- - Tuesday, April 10, 2012

In his Wisconsin victory speech April 3, Mitt Romney said, “Washington has to become an ally of business, not the opposition of business.”

This to me is a more worrisome statement than his communication adviser’s gaffe about Etch-A-Sketches or Mr. Romney’s shoutout to NASCAR team owners.

Over the past few years, the country has been subjected to a tutorial about the role of government. Thanks to the efforts of the Tea Party and, of course, the teaching by example of the Obama administration, a lot more Americans understand the problems with corporatism, crony capitalism and industrial policy.

There are three potential problems with Mr. Romney’s formulation. The first is political. As Tim Carney writes, Mr. Romney’s friend-of-business rhetoric fails “to tap into the broad perception in this country, from Left to Right, that the game is rigged in favor of the well-connected and the too-big-to-fail.”

Indeed, getting into a contest with President Obama over who is a better friend of business is not the winner some might think. Mr. Obama has given billions of dollars to big businesses, from Wall Street to Detroit. The stimulus was full of tax breaks and gimmicks aimed at business; the president calls them special-interest loopholes when companies he doesn’t like get them.

I’m not saying Mr. Obama’s policies are valid or wise, but the water will get very muddy very quickly if Mr. Romney campaigns on who is business’s “best friend forever,” especially when you consider that one of the things Mr. Romney did at Bain Capital was take businesses apart.

And that was a good thing. Free markets depend on failure, or what Joseph Schumpeter called “creative destruction.” You can’t have light bulbs without destroying much of the candle-making business. At Bain, Mr. Romney was part of the process that fueled innovation. That’s nothing to be ashamed of.

Which brings us to the philosophical problem. Since the Progressive era, American liberals have been in favor of some variant of corporatism or industrial policy. The idea stretching from Teddy Roosevelt and Woodrow Wilson through Franklin D. Roosevelt, John F. Kennedy, Jimmy Carter and Bill Clinton to now is that the government is smart enough to pick winning industries and technologies. You know, like Solyndra.

There’s a huge difference between being pro-business and being pro-free-market. The government’s role in the free market is to keep it free and fair, not to play favorites.

When government takes it upon itself to be the ally of business, certain biases often take over. For instance, existing industries have a huge advantage over ones that haven’t been created yet. A more obvious bias is toward big companies over small ones. Big companies create constituencies and can afford lobbyists to make their case. Moreover, big business becomes a tempting vehicle for other policies, such as, say, providing health care. And why not: When government is scratching business’s back, why shouldn’t business return the favor?

There’s a reason the White House named Jeffrey R. Immelt, CEO of General Electric, to head its jobs council. CEOs of giant corporations are so much more pleasant for government officials to work with than all those small businesses with their bumpkin bosses, who just happen to create most of the new jobs.

Indeed, big corporations are enjoying record profits under Mr. Obama, but as Mr. Romney noted, “New business startups - and that’s normally where we get job growth after a recession … are down to the lowest level in 30 years.” He needs to follow that train of thought.

In fairness to Mr. Romney, much of his rhetoric is very pro-free-market and draws a sharp contrast with Mr. Obama’s crony capitalism. But then he’ll hit one of those off-key notes and cause some to worry whether he’s just saying the other stuff because that’s what his advisers say he should say.

That brings us to the third problem. What if Mr. Romney wins? A technocrat, he excels at accomplishing very specific tasks by getting deeply into the numbers and listening to the best experts. That’s great when it comes to turning around the Olympics or a fast-food chain. But that’s also how he came up with Romneycare.

A Romney White House that starts out saying “How can we help business?” would end up in a bad place, and so would America.

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