Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

What's Good for Business is Good for the Economy?

Written by johnleemk on 3:57:48 pm Jul 1, 2007.
Categories: ,

One thing I find really annoying in politics is the presumption that if you want a strong economy, you have to support business.

For instance, I recently read in Fortune that there were fears Hillary Clinton (my preferred candidate for the US presidency) would not be able to manage the economy because as a Senator, she has voted with the Chamber of Commerce position about half of the time, and with the National Association of Manufacturers about 16% of the time.

Although Fortune was careful to only state that businesspeople had reason to be wary of Clinton, the obvious implication was that she would not be an ideal candidate on economic policy issues.

This is a ridiculous implication, considering that the economy is made up of both consumers and producers. Now, obviously they are not always at loggerheads, but as Milton Friedman pointed out:

With some notable exceptions, businessmen favor free enterprise in general but are opposed to it when it comes to themselves.
Free enterprise is good for the economy, but it is not necessarily good for businessmen. That is why those who are pro-capitalism should not necessarily be pro-business.

If anything, we should probably be glad that Clinton does not have such a stellar record from a businessperson's viewpoint. Quoth Friedman:
The broader and more influential organisations of businessmen have acted to undermine the basic foundation of the free market system they purport to represent and defend.
A 45% figure probably makes sense for the Chamber of Commerce; it indicates a candidate who is either really a waffler, a pragmatic candidate who can balance the sometimes conflicting interests of consumers and producers for the greater good of the economy.

The 16% figure for manufacturers? Well, considering that manufacturers only make up one segment of the economy — a dwindling one, I might add, since the service sector is growing in importance — it is not something that should be of too great concern.

Hillary Clinton of course has her flaws. I think her opposition to school vouchers, for example, is misplaced. That's the kind of economic policy people should be taking her to task for — not over silly things like not supporting business no matter what.

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