk to business people they complain about taxes, regulations and the deficit; they always do. But the Obama’s-socialist-policies-are-wrecking-the-economy chorus isn’t coming from businesses; it’s coming from business lobbyists, which isn’t at all the same thing. Read the report on the U.S. Chamber of Commerce in the latest Washington Monthly [note that this is the very report we were talking about the other night]: peddling scare stories about what Democrats are up to is a large part of what organizations like the chamber do for a living.

The lesson?

[B]usiness leaders are, as I said, feeling unloved: the financial crisis, health insurance scandals, and the catastrophe in the Gulf of Mexico have taken a toll on their reputation. Somehow, however, rather than blaming their peers for bad behavior, C.E.O.’s blame Mr. Obama for “demonizing” business — by which they apparently mean speaking frankly about the culpability of the guilty parties.

Well, C.E.O.’s are people, too — but soothing their hurt feelings isn’t a priority right now, and it has nothing at all to do with promoting economic recovery. If we want stronger business spending, we need to give businesses a reason to spend. And to do that, the government needs to start doing more, not less, to promote overall economic recovery.

Which is, of course, the very last thing the people who are propagating the myth of big business being beaten up on want to hear.

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