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Enlightened Self-Interest

November 10, 2012

In 1914, Ford Motor Co. founder Henry Ford raised his workers’ wages from $2.34 to $5.00 per day. No one made him do it; he just decided to do it. People thought he was nuts. But his purpose was to slow rampant employee turnover and reduce training costs, both of which slashed efficiency. Efficiency was the hallmark of Ford’s assembly line innovation.

Not only did Ford’s unilateral pay increase reduce turnover, it got auto workers all over Detroit clamboring to become Ford workers.  At $5.00 a day, Ford could hire the best mechanics in the industry. Furthermore, at their increased wages, Ford’s assembly line workers could afford to buy the cars they built. In a stroke, Ford reduced his own production costs and expanded his market. By the standards of the time it was counter-intuitive: Ford got rich by paying his workers more.

Some called it “enlightened selfishness”; some called it “welfare capitalism.” Ford himself called it “profit sharing.” By whatever name, the philosophy enjoyed popularity in the 1920s, with a revival after World War II into the 1950s. Henry Ford showed that sometimes the best way to get what you want is to give someone else what they want. I call it “enlightened self-interest.”

Business leaders need a political party that advocates for business interests. For decades, that party has been the Republican Party – it was Republican Calvin Coolidge who said, in 1925, that “the chief business of the American people is business.” But in the last 50 years, the Republican Party has strayed from the promotion of business into the promotion of a conservative social and religious agenda. The business wing of the Republican Party isn’t especially interested in that agenda, but it has stayed on board by making a bargain:  we’ll tolerate your social and religious agenda as long as you continue to carry the banner of business. As long as the Party’s agenda brought voters to the pro-business party, the bargain worked for business.

After their 2010 mid-term electoral victories, despite repeated professions of concern about jobs and the economy, Republicans became obsessed with abortion, guns, illegal immigration, union busting, voter suppression and gay marriage. They reject the fruits of scientific reason, from evolution to climate change. They reject innovation, from high-speed rail to renewable energy. They became not the party of loyal opposition, but the party of hostility to anything and everything the President is for – even something they used to support, like carbon cap-and-trade.

Their opposition to President Obama took on a sinister racial tinge. The Republican Party came to a position in which it can be called the party of middle-aged and older white men – a position from which Bill O’Reilly could with reasonable accuracy explain Tuesday’s election results by saying that “the white establishment is now the minority.” (Rather less accurately, O’Reilly clearly thinks this is a bad thing.)

When Republicans have moved so far right on social and religious issues that they go into elections with a structural disadvantage, it is no longer in the interests of the business establishment to go along with that social and religious agenda. Business leaders are if nothing else practical people. They are not looking for ideological purity but for tangible results. If their party isn’t strong enough to deliver those results, business leaders must and will re-think.

When it comes to economic matters, business leaders know that it is more important that problems be solved than that they be solved in a manner that is 100 percent to their liking. Business leaders were rattled by the Tea Party’s approach to the debt ceiling in 2011. Tea Partiers decided that reining in the debt (or was it reining in President Obama?) was a matter of such great moral import that it justified undermining the credit rating of the United States government. Business leaders are concerned about the federal debt, but business interests understand that diminution of the federal credit rating only adds to the federal debt, and costs business as well. Business knows that there are times when getting an imperfect deal done is better than staying ideologically pure.

Now we are coming to the “fiscal cliff,” followed shortly thereafter by another debt ceiling. Business interests know that the chief threat to their interests in both cases is uncertainty; they want both issues resolved as soon and as certainly as possible. And they want a resolution that is soon and certain more than they want a deal that consists entirely of business-friendly elements.

This recognition constitutes a form of enlightened self-interest. Business leaders need to make their enlightened self-interest plain to the American people – and to the Republican leadership. They need to recognize that a system in which Warren Buffet pays a lower marginal tax rate than his secretary does is not politically sustainable; they need to join Buffet in his call for modest increases in the marginal tax rates on the very rich. Business interests will have the moral ground to ask others to compromise only if they offer to give up something of their own. By taking this position, business interests can start to reclaim political credibility; by pushing Republican leaders to take this position, business interests can start the Republican Party back on the road to credibility.

Looking past the immediate issues of the fiscal cliff and the debt ceiling, business leaders need to prevail on the Republican Party to tone down the far-right elements of its agenda. Republicans don’t need to become pro-choice, but they do need to move the abortion issue off the front-page of their “to do” list. Immigration reform is a no-brainer; Republicans should yield to Democrats’ more humane, more family-friendly approaches to immigrants already here, in exchange for the tougher measures to prevent new illegal immigration that Republicans favor. Republicans don’t need to become advocates of gay marriage, but they need to stop using the issue as a wedge, to stop using hostility to lesbians and gay men as voter motivation.

One of the great ironies of business support for Republicans is that virtually no major American corporation today would tolerate in its own ranks the kind of mono-cultural exclusivity that threads through  the fabric of Republican theology. Republicans need to be persuaded to do the same internal analyses that corporations have done in the last decade, honestly confronting their own lack of diversity and meaningfully addressing its causes.

And business interests have to recognize that the Republican antipathy to science is not just an embarrassment; it’s the express train of American decline.

Business leaders need to get the Republican Party to recognize the potential of the role of loyal opposition. Republicans should stop trying to block every Obama initiative. Instead, Republicans should work to make Obama initiatives better.

We know that Republicans are against regulation of business, but Republicans have to recognize that they lost the election. Clumsy regulation can stifle business, but deft regulation can make business better, more competitive, and more profitable – I offer American regulation of securities markets as Exhibit A. Good regulation can also contribute considerably to public health and safety – here, I offer as Exhibits B, C and D the Food and Drug Administration, the Clean Air Act (have we forgotten our cities’ soot-laden skylines of the 1960s?) and the Clean Water Act (remember when the Cuyahoga River literally caught on fire?). So when Democrats propose some new area of regulation, Republicans should not react with an ideologically pure “no,” but with a practical, “How can we make this regulation work for the American economy and for the American public?”

Speaking of enlightened self-interest, liberals should not be rooting for continuing Republican decline. I grant that the prospect of Democrats holding long-term power seems like fun from a liberal’s point of view. But long-term power always ends badly – viable opposition not only keeps us honest, it keeps us smart. They say that power corrupts – long-term power makes us lazy, intellectually sloppy. Strong, intelligent Republican opposition is therefore a matter of enlightened liberal self-interest. Declining, incoherent Republican opposition – as much fun as it might seem – is not in our interests.

One Comment
  1. Scott Mason permalink

    Brilliant, especially the last few paragraphs.



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