The Bush administration has a reputation
for creating an unusually business-friendly White
House. Put Vice President Dick Cheney's secretive
Energy Task Force and massive tax cuts together
with corporate lobbyists writing regulations for
their own industries, and you've made an argument
that seems pretty persuasive.
There are
reasons, however, to consider a contrary notion:
Maybe President George W Bush and Cheney aren't
very good capitalists at all.
Bush's
history as a failed businessman is well known.
Cheney, portrayed by conservatives as a brilliant
ex-chief executive officer
and
by progressives as a Halliburton shill, also has a
suspect past. While he certainly increased
Halliburton's profile in four-and-a-half years as
its chief, his foremost accomplishment was the
US$7.7 billion acquisition in 1998 of Dresser
Industries, a rival that turned out to be plagued
with staggering asbestos-related liabilities.
In the wake of Cheney's reign, multiple
Halliburton divisions sought bankruptcy protection
and the company's stock price plunged. Rolling
Stone magazine reported in August 2004, "Even with
the bounce Halliburton stock has received from the
war, an investor who put $100,000 into the company
just before Cheney became vice president would
have less than $60,000 today."
Many
analysts hold the vice president accountable for
the downturn, arguing that Dresser's asbestos
problems, which cost Halliburton billions, were
predictable. Less harsh critics nonetheless
question his success as a business leader. For
instance, Jason E Putman, an energy analyst at
Victory Capital Management, argues that, as
Halliburton chief, "Overall, Cheney did maybe at
best an average job." Newsweek's Wall Street
editor, Allan Sloan, is less complimentary,
suggesting Cheney was a "CEO who messed up
big-time".
When it comes to Iraq, we hear
a lot about the government largesse flowing toward
Halliburton, Bechtel and a handful of other
favored firms. Less often do we consider the
possibility that the administration's "war on
terrorism" has been a major business blunder. If
you start, though, with the lackluster corporate
records of Bush and Cheney, the administration's
foreign policy comes into quite a different focus.
Even if you believe that the White House is
designing its overseas crusade to benefit US
corporations, there's no reason to assume that it
has been doing so successfully.
Increasingly, the business media is
suggesting that corporate leaders, who once hoped
the current administration would push the
corporate globalization of the Bill Clinton years
to new heights, now fear another fate from the
international order Bush has created. Tax cuts and
deregulation on the domestic front have been
obvious bonuses, but otherwise many US
multinationals face a troubling scene. The White
House's failed CEOs have pursued a global agenda
that, at best, benefits a narrow slice of the
American business community and leaves the rest
exposed to a world of popular resentment and
economic uncertainty.
When it comes to the
interventions of Bush, Cheney, Secretary of State
Condoleezza Rice and the neo-conservatives in the
global economy, "at best an average job" might be
a charitable judgment, and "messed up big-time"
could be closer to reality. Those business people
who have yet to join the majority that opposes the
president's handling of his war in Iraq - or the
increasing chorus of conservative critics who have
begun questioning the administration's foreign
policy - may soon have a long list of reasons to
get on the bandwagon, starting with the bottom
line.
Not KFC's war In recent
years, KFC has had some trying moments in the
Muslim world. In early September, a bomb exploded
inside one of the company's fried-chicken outlets
in Karachi, Pakistan. It was not the first time
the chain had been targeted. In May, a Shi'ite
mob, angered by US backing for President General
Pervez Musharraf and by reported abuses at
Guantanamo Bay, set fire to another KFC outlet -
one decked out with large images of Colonel
Sanders set atop fields of stars and stripes. Two
other branches were destroyed shortly after the US
attack on Afghanistan in 2001.
The woes
affecting KFC go well beyond one fast-food chain -
McDonald's, too, has been attacked in Pakistan and
Indonesia - and the torching of fast-food outlets
is only the most dramatic sign of the new business
climate being fostered by a changing American
foreign policy. If Clinton's diplomatic affairs
could be described as a sustained effort to make
the world safe for Mickey Mouse, Microsoft and
popcorn chicken, the Bush/Cheney agenda represents
something altogether more dangerous for business.
