Бизнес правительства держаться подальше от бизнеса до тех пор пока бизнес эссе

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THE critiques vary. Some British commentators allege that companies have taken over the role of government, creating a “Captive State” (in the title of a book by George Monbiot, a Guardian journalist) or have made a “Silent Takeover” of sovereignty (a book by Noreena Hertz, a Cambridge academic). Others simply think the free-market era was a “False Dawn” and is over (John Gray, of the London School of Economics). Americans have tended to focus on the role of lobbyists and political corruption (“Pigs at the Trough”, by Arianna Huffington, cited earlier; “Government’s End”, by Jonathan Rauch, a columnist for the National Journal and formerly a writer for The Economist), or on the relationship between “Wealth and Democracy” (Kevin Phillips, a distinguished political writer). Or on the domination of the Bush administration by “big” or just “Texas” oil interests (too many critics to mention, of all nationalities).

Is there any truth to all this? One thing these critiques are not compatible with is the common notion that the nation state is dead, its powers handed over to markets by “fundamentalists” (ie, the deregulation and privatisation led by Ronald Reagan in America and Margaret Thatcher in Britain in the 1980s), or usurped by globalisation or supranational institutions (the European Union, the WTO, etc). For if the state had few powers left, it would not be worth capturing, bribing or otherwise suborning. But it has, and it is. Corruption, by firms and individuals seeking to exploit governments’ vast powers, is indeed a big problem for democracies all over the world. Yet it is not the whole problem. Governments remain far too keen to do businessmen’s bidding even when no money is offered.

Why, for example, have share options not been treated as a cost in corporate accounts, or taxed equally with other personal income? A partial answer is that doing so is not easy—the right price is difficult to determine, the cost is mainly one of dilution of existing shareholders’ equity stakes rather than a direct cost to the firm, and the income is hard to evaluate until the options are exercised. If the will had been there, however, those hurdles could have been overcome. So the most tempting explanation for why nothing has been done, given America’s political ways, is corporate lobbying larded with campaign donations. Corruption, in other words.

Yet this cannot be the whole answer, for options have been given special treatment elsewhere, too: Britain’s Labour government maintained tax concessions for them without donations in return. Why? Because businesses told the government this would help high-tech companies to prosper. “Picking winners”, the old delusion of British industrial policy, may have been obsolete, but if managers picked the winners for you, that made it all right.

Since Gordon Brown, Labour’s chancellor of the exchequer, took up his post in 1997, every one of his annual budgets has included an array of tax breaks and other incentives for particular industries. Businessmen have been given prominent positions advising government, or even in it: Lord Simon, the former head of the BP oil giant, for example, or Lord Sainsbury, formerly of the eponymous retailer and now science minister, or Lord Haskins, who ran a task force dedicated to cutting red tape (his place has now been taken by another businessman, David Arculus). Labour should no longer be hostile to business, runs the party line; it should be friendly with it.

In France, close ties between senior businessmen and government have been endemic for decades, in part for corrupt reasons (as shown by the trial now under way of former executives of Elf-Aquitaine, an oil firm used for nefarious purposes by people close to the late François Mitterrand), in part because the line between civil servants, politicians and top managers is blurred—the same people move easily between the three roles.

In Germany, Gerhard Schröder has been cast in the part of rescuer of business, propping up the Holzmann construction firm, for example. Like his predecessors, he has maintained big subsidies to Germany’s inefficient and heavily polluting brown-coal industry. He also employed a businessman to recommend changes to the country’s labour laws: Peter Hartz, personnel director of Volkswagen. Helmut Kohl, Mr Schröder’s predecessor as chancellor, made frequent visits to China, mainly with German businessmen to help secure them contracts. Japan has long had what is known as an “iron triangle” connecting big business, the bureaucracy and the ruling Liberal Democratic Party; and, as in the American Congress, Japanese parliamentarians develop expertise in particular areas of spending or regulation in order to attract corporate donations.

No one could easily overlook the representation of business in George Bush’s White House, from John Snow, the treasury secretary, whose huge pay packets were mentioned earlier, to Donald Rumsfeld, the defence secretary, and Dick Cheney, the vice-president. The heads of the air force and navy were both recruited from defence firms despite—because of?—their huge budgets for procurement from those very firms. Of the 200 or so known members of Mr Bush’s leading fund-raising group, known as “the pioneers”, more than 40 have been given jobs in government. When Mr Cheney ran a task force to recommend changes in American energy policy, he naturally consulted a lot of big energy firms, most embarrassingly Enron. No doubt it was entirely coincidental that his report recommended subsidies and incentives to increase domestic output of energy—by American energy firms.

American government spends more than $90 billion of the federal budget each year on hand-outs to business

What can be and is easily overlooked is that the American government, despite its supposed reckless market-fundamentalism, actually spends more than $90 billion of the federal budget each year on hand-outs to business: farm subsidies (which mainly go to agri-businesses, not farmers), research grants, export-credit guarantees, incentives of many kinds. Moreover, that figure, calculated by the Cato Institute, a Washington think-tank, is certain to be an under-estimate, as the true extent of what such critics call “corporate welfare” is not disclosed. Other rich countries do the same, especially for agri-businesses, but not only those. In 2000, export-credit guarantees outstanding from the 30 OECD members totalled $330 billion.

