Every couple of weeks I resolve to remake myself as one of those pundits who writes about how one of the leading problems in the world is that people aren’t nice enough to incredibly rich businessmen. I could be the next Sebastian Mallaby! But then I read something one of my role models writes and, frankly, I get kind of mad.
So here’s John Gapper in the FT:
FT After enduring torments in George Orwell’s 1984, Winston Smith learnt to love Big Brother. After the midterm elections, which are also likely to be painful, Barack Obama should learn to love big business.
The US president, a former community organiser in Chicago whose formative professional experience was helping the dispossessed after steel companies and manufacturers left town, has never shown affection or sympathy for US multinationals. One of his favourite jabs at Republicans is that they seek tax breaks for corporations “to ship jobs overseas”.
And here’s reality:
Profits have surged 62 percent from the start of 2009 to mid-2010, according to the Commerce Department. That is faster than any other year and a half in the Fabulous ’50s, the Go-Go ’60s or the booms under Presidents Ronald Reagan and Bill Clinton.
Under another president, especially a Republican president, the data on corporate profits would be envied. George W. Bush, who dedicated a good deal of his presidency to tax cuts aimed at boosting business profits, probably would have loved such results. It took Bush nearly four years to post the gains that Obama has managed in less than half the time.
You would think that hard-nosed businessmen would be sufficiently practical to realize that they’re doing well under president Obama and perhaps just stay quiet and enjoy counting their money. But no! They want to whine loudly in public about the fact that the president is saying mean things about them. Is the Fortune 500 being run by seven year-olds?
In substantive news, the rising profits are good news and highlight the need for higher inflation expectations. Firms are earning cash, which means they have the capacity to expand operations, which will reduce unemployment and raise incomes. But with the current depressed state of medium-term expectations there’s little reason to do so. Recent talk of Quantitative Easing is, however, already shifting investor thinking in pro-growth directions. The Fed needs to move forward boldly and clearly and stop worrying about mini golf. Businessmen need to worry about running their businesses.