Ivan Seidenberg is chief executive of Verizon Communications and the current chairman of the Business Roundtable, the authoritative voice for big business in the United States. So when he showed up at the Economic Club of Washington last week to blame the Obama administration's economic and regulatory policies for the lack of job growth and business investment, it drew a lot of attention — and a lot of nodding heads from his big-business buddies.
If you actually read his speech and the accompanying 49-page bill of particulars, however, it would become clear that Seidenberg is anything but the economic statesman he fancies himself to be. Rather, he revealed himself to be nothing more than a corporate hack peddling the much-discredited country-club nonsense that what's good for corporate cash flow is good for America. His presentation was so riddled with hyperbole, junk economics and logical inconsistencies that it will be a long while before anyone in Washington takes him, or the Business Roundtable, seriously again.
It should hardly be a surprise that the business community is feeling a bit put upon these days. After all, it is coming off a glorious decade in which business lobbyists not only set the agenda for the White House and Congress, but also headed many of the economic agencies and drafted the most important legislation. It is only now that the rest of us are having to clean up the mess left by this anti-tax and anti-regulatory orgy.
Rather than applauding the Obama administration for finally stepping up to face these problems, however, Seidenberg served up tired old nostrums about the government "reaching into virtually every sector of economic life" with "one-size-fits-all" regulations. Although he doesn't have the courage to come out and say it, it is clear Seidenberg believes we were better off when the Securities and Exchange Commission could investigate Bernie Madoff and find nothing amiss and when the Office of Thrift Supervision considered it a great innovation when banks began to provide home loans to borrowers with bad credit scores requiring no money down or documentation of income.
One of the themes running through Seidenberg's tirade was that any dollar in taxes collected from any business, or any dollar of increased operating cost required by regulation, is a dollar that would have otherwise been invested in new jobs, new equipment or growth-enhancing research. This fallacy is contradicted by economic theory, to say nothing of recent experience.
As any CEO knows, businesses hire workers when they have profitable work to do and invest when they have profitable investments to make. Right now it is primarily the lack of such opportunity that weighs on the economy, not the prospect of a modest increase in taxation and regulation. Moreover, we now have plenty of experience to indicate that even when taxes and regulatory costs are cut, companies are just as apt to use the money to increase compensation for top executives or pay out higher dividends to investors as they are to invest in genuine growth-enhancing new products and processes.
The glaring omission from Seidenberg's big Washington speech was any acknowledgement that the current economic crisis results from the failure of the business community to wisely allocate capital, protect the interests of investors and consumers, and create a supportive climate for sensible regulation and prudent fiscal policy. Blaming it all on Barack Obama — that took real chutzpah. Leadership it was not.