The interventionist itch

What is wrong with all this? Surely, now that it is agreed that socialism doesn’t work and that direct government ownership is usually disastrous, politicians should work closely with businessmen? After all, they are the ones who know how to make things happen and to create jobs.

They are. But that is what, as far as possible, they should be left to do, in competition with one another and at arm’s length from government. The job of a chief executive is to make profits for his company and, no doubt, feather his own nest; it is not to make public policy—especially in his own industry, for that is where his selfish interests will be greatest. Inviting him to advise government, or listening to his views about promoting share options to help his industry, is sure to divert public policy to private ends. This is not the fault of executives or their companies; it is the fault of government.

Ministers and business bosses do, of course, share some goals: they both want faster economic growth, and they often both want jobs to be created or, in the common political parlance, “protected”. So the urge to co-operate is powerful, by ministers acting as salesmen abroad or slanting regulations, tax breaks and subsidies to promote desired outcomes at home. It is not always corrupt or self-serving or distorting, and is often done with honourable motives. But it still ought to be avoided, for five main reasons.

The urge for business bosses and ministers to co-operate is powerful but ought to be avoided

The first is that, far more often than not, the outcome is bent to selfish ends. Adam Smith wrote in the 18th century that trade regulations “may, I think, be demonstrated to be in every case a common piece of dupery, by which the interest of the State and the nation is constantly sacrificed to some particular class of traders.” The same applies to many regulatory and fiscal measures. Once established, such measures become perilously hard to change, for the beneficiaries fight to keep them.

The second is also shared with trade protection. It is that even if such intervention might be justified on some economic ground or other, governments do not have the knowledge or competence to be able to direct it properly, in terms of quantity, character and timing. That is why governments often end up seeking businesses’ advice, which returns us to the previous problem.

Third, interventions are never neutral. Money or privileges are given to one group at the expense, directly or indirectly, of others or of taxpayers in general. Even within an industry, the interests of the firms consulted may differ from those of other firms. Efforts to even things up just add to the costs. And domestic interventions distort international competition just as much as do tariffs. One of the greatest achievements of the European Union has been to agree to limit and in many cases entirely forbid state subsidies in member countries, for exactly that reason. But the task is incomplete.

Fourth, all fiscal and regulatory interventions are an invitation not only for lobbying but also for outright corruption. That, it must be admitted, is why some politicians like them: they provide the leverage with which to extract political donations.

Fifth, and perhaps most fundamental, is the related fact that close ties between business and government are detrimental to democracy, and to public trust in democratic government. Companies pose a problem for democracy by their very existence, for through their command over resources, persuasive power and many legal privileges (such as the limited liability that is the basis of joint-stock companies), they unavoidably carry much more political weight than do individual citizens. Similarly, political equality is challenged by extremes of wealth, for with more money may come more political power. Both inequalities have to be tolerated because they bring social advantages too, but there are limits. In democracies, governments have to be the arbitrators, the counterweights to powerful private groups. But if they allow, or even encourage, companies and wealthy individuals to manipulate them, they risk stretching public faith in democracy to breaking point.

At least Sisyphus tried

Needless to say, governments will always deal with businesses. They will always want to, to some extent, and their taxes, spending and regulations will mean that they always have to. Individuals and companies will also always offer financial and other support to political parties, and will seek, on their own or in groups, to lobby governments in support of their interests. So, whereas entirely free trade may in principle be attainable (though it remains a distant prospect) because the bargaining in governments’ trade deals could go all the way to zero, the complete detachment of governments from business, lobbies and donors is not.

Pushing back the extent of influence is destined to be a never-ending effort, particularly when the influence-taking gets out of hand, as it did in most rich countries (especially America) during the late 1990s. Competition and choice are the market processes that bring long-term, broadly based benefits to the public, and political influence or favouritism constantly threaten to disable those processes.

There is no single, big solution to campaign-finance abuse, interest-group influence or corporate privileges. As Mr Rauch wrote in his 1999 book “Government’s End”, what is needed is a panoply of incremental changes: pressure to scrap corporate welfare; reforms to make tax systems neutral rather than preferential; more use of competitive contracts for public programmes to discourage their capture by particular interest groups; a stronger antitrust policy generally (this has been one of the bright spots in public policy in America, Britain and the EU as a whole in recent years); a more robust attitude by politicians to corporate pressure; more legal challenges to abuses of procedure; laws enforcing the disclosure of political donations and banning devious funding routes; laws seeking to reduce the need for campaign money by handing out free advertising time on television; and a myriad other measures.

Without that Sisyphean effort, governments will just be crushed. And so, eventually, will be the freedoms both of capitalism and democracy.