The Clinton administration served as a
steady advocate for building a cooperative,
"rules-based" international economy - a
multilateral order known to critics as "corporate
globalization". The Bush administration, while
purporting to be interested in issues such as
"free trade", has offered up a very different set
of policies.
Aggressive and unilateralist,
it has fashioned a new model of "imperial
globalization", which has even put multilateral
institutions such as the World Trade Organization,
decried by globalization activists, in jeopardy.
Rather than working through such bodies, the
current administration has regularly shown
intransigence in international negotiations around
trade and development; it has focused on tying its
aid for other countries directly to its militarist
prerogatives; and it has tried to deny war-weary
"Old Europe" its traditional role as a junior
partner in the globalization endeavor. In the
process, it has begun dismantling an international
order that served multinational corporations very
well in the booming 1990s, and facilitated their
rise over the past 30 years.
In short: if
Bush is an oil president, he's not a Disney
president, nor a Coca-Cola one. If Cheney is
working diligently to help Halliburton rebound,
the war he helped lead hasn't worked out nearly so
well for Starbucks.
A bungled-brand
America Whether the administration's bold
gamble for US global dominance will prove
profitable either in the near future or in the
long run, the business costs of this approach are
already becoming evident. For starters, the new
wave of anti-Americanism sweeping the planet goes
far beyond KFC bombings in South Asia or
widespread hostility in the Middle East.
In Asia, the South China Morning Post has
noted that a "strong, growing hostility" toward
the United States has complicated Disney's
expansion plans in the area. The Bush imperial
foreign policy, moreover, is inspiring consumer
backlash even among traditional allies.
In
December 2004, Jim Lobe of Inter Press Service
reported on a survey of 8,000 international
consumers released by the Seattle-based Global
Market Insite (GMI) Inc. The survey noted:
One-third of all consumers in
Canada, China, France, Germany, Japan, Russia
and the United Kingdom said that US foreign
policy, particularly the "war on terror" and the
occupation of Iraq, constituted their strongest
impression of the United States ...
"Unfortunately, current American foreign policy
is viewed by international consumers as a
significant negative, when it used to be a
positive," comments Dr Mitchell Eggers, GMI's
chief operating officer and chief pollster.
Brands the survey identified as
particularly at risk at the time included Marlboro
cigarettes, America Online (AOL), McDonald's,
American Airlines, ExxonMobil, Chevron Texaco,
United Airlines, Budweiser, Chrysler, Barbie Doll,
Starbucks and General Motors.
More recent
assessments have verified these trends. Indeed, in
past months, a litany of stories in the financial
media featured unnerving questions for business.
Typical were the British Financial Times in August
(World Turning Its Back on Brand America) and
Forbes in September (Is Brand America In
Trouble?).
A US Banker magazine article
from August relaying the results of an Edelman
Trust Barometer survey of global elites found that
"41% of Canadian elites were less likely to
purchase American products because of Bush
administration policies, compared to 56% in the
UK, 61% in France, 49% in Germany and 42% in
Brazil".
It's not just snooty foreigners
who are negative, either. American business
leaders themselves have been starting to link
economic woes to imperial policy. The previously
mentioned US Banker article warned, "The majority
of American CEOs, whose firms employ eight million
overseas, are now acknowledging that anti-American
sentiment is a problem."
And a 2004 Boston
Herald story, headlined "Mass. Execs: Iraqi War
Hurting; US competitiveness becoming a casualty",
pointed to the "sixty-two percent of executives
surveyed by Opinion Dynamics Corp [who] said the
war is hurting America's global competitiveness".
