I was speaking with a friend who’s an executive in large US corporation, and our conversation made the cause of the Great Recession more clear.
Business people are holding almost $2 trillion in cash that should be used to create new products, jobs, and sustainable economic growth. My friend said they dislike the uncertainty and change caused by Obama’s restructuring of health care and financial markets. They are angry at seeing business criticized, and they are afraid “the U.S. is becoming like Europe.” The general impression is that they want to return to business as usual.
This seems unlikely because Obama represents a wave of change that requires a different form of business, especially for large corporations. It was primary the single-minded focus on money and self-interest that almost brought down Wall Street and the rest of the world. In health care, this country allowed free enterprise medicine to create such a mess that our system is twice as expensive as other nations — and less effective — while leaving the poor uninsured. Free enterprise has done little to address the climate change, energy, and environment crisis, and the U.S. is losing the global race to green technologies.
These failures means there is no turning back. The Reagan Revolution was important in encouraging the creative free enterprise that drove the boom of 1990-2000. But that era is passing as we increasingly see the limits of free markets and a obsolete form of business based on profit alone.
Other nations are facing the same challenges to manage their markets effectively – a stunning example being the huge success of “state capitalism” in China. The world badly needs to transform business into a more powerful system that serves society as well as making money. It’s hard to know what the U.S. will do because we are so Mercurial. Other nations may take the lead.
There always exists the possibility that Americans could rise to this challenge by drawing on their ideals of democracy, human rights, community, problem-solving, etc. to create a “democratic corporation/collaborative enterprise/corporate community” and other concepts being explored. [1] We could give the world an update on the principles of democracy we invented more than 200 years ago.
Without transformational change of this type, business people are likely to remain stuck in an outmoded institution that continues to struggle with business-society conflicts that sap the strength of the nation.
[1] Halal, “Business Collaboration Could Transform the Economy,” Christian Science Monitor (August 6, 2009)