'Business and the GOP'
Business and the GOP: Still no resolution on the debt ceiling, and I think people are still too optimistic here. Republicans still aren’t willing to walk away from this without some kind of trophy, so they can claim victory; the whole point of Obama’s position is that you don’t get anything, not even something trivial, as a reward for threatening disaster.
Meanwhile, Republicans are getting a lot of pressure from business, which doesn’t like what’s happening. And some pundits are already speculating about the possibility either of a split within the GOP or a kind of coup in which the business-backed party elders take control back from the crazies.
So I’ve been thinking about this, and have managed to convince myself that it’s wishful thinking.
Now, it’s true that Republicans are bad for business... Ever since Republicans retook the House, federal spending adjusted for inflation and population has been dropping fast...
This is exactly the wrong thing to be doing in a still-depressed economy with interest rates at zero... But here’s the thing: while the modern GOP is bad for business, it’s arguably good for wealthy business leaders. After all, it keeps their taxes low, so that their take-home pay is probably higher than it would be under better economic management. ...
In a way, this is an inversion of the usual argument made by defenders of inequality. They’re always saying that workers should be happy to accept a declining share of national income, because the incentives associated with inequality make the economic pie bigger, and they end up better off in the end. What’s really going on with plutocrats right now, however, is that they’re basically willing to accept lousy economic policies from right-wing politicians as long as they get a bigger share of the shrinking pie.
This may sound very cynical — but then, if you aren’t cynical at this point, you aren’t paying attention. And I suspect that the GOP would have to get a lot crazier before big business bails.
This also speaks to the well known agency issue between the "wealthy business leaders" and the stockholders in the firms they are running.
Posted by Mark Thoma on Saturday, October 12, 2013 at 11:29 AM in Economics, Politics |
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