Regularly featured in stories about
America's image problems is a group of corporate
executives who have come together as Business for
Diplomatic Action (BDA).While avoiding an explicit
stance on the Iraq war, the BDA argues:
The costs associated with rising
anti-American sentiment are exponential. From
security and economic costs to an erosion in our
ability to engender trust around the world and
recruit the best and brightest, the US stands to
lose its competitive edge if steps are not made
toward reversing the negativity associated with
America.
Compared to the adverse
impacts of Bush's imperial globalization, the
administration's efforts at (Under Secretary for
Public Diplomacy and Public Affairs) Karen
Hughes-style brand rehabilitation are laughable -
and the BDA knows it. Taking diplomatic matters
into their own hands, BDA spokespeople flatly
state, "Right now the US government is not a
credible messenger."
A quagmire for
corporations Is the problem just one of
perception, or have the wages of war cut into
business profits? In June 2004, USA Today reporter
James Cox wrote about how financially ailing
companies are pointing to the war as the culprit:
Hundreds of companies blame the Iraq
war for poor financial results in 2003, many
warning that continued US military involvement
there could harm this year's performance. In
recent regulatory filings at the Securities and
Exchange Commission (SEC), airlines, home
builders, broadcasters, mortgage providers,
mutual funds and others directly blame the war
for lower revenues and profits last
year.
Among those complaining,
Hewlett-Packard claimed that the occupation of
Iraq has created uncertainty and hurt its stock
price; meanwhile, media companies Hearst-Argyle
Television, Sinclair Broadcast Group and Journal
Communications bemoaned the number of TV and radio
ads preempted by war news.
While fingering
the war might be just a convenient excuse for some
underperforming executives, the level of grumbling
is noteworthy, as are the comments of outspoken
fund managers profiled by Cox:
"The war in Iraq created a quagmire
for corporations." - David J Galvan, a portfolio
manager for Wayne Hummer Income Fund in his
letter to shareholders.
Vintage Mutual
Funds concludes that "the price of these
commitments [in Iraq and Afghanistan] may be
more than the American public had expected or is
willing to tolerate".
"In an SEC filing,
Domenic Colasacco, manager of the Boston
Balanced Fund, calls the ongoing US occupation
'sad and increasingly risky'."
Of
course, we know that reconstruction companies are
posting profits. Sales of gas masks and armored
Humvees are also up. But such war-supported
companies are a small minority. On the other hand,
the diverse businesses in the tourism industry
have taken a huge blow. Delta Air Lines, JetBlue,
Orbitz, Priceline.com, Morton's steakhouses,
Fairmont Hotels & Resorts and Host Marriott,
to name just a few, have blamed disappointing
returns on the war. Travel industry leaders have
warned:
The US is losing billions of dollars
as international tourists are deterred from
visiting the US because of a tarnished image
overseas and more bureaucratic visa policies ...
"It's an economic imperative to address these
problems," said Roger Dow, chief executive of
the Travel Industry Association of America,
tourism's main trade body ... Mr Dow stressed
that tourism contributed to a positive
perception of the US ... "If we don't address
these issues in tourism, the long-term impact
for American brands Coca-Cola, General Motors,
McDonald's could be very damaging."
Economic nightmares
foretold Every year, the global business
elite gathers at a resort in Davos, Switzerland
for the World Economic Forum. In the high-flying
Clinton years, a feeling of exuberance pervaded
the globalists' gathering - protests outside their
meetings notwithstanding. By January 2003,
however, the mood in Davos had already darkened
perceptibly. Economic optimism was waning. The
coming war in Iraq, in particular, was causing
concern. Corporate leaders showed little more
enthusiasm than the protestors outside for the
impending unilateralist invasion. Analysts fed
their misgivings, citing "the threat of war as the
biggest question mark hanging over global growth
prospects".
Around the same time,
progressive economists Dean Baker and Mark
Weisbrot detailed a possible worst-case scenario
in a policy report entitled "The Economic Costs of
a War in Iraq. Beyond the costs of
anti-Americanism abroad", they focused on three
additional areas of concern: A war-related oil
shock that might cost the American economy
hundreds of thousands of jobs over a seven-year
period; a heightened risk of terrorist attacks in
the US, which might result in increased security
costs, slowing the growth of the Gross Domestic
Product (GDP); and a likelihood that increased oil
prices would drag the developing world into a deep
recession.
