Tuesday, February 7, 2012

Obama, Hostile to Business?

President Obama
(photo by Jurvetson/flickr)
Last week I was watching the Kudlow Report, a daily TV program on politics, business and investing on CNBC, hosted by Larry Kudlow, a former economist in the Reagan administration. For those not familiar with CNBC, it’s generally skewed towards Wall Street and as far as mr. Kudlow goes, he seems a nice guy who speaks eloquently and passionately about the importance of free markets, while conveniently favoring Republican viewpoints. Kudlow's guest was Bob Lutz, a former senior executive at several car companies, including President of Chrysler in the eighties and nineties and Vice Chairman of General Motors from 2001 to 2010. In other words an accomplished businessman with wide experience in one of the key industries in the U.S. Kudlow asked him  whether Mitt Romney, as U.S. President, would be good for business. Lutz’s response was:
“ ..I am with those who would like Ronald Reagan back or make Romney more Reaganesque. I don’t think that’s going to happen so we have to compare him to what we’ve got today.” He then added that Romney would be a better choice, as the Obama administration is “hostile to business.”
Kudlow asked further about Romney’s business policies. Lutz responded that he always would have animosity to Romney because of his Op-Ed article in the New York Times in November 2008 Let Detroit Go Bankrupt where Romney criticized the potential bailout of the U.S. car companies after the financial crisis of 2008. Lutz says:” that (view of Romney ed.) was so imprudent it would have wreaked economic devastation on the country.” (sic!) As we and Bob Lutz now know, the bailout of the car companies did take place, and it may be debatable how financially successfully this bailout was for the U.S. tax payer, economic devastation was averted, GM and Chrysler are still in business and apparently doing quite well. Case in point was this weekend's Super Bowl ad delivered by Clint Eastwood which highlighted the recovery of Chrysler. Although this ad too has caused some controversy as representing partisan politics.

Back to Obama, conservative pundit turned Obama supporter Andrew Sullivan highlighted Obama's accomplishments in a recent Newsweek article : in addition to the bailout of the auto industry, the continuation of a bank bailout begun by President George W. Bush. This administration also passed a stimulus package resulting in adding 2.4 million private sector jobs since 2010 while overall government employment has declined 2.6 percent since 2009, and taxes were lowered on most Americans. According to Sullivan, Obama has been far more fiscally conservative than his Republican predecessor, and hardly can be seen as anti-business.
With these facts, Lutz still claims that Obama is hostile to business while also believing his own inconsistency that Romney, although devastatingly wrong on the Detroit bailout, would be better for business. This kind of reasoning is endemic in the current political environment, where different philosophies and political approaches are not truly debated, and facts not even appreciated: “my party's facts” are truer than “your party's facts”. It's disappointing that even an accomplished business executive as Lutz falls in this trap, but where is our TV host and professional economist Kudlow in this exchange? He remained silent: no questioning of Lutz’ inconsistency and no facts or figures to clarify what Obama's accomplishments are. I guess, next time if I want to understand what is really going on in business, I might as well view Super Bowl ads.

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