Our world has turned upside down since August. We are shaking our heads in disbelief. It’s not the recession. We understand the business cycle. It’s not even the size of the recession. Given the reckless mortgage market, the day of reckoning had to come. It’s not tight liquidity. We can deal with cash flow. It’s not the failure of Detroit automakers or big financial firms. Businesses fail.
It’s not even personal-the drop in our retirement accounts, investments and home value. We understand risks and rewards. This is the price of the free market.
Our despair is over the reversal in the strategy that had made us the world’s strongest economy. It started with the bailouts. Several hundred billion dollars to bail out companies that should have been allowed to fail. Then came the $787 billion “stimulus” package. Nearly $2 trillion of new debt in less than a year. And in the spring, a new budget with years of spending, big deficits and new taxes. This horrific theft from our children is irresponsible, and highlights what separates the mindsets of politicians and businessmen. Executives know that budgets require choices; politicians view the deficit as just a paper entry. Adults elsewhere in the world know that the day of reckoning comes. And while the political parties can blame each other, American business is not blameless-the big business lobby groups were cheering Congress on for the bailouts and stimulus package.
But it’s not just the ballooning deficit that makes us shake our heads. The sudden and growing limits on free trade, the desire for card check legislation allowing sudden unionization, the return to big government and big regulation, all discourage entrepreneurism and investment. All make hiring people and creating new nongovernmental jobs not only difficult, but potentially impossible.
We are embarking on a dangerous national strategy that devalues business and thus restricts jobs. Our strategy must shift to preserve our primacy in the digital age. Today, we are the creative center of the world. Our creativity produces the best movies, music and writing. We own the best technology, software and Web businesses. President Obama’s laudable goal that every American earn a college degree supports this path-but conflicts with the union agenda of regaining lost factories through card check and Buy American protectionism.
That’s why we shake our heads. We see two futures. One where the free market allows America to lead the world in innovation, creativity and content, with a strong economy, private investment and new jobs using free market capital. The other, a new course of big government spending, inevitable inflation and higher interest rates, and new disincentives for investment, risk and hiring.
If Congress can’t make tough budget choices I suggest two alternatives: enact the Cooper-Wolf proposal to create a base closings-like bipartisan commission to reduce government spending, entitlements and taxes with an up or down vote by Congress required. Or pass a constitutional amendment tying Congressional pay to a balanced budget.
Our generation could be the first American generation to cede to the next a less prosperous future. We can let it happen or-as business leaders do every day-fight for prosperity and innovation.
Gary Shapiro is president and CEO of the Consumer Electronics Association, one of the 15 largest trade associations in the U.S., representing more than 2,200 manufacturers and retailers in the consumer technology industries, including Apple, Microsoft, Intel, Cisco, Sony, Panasonic, Verizon and Best Buy.