I asked Baker how relevant the
report's concerns have proven. Though he
emphasizes that the worst did not come to pass, he
notes worrying signs. Oil prices have indeed
skyrocketed, owing largely to increased demand
from China and India, but exacerbated by Iraq's
absent oil. Moreover, as each new intelligence
estimate predicts that we are less, not more,
secure because of the Iraqi occupation, the risk
of an economy-crippling attack grows. Already,
Baker points out, the hours we spend waiting in
security lines at the airport or delayed in city
subways represent costly economic losses.
Then, of course, there is the as yet
unrealized possibility that spreading guerilla
warfare and terrorism will include escalating
sabotage against vast and largely indefensible
stretches of oil pipeline in the Middle East. It
is this scenario among others that caused
professor of Middle Eastern history and Informed
Comment blogger Juan Cole to liken Bush's Iraq
debacle to "throwing grenades around in the
cockpit of the world economy".
Such costs,
foretold before the invasion, suggest that the
pre-war pessimism in Davos was well justified. And
such a modest list hardly exhausts the possible
economic "downsides" to Bush administration
policies in Iraq and beyond.
The debate
about Congressional spending, for one, deserves at
least passing mention. Whether fiscal
conservatives are right that Iraq and
tax-cut-bloated deficits are necessarily bad for
business, or whether Military Keynesianism has
actually been helping to soften a periodic
economic downturn, the idea of war without
sacrifice should sound fishy to any account-minded
executive.
Take direct war costs running
in the hundreds of billions, add in medical bills
for disabled veterans, then throw in the costs of
National Guard reservists being pulled from small
businesses, and pretty soon you're talking real
money. At some point the overvalued dollar, which
our creditors in the central banks of China and
Japan have decided to let ride for the time being,
will have to come down and is likely to bring the
economy with it. When that happens, Colonel
Sanders won't be the only one to feel the pain.
Will business turn? In the
August of the 2004 election cycle, the Kerry
campaign distributed a list of 204 business
executives who supported the candidate's policies.
It was a nice try, but, as Bloomberg News
reported, the Democrat trailed Bush badly in
corporate support. Fifty-two chief executives from
major companies had by then donated to Kerry; 280
to the president's reelection campaign. (Business
being business, "at least three executives on
Kerry's list also gave the maximum $2,000 to
Bush's reelection campaign.")
A year has
passed since the elections. Approval ratings for
the victorious president continue to sink to
all-time lows, and "staying the course" remains
official Washington policy for Iraq. In this
context, it's not surprising that Republican
"realists" such as Brent Scowcroft (who warned in
a Wall Street Journal op-ed before the war that
"it undoubtedly would be very expensive - with
serious consequences for the US and global
economy") are making noise again.
And it
would make perfect sense if an increasing number
of those Bush CEOs were by now pining for a return
to Clinton-style multilateral globalization of a
sort still held out by the defeated senator from
Massachusetts and many other Democrats.
Neither of these alternative camps will
seem particularly appealing to progressives, but
they pose a genuine threat to the imperial
globalists who seem incapable of extracting
themselves from Iraq. Indeed, intra-party rivalry
among the Republicans - which is likely to
increase as we enter an election year - could play
a vital role in turning White House hawks into
dead ducks. All the better if this avian
transformation is sped by dissatisfaction from
corporate leaders reevaluating the costs of Bush
foreign policy and deciding that empire just
doesn't pay.
Mark Engler, a
writer based in New York City, is an analyst with
Foreign Policy In Focus and a contributor to
TomPaine.com, Newsday and In These Times. He can
be reached via the web site DemocracyUprising.com.
Research assistance for this article was provided
by Kate Griffiths.
