Bush and Business

I have never voted for a Democrat for any office above Senator, but stuff like this makes me question whether or not I can vote for Bush in 2004.

The basic moral premise behind a law like Sarbanes-Oxley is that businessmen are not innocent until proven guilty–that they are inherently disposed toward crime and thus must be collectively monitored and shackled by virtuous bureaucrats.

It was on this premise that Bush went beyond Sarbanes-Oxley and gave regulators at all levels the green light to crack down on businessmen *in general*. Since then, bloodthirsty bureaucrats have been gleefully enforcing previously un-enforced regulations, harassing CEOs with threats of jail time, and more aggressively blocking mergers and acquisitions.

On Wall Street, the SEC and New York Attorney General Eliot Spitzer have been intimidating firms and executives into paying huge settlements on dubiously defined offenses such as "tainted" research or IPO "spinning." In telecommunications, a potential merger between Echostar and Hughes, which seemed set to go through, was derailed thanks to what a *Wall Street Journal* news story called FCC Chairman Michael Powell's "newfound aggressiveness." Over at the FTC, meanwhile, the agency has been flexing its antitrust muscles to prevent mergers in even the most obscurely defined markets, such as "superpremium ice cream," "jarred pickles," and "food service glassware." Following the government's example, embittered stock market losers and their lawyers have launched a wave of shareholder lawsuits against productive corporations like Intel and Cisco simply because of declines in their stock market value.

The essence of the new environment is that now, more than ever, businessmen *cannot know what is legal or illegal until after the fact*. They have no means of knowing in advance whether their accounting methods will get them thrown in jail, whether they will be bankrupted by a class-action lawsuit for "defrauding shareholders" if their new product does not sell as well as expected, or whether a strategic merger that takes years of planning will be thwarted by some ambitious bureaucrat. The result is that honest businessmen have been paralyzed when it comes to steering their companies.

That businessmen are especially "risk-averse" right now is a fairly commonplace observation–but the crucial point is that they are risk-averse *because* of the government crackdown, which has compounded the risk inherent in all investment and management decisions with the severe risk of arbitrary government reprisal. Thanks to Congress and the administration, taking risks has become too risky.

I still haven't figured out if this President and Congress are liberal Republicans or if they are simply trying to steal issues away from the Democrats, but in my view neither party is good for business right now. Despite the negative connotations with the phrase, I prefer "Big Business" to "Big Government" any day.