The return of antitycoon rhetoric

Not for decades have the halls of Washington resounded with such bitter rhetoric about the nation's tycoons.

As incidents of corporate malfeasance continue to appear – and an election approaches – politicians of both parties are teeing off on executives, a class many lionized only months ago. And make no mistake, this time it's personal. In general, the target of Washington's harsh words is very much business people, not faceless corporations.

Consider what President Bush said Tuesday, as he signed the corporate-reform bill into law: "No more easy money for corporate criminals. Just hard time."

This focus is partly a means of political communication. Anti-fat-cat speeches may play better with voters than lawmakers' explanations of why they're in favor of complicated accounting reform.

But Washington's current tone may also mark a return to a traditional skepticism. For over a century, the nation's political leaders have tended to be alternately admiring and wary of their corporate counterparts – as has American culture as a whole.

"What's unusual is that for such a long time, business people have been held up on a pedestal," says Mark Blyth, a political scientist at Baltimore's Johns Hopkins University and author of a book on economic ideas and political change in the 20th century.

To see how much things have changed in Washington in only a few months, consider the enthusiasm with which President Bush on Tuesday signed the Accounting Industry Reform Act into law.

The legislation is intended to toughen oversight of the troubled accounting industry via creation of an independent review board, among other things.

"Today, I sign the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt," said Bush with a flourish as he wielded his pen.

The White House ceremony was all smiles. There was no mention of the somewhat uncomfortable fact that Bush had opposed many of the provisions in the bill as unnecessary when they were first introduced in the Senate.

The antitycoon rhetoric has been flowing even more freely in other Washington forums this week. In the Senate, committee hearings have been probing whether troubles in the telecommunications industry will affect consumer phone service, and whether Merrill Lynch fired an analyst critical of Enron in order to win investment-banking work from that firm. Tuesday, the Senate Commerce Committee was treated to the now-familiar sight of executives – two Merrill Lynch officials, in this case – invoking their Fifth Amendment rights against self-incrimination.

In the House, Republican leaders on Monday went so far as to announce that they will introduce legislation aimed at seizing the mansions and yachts of corporate executives convicted of misleading investors. The bill is not written yet. It has only a name – the Investor Relief Act. But GOP lawmakers decided to promote it anyway, prior to the beginning of their August recess.

"We need to do more to strip corrupt corporate kingpins of their ill-gotten gains," said House majority whip Tom DeLay (R) of Texas. "We're taking the mansion ... and we're coming after the yacht."

Harsh words – especially for a Republican. It's no news flash that the GOP has long been the US political party more friendly to business interests.

But even Republicans have operated in a national political context in which attitudes toward business leaders cycle from admiring to contemptuous, note economic historians.

It was Republican Theodore Roosevelt, after all, who coined the phrase "malefactors of great wealth," as he introduced the beginnings of modern business regulation. More recently, it was Richard Nixon who imposed wage and price controls on the US economy – a move that in its own way was as radical a departure from Republican orthodoxy as was Mr. Nixon's opening to communist China.

From the Gilded Age until the early 1980s, with a few periods of exception, in Washington "there was a tradition of suspicion towards big business," says Bruce Schulman, a professor of American studies at Boston University. "There was a sense that government's job was to restrain the excesses of business."

This period generally ended with the movement toward deregulation of large industries such as the airlines and telecommunications, says Mr. Schulman. While it was the Reagan administration that pushed through the most extensive deregulatory efforts, the move in that direction actually began in the late Carter years.

Is the nation's capital moving back into an era of deep suspicion of business? "We're starting to see the reemergence of that," says Schulman. "But I'm not sure how deep that goes, partly because of structural changes in how American life operates."