In last night's State of the Union address, President Obama urged greater US competitiveness. But there's a big difference between cozying up to businesses and promoting policies that foster economic growth.
Much is being made of president Obama’s new-found friendliness toward business, punctuated by his call “to make America the best place on Earth to do business” in last night’s State of the Union address. While moderates seem pleased, liberals dislike it, and conservatives suspect that the president isn’t sincere.
As an economist, I worry that Mr. Obama is sincere. But my concern about the president’s cozying-up to business differs greatly from the concern that animates the political left.
Contrary to popular presumption, being friendly to business is not the same as being pro-economic growth or pro-free-market.
Adam Smith explained that a nation is wealthy only if its people have ready access to goods and services that make their lives healthy, comfortable, and enjoyable. The greater this access, the wealthier the nation.
Of course, to make available the goods and services that consumers want requires businesses. Unfortunately, throughout history, businesses have too often been saddled with excessive taxes and regulations in well-intentioned but misguided attempts to help workers and consumers.
Economists (especially the free-market variety) – concerned always to keep outputs of goods and services as high as possible – typically defend business against counter-productive government interference. We economists do so, however, not because we have special fondness for business. We do so because we understand that government interference in business often results in fewer goods and services for ordinary men and women – as consumers – to enjoy.
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