Wednesday, December 7, 2011

Mickey Kaus picks apart President Obama's call for "American business leaders to understand that their obligations don’t just end with their shareholders."

Here's what Obama said in his recent speech in Kansas:

[R]ebuilding this economy based on fair play, a fair shot, and a fair share will require all of us to see the stake we have in each other’s success. And it will require all of us to take some responsibility to that success. . . .

[I]t will require American business leaders to understand that their obligations don’t just end with their shareholders. Andy Grove, the former CEO of Intel put it best: “There’s another obligation I feel personally,” he said, “given that everything I’ve achieved in my career and a lot of what Intel has achieved…were made possible by a climate of democracy, an economic climate and investment climate provided by…the United States.”

This broader obligation can take different forms. At a time when the cost of hiring workers in China is rising rapidly, it should mean more CEOs deciding that it’s time to bring jobs back to the United States – not just because it’s good for business, but because it’s good for the country that made their business and their personal success possible.
Kaus's whole post on that section of Obama's speech is worth reading. He makes several points, but here's the main one:
How likely is this to happen on the scale that is necessary? Something close to zero. It’s one thing to rely on the generosity of rich people when it comes to funding new hospital wings and small magazines. It’s another when it comes to the basic success of the American economy—which (reminder) has been reliably achieved over the centuries because we have relied on sturdy, universal drive of self interest.
Kaus's "(reminder)" is a devastating rebuttal to Obama's economic worldview. Obama doesn't seem to understand how markets can do good through lots of people acting in their self interest, so he feels it must be the obligation either of charitable individuals or benevolent government to make sure the system is "fair." Of course, as Kaus says, charity can be very effective. But the president isn't going to inspire people to be more charitable than they already are. The only way any president can increase the level of charity is through economic policies that cause people to have more money to give away.