BASEHOR, Kan. - The poor Republicans. They've been in such a hurry to run to the microphone to denounce anything that runs afoul of their cherished "no taxes, no regulation" ideology that they've neglected to notice that they're increasingly becoming irrelevant as a party of ideas. In a sign that those cracks are growing ever larger, Senator Tom Coburn, (R) Oklahoma, submitted a bill for consideration that would eliminate tax subsidies for the ethanol boondoggle, something that Grover Norquist, head of Americans for Tax Reform, said amounted to a tax increase.
Fareed Zakaria, in his recent Time Magazine opinion piece, wrote about conservatives' outmoded ideology, saying,
Consider the debates over the economy. The Republican prescription is to cut taxes and slash government spending -- then things will bounce back. Now, I would like to see lower rates in the context of tax simplification and reform, but what is the evidence that tax cuts are the best path to revive the U.S. economy? Taxes -- federal and state combined -- as a percentage of GDP are at their lowest level since 1950. The U.S. is among the lowest taxed of the big industrial economies. So the case that America is grinding to a halt because of high taxation is not based on facts but is simply a theoretical assertion. The rich countries that are in the best shape right now, with strong growth and low unemployment, are ones like Germany and Denmark, neither one characterized by low taxes.
If you listen carefully, Republicans never say that U.S. corporations have the highest taxes paid. They always say that the U.S. has the highest tax rates. Indeed, an article in Friday's Wall Street Journal admitted as much in print by saying,
As other countries have reduced corporate taxes, the U.S. has one of the world's highest top rates, at 35%, although effective rates everywhere can be substantially lower depending on tax breaks and other incentives.
Ahem. Substantially lower.
In recent months, Harvard Business Review, Bloomberg Business Week, and Fortune Magazine have all openly questioned the Republican orthodoxy of "no new taxes, no regulation" of business. That fact alone speaks volumes about how business is treating the Republicans' intransigence over matters of taxation and regulation. The inconvenient fact that the Republicans' two intellectual stalwarts in their argument -- Friedrich Hayek and Milton Friedman -- have begun to be marginalized again must really add salt to the wound.
Corporate Capitalists are, once again, coming around to the realization that they have a responsibility to do more than just make money. Milton Friedman was a free-market ideologue of the first order and, for example, had no truck with anything relating to corporate social responsibility, let alone regulation and taxation. Friedman famously said that The Social Responsibility of Business is to Increase Profits. And yet, the March edition of the Harvard Business Review contained an article entitled, "Capitalism for the Long Term," by McKinsey & Company's global managing director, Dominic Barton, in which he said,
Capitalism's founding philosopher voiced an even bolder aspiration. "All the members of human society stand in need of each others (sic) assistance, and are likewise exposed to mutual injuries," Adam Smith wrote in his 1759 work, The Theory of Moral Sentiments. "The wise and virtuous man," he added, "is at all times willing that his own private interest should be sacrificed to the public interest," should circumstances so demand.
The artful dodge that the business press is using these days to lay to rest (temporarily at least, lest they anger their Republican mouth pieces too much) the shop-worn cries about taxation and regulation, is interestingly being called "shared value," a term that includes not just shareholders but stakeholders (i.e., society as a whole). I sincerely hope that business--and corporate capitalists--have finally not only awakened to this reality, but continue to embrace it once the public's current anti-business, anti-Wall Street rage subsides. Dominic Barton goes on to say in the same article,
In other words, although a large majority of executives believe that social initiatives create value in the long term, they don't act on this belief, out of fear that financial markets might frown. Getting capital more aligned with capitalism should help business enrich shareholders by better serving stakeholders.
Time will tell, but it appears that the sleepy giant that is "middle America" has finally been goaded, shamed, and bankrupted into asking tough questions of their vaunted "free markets" and their Republican champions, and both are responding. Even if slowly and grudgingly.