A JFK moment for Obama at the US Chamber of Commerce
Obama implored businesses at the US Chamber of Commerce to ask what they can do for their country. But many businesses are more likely to make decisions based on investment conditions than on patriotism.
Speaking before the US Chamber of Commerce, Mr. Obama acknowledged that the government has a “responsibility” to create favorable conditions for US business. But he said that business also has a “responsibility” to invest in new jobs, and well-paying ones – even in the face of low market demand.
“As we work with you to make America a better place to do business, I’m hoping that all of you are thinking what you can do for America. Ask yourselves what you can do to hire more American workers, what you can do to support the American economy and invest in this nation,” Obama said.
The obligation of businesses to workers and the community – often called a “social compact” – has been a hot topic in this era of stagnant wage growth and a widening wealth gap. Now, during a recovery of slow job growth, the president – and many others – wish businesses would stop sitting on nearly $2 trillion on their balance books and invest that cash in new jobs.
But will an invocation to conscience and patriotism do the trick?
The question brings to mind the case of Henry Ford and his famous 1914 pay raise, seen by many as a socially conscious decision. He increased the daily wage to $5 – more than twice what he offered to most of his workers. “One’s own employees ought to be one’s own best customers,” Ford said. “Paying high wages is behind the prosperity of this country.”
But that quote came years after he made the decision, which was originally based on hard-nosed economics. Mr. Ford increased wages to reduce high turnover and improve efficiency on the assembly line.
That says something about what might motivate US businesses to start investing again. The appeal to patriotism may play a role, and certainly small businesses often act as community boosters. But in an age of global competitiveness, it is investment conditions in the United States that will mostly decide where and when to unload that $2 trillion.
In the past two years, companies have complained about a business tin ear at the White House (though they were happy to back government bailouts and stimulus money). Since Democrats lost the House to Republicans in the November elections, though, the White House has been forced to tune in to business complaints.
The administration has come a considerable distance in three months, agreeing with Republicans to continue tax cuts for all, bringing people with business savvy into the president’s inner circle, revising a free-trade deal with South Korea, and now talking about lowering the corporate tax rate.
These days, a big business complaint is too much regulation – of health care, the environment, and financial services. The White House is reviewing onerous rules, but is unlikely to bend as much as business would like.
Obama spoke before a rather subdued crowd that broke into applause only two times during the substantive part of his speech. One was to endorse a president who said he would “go anywhere anytime” to boost exports and open markets for American businesses, workers, and products.
The other was in agreement that “now is the time to invest in America.” Whether that’s because conditions are improving, or whether it was a response to his patriotic appeal was hard to say.
It may have been because of the most basic business motivator of all – rising consumer confidence and economic forecasts that demand will increase.