No Adam Smith
January 20 2010 by JP Donlon
In “Bull’s-eye!” our lead story this issue, many leaders say that they have come to feel that the administration has painted a target on their backs. Even among those in the business community who were initial supporters of Barack Obama, some now worry that his policies won’t grow the economy, but instead expand the scope and power of the state. “Every Obama economic policy increases government control and decreases economic freedom,” one business leader who asked not to be identified told us during our recentCEO2CEO Leadership Summit (see p. 56), held at the New York Stock Exchange. CNBC Mad Money host, Jim Cramer, who voted for Obama, remarked on eerie similarities between the President’s comments and the words of a certain communist revolutionary who rose to power in 1917.
We hesitate using the Mword to describe the President. Last July he told the editors of Business Week that his Administration is not “a bunch of command-and control, top-down, heavy handed bureaucratic” regulators eager to “bog businesses down. That’s not going to be our approach.” He appears to be a sincere person with a lot on his plate, trying to get the economy going again. But sometimes sincerity can be an overrated virtue. Leaders must be judged by what they do, not just by what they say.
Writing in Forbes last November, Michael Cembalest, chief investment officer for JPMorgan Private Bank, offered an interesting piece of research exhibited here, which may clinch the case. In “Obama’s Business Blind Spot,”Cembalest sought to examine the administration’s frame of reference by researching the history of presidential appointments and cabinet making, beginning with the creation of the secretary of commerce in 1900. In compiling the private-sector experience of all 432 cabinet members, “one thing is clear,” he observed. “The current administration, compared with past Democratic and Republican ones, marks a departure from the traditional reliance on a balance of public- and private-sector experiences.”
Anti-business may be too unnuanced a label for the President, but he clearly does not trust free markets, preferring government control instead .He has a dark view of profit making and the mechanisms by which business creates value. A disciple of Adam Smith he is not.