No More White House Business Councils Is the Lone Charlottesville Positive
So far, one of the few good things to come out of the national agony that began with the white supremacist march in Charlottesville this past weekend is the fact that the President’s Councils on manufacturing and strategy are no more.Good riddance. They were window dressing at best, an example of dirigiste economic planning and favor-seeking at worst.
The disbanding of the two councils is seen as a sign of an administration in disarray, and that may well be the case. But the existence of councils aimed at bringing CEOs together with the White House to plot ‘economic strategy’ was a sign of intellectual disarray. Giving some insiders a chance to get together in the White House does not give government a sense of what entrepreneurs are thinking or the real needs of business, much les the economy. It merely gives a few companies and their honchos an opportunity to get across their own needs and desires – which may or may not be what is good for the marketplace as a whole.
The President’s councils on strategy and on manufacturing were never symbols of a free marketplace. Rather, they were implicit symbols of a belief in corporatism, the notion that decisions should be made by a consensus among powerful corporate groups on the basis of their common interest. There is one big problem with that notion: Except at the broadest level of needing political stability and freedom, different companies don’t have many common interests. They are competitors, not colleagues. In fact, a U.S.-based company like Apple has more shared interests with their Taiwanese supplier Foxxconn than they ever will with their American competitors. Carrier should not be focused on meeting the political needs of the White House; it should be focused on meeting the economic needs of their shareholders. The fact that Carrier, a United Technologies subsidiary, quit one of the councils just before it was disbanded is a strong sign of market independence from a company that is heavily dependent on government contracts, one that bent to the President just a few months ago.
The last thing we need is a return of ‘national champions’ that seek to close the door to competitors, foreign and domestic, and keep consumers on the hook through planned obsolescence. And the second-last thing we need is to give insiders a chance to barricade the door against upstarts. Government councils sometimes claim that their members leave their corporation’s interests at the door; in fact, no CEO can ever put aside their shareholders’ interests. It is a 24/7 job – one they take with them to the White House conference room.
The real significance of the councils can be seen in the fact that some CEOs tried to cling to their membership, claiming it gave them a platform to work for better government programs or principles such as inclusiveness. The fact that neither of these CEO councils even met in months makes it clear that such claims deserve at least a couple of ‘pants on fires’ from fact-checkers. The truth is, membership on this kind of Presidential business advisory body has one real value, and only one: An opportunity for CEOs to demonstrate to shareholders that they know how to play the game of crony capitalism. In other words, they are tools to distort the market and distract it from the goal of actual wealth creation – and formally recognize commerce as nothing more than a swamp of favor seeking, rather than a tool of wealth-building.
The fact that the strategy council voted to disband itself is a pretty strong judgment on the current President, given the lengths to which most CEOs will go to show off their political clout. But some CEOs on the manufacturing council tried to hang on by their thumbs to their place in the corridors of power. Let us dispense with the notion they were doing it to maintain a community-spirited voice in government. The truth is, if the CEO of Walmart or Dell wants access to the highest levels of government, they can get it, simply because of the size of their workforce and/or their impact on the overall economy, even aside from their campaign finance bundling. CEOs serving on these insider bodies aren’t trying to make sure they have a voice. They are trying to demonstrate that they have a louder voice than others. Does it make sense to give them a forum to do that – much less a forum to actually help shape economic policy? If Walmart has a say in government economic policy, why shouldn’t Target? If Dell has an inside line, why not HP? For that matter, why should big companies have a big say, when start-ups don’t? The biggest wealth creators of the future may right now be trying to launch their companies in their parents’ basement or garage. The fact that big players get to hob-knob with the President and his advisors may help a few lucky CEOs, but it actually undermines any competitor or potential competitor.
It’s fortunate that the President’s councils bodies were never more than Potemkin villages. Imagine if they were genuinely involved in shaping government policy. And it’s even more fortunate they have disbanded – rather than solidify the anti-market notion that government and business should shape common strategies and tactics.
