Friday, May 14, 2010

Business Deserves Cheer, not Bashing

(From the May 13, 2010 Grand Haven Tribune)

It seems that bashing business has been in vogue in the past few months. At the national level, people have been angry about tax dollars bailing out large auto companies and financial institutions. Outrage has been expressed about the huge salaries commanded by top executives, well out of proportion to their average worker. Goldman Sachs executives received a congressional tongue lashing for suspected fraud in the way they handled investments. BP is taking a lot of heat for the oil spill in the Gulf of Mexico.

While these examples might seem to justify anger, they are only a few specific examples. The general anti-business rhetoric is unfair and alarming. President Obama said in a recent graduation speech that he believes at some point you have made enough money. He seems to articulate an attitude that many have about making money. There is an assumption that successful business people gained their wealth dishonestly. Again, that may be true of some people, but the majority of wealthy business people I know worked very hard and earned whatever they have. It’s not up to other people, not even the president, to say when they’ve worked too hard.

I’ve noticed this business bashing locally as well. An organization I consult with was criticized recently by being called “pro-business.” I’m not sure why that’s a bad thing. Trying to help nurture business and economic growth helps entire communities, not just businesses. Also, never mind that the same organization has done lots of work in the area of environmental sustainability.

On another occasion recently I was in a meeting with other professors. One mentioned that a chemistry professor had left to take a job at a chemical company. An assistant dean said the university just couldn’t compete with the salary. Another professor said the professor could be persuaded to stay if she wanted to be able to look at herself in the mirror in the morning. Really? This attitude that going to work for a business is somehow evil seemed incredibly narrow to me. I wanted to pointed out to the colleague who said it that he had probably already benefited by that chemical company’s products three times that very day.

In fact, ever since Adam Smith wrote “The Wealth of Nations” in 1776, humankind has increasingly benefited by the “division of labor.” Businesses provide the products and services we need. That’s just one benefit of business.

They also provide employment. At a time when most of us have neighbors and friends who have been looking for work for months or years, we should be cheering on businesses so they can hire more employees. Data from the Michigan Department of Labor and Economic Growth shows that in 2009 businesses of various types accounted for more than 77,000 of the 101,200 jobs in Ottawa County. Government, education and health make up the remaining 23, 000 jobs.

Keep in mind that it is the businesses that pay for the government and education jobs through taxation. Employees pay income taxes. But additionally, businesses pay tax on business income. And they pay a lot. Michael Boskin, an economics professor at Stanford and fellow at the Hoover Institution, reported in the Wall Street Journal recently that the U.S. has a 39% corporate income tax rate, including state taxes—the second highest rate of any advanced economy. Add to that the real estate property tax, and personal property tax on manufacturing machines, computers and other items used in the business. Some communities on the east side of the state are going into debt just because an auto plant is no longer using a single piece of heavy equipment.

That tax burden provides considerably more to the coffers of the five units of government in north Ottawa County than households. But even with that, according to Joy Gaasch, president of the Chamber of Commerce of Grand Haven, Spring Lake, Ferrysburg, businesses give even more to the community through philanthropy. Everything from the annual United Way campaign to projects like the Community Center and North Ottawa Dunes benefits mightily from local businesses.

So I don’t understand all the business bashing. Especially when our national government keeps growing, and public educators at recent local meetings complained of declining funding, I would think people would be thanking business. It doesn’t make sense to complain about debt in government and public education and then bash the very source of revenue that sustains them.

If people think being pro-business is bad, I wonder what anti-business would lead to. Central planning in Eastern Europe was a colossal failure. The current example in Greece shows what happens when the number of public employees overwhelms the private sector. As Margaret Thatcher, former prime minister of England, said: “the main problem with socialism is that sooner or later you run out of other people’s money.”

While there will always be a few bad apples, by and large the “other people” who start and maintain businesses provide products, services, jobs, and public funding. We should stop bashing them, and cheer them on. We’ll all share in their success.