The One Line in the State of the Union That Shows Why Business Distrusts the President
President Obama gave his final State of the Union address tonight, focusing on his accomplishments over the past seven years while trying to set a path forward on areas like education costs, cancer and climate change. As with all political speeches, it's mostly a collection of forgettable rhetoric. History shows lame-duck presidents light on actual policy proposals don't generally get laws passed.
But some words in this speech were striking, not so much because they will lead to policy, but rather because they underscore exactly why the business community -- from the large corporations the president has made a habit of demonizing over the years to the entrepreneurial startups he always makes an applause-line point of supporting -- don't trust him...or, more accurately, pay him no mind.
When talking about business, he made sure he attacked the "bigs": oil, banks, hedge funds. He mentioned how they make their own rules (ironic to the ears of Big Oil, which was rebuffed in building the Keystone Pipeline) and operate at the expense of regular Americans. At one point, he got a good deal of applause for saying, "Food stamp recipients didn't cause the financial crisis; recklessness on Wall Street did." I'm still looking for the person in America who actually blamed a food-stamp recipient for the housing-market collapse. When you find him or her, Tweet me.
We're used to the class-warfare rhetoric from this president, who always seems to attack the corporate boardroom, despite likely never having set foot in one himself.
Yet, what was most instructive was this line:
"And this year I plan to lift up the many businesses who've figured out that doing right by their workers ends up being good for their shareholders, their customers, and their communities, so that we can spread those best practices across America."
If ever there were a line that showed how out of touch -- and, to his corporate and small-business backers, tone deaf -- the Obama administration has been, it's this one. Why? Because of the government-centric conceit that is inherent in every word. Obama believes it is the job of the president to "lift up" businesses, rather than the shareholders who have risked capital to grow these companies. He will focus on the ones that "figured out" that treating people fairly is good business -- as if that were a deep truth hidden to all but people who could pass a Mensa test. And he, and the government he commands, will spread these best practices across the country. No doubt, we can all thank him later.
Here is the problem with that line: Business is way ahead of the government on this. Private enterprise, big, small and startup, knows the value of fostering and protecting workers. Businesses do not routinely mistreat their workers, because they need their workers. It is basic business-management rule that your employees need to be treated even better than your own customers because these employees will have the most contact with those customers. It's a win-win, as they say. That's out of first-year management textbooks (and the experience of anyone who has run a business), not some government manual.
Companies, at bottom, treat employees well simply by paying them for their labor. Having a job and, better, a career, is life-changing and life-fulfilling. Sure, some people might think they are underpaid (most people do, actually) and unions continue to push for higher minimum wages, which only affect a small percentage of American workers, as a proxy to attack worker pay on a larger level (and in an attempt to remain relevant in the American economy). But the truth is that, with unemployment as low as it is, companies are in a competitive labor environment and have to compensate well to keep the best of their teams or lose them to competitors. The market is ensuring that environment, not the president.
Companies that take a team approach, reward their employees, work collaboratively and provide opportunities are the rule in American business, not the exception. Profits flow from the strength of a product and that takes top-notch people to build it, sell it and service it. People matter, and modern capitalism celebrates that.
Of course, government doesn't get that philosophy. People work in government largely through three means: they are voted in, they are appointed by those who are voted in, or they follow byzantine civil-service requirements to get jobs with set pay and set benefits. It is a different world than business. It's tough to understand where profit derives when you happily hum along at a deficit and have your budgets set by a bunch of folks who won popularity contests. No wonder all of this seems somehow novel to the president.
In President Obama's defense, business isn't black and white. When he talked about the "spirit of innovation" and how "our best corporate citizens are also our most creative," one can't help but think of Apple. When he talked about companies that "put quarterly earnings over long-term returns" and avoid "paying taxes through offshore accounts," one can't help but think of Apple. On issues like treatment of workers, Apple is similarly complex, a pioneer of LGBTQ+ rights before it was cool, with a high-profile gay CEO in Tim Cook, but a questionable corporate citizen when it comes to the treatment of Asian workers who manufacture its goods. Is Apple "Big Tech" or "entrepreneur chic?" It likely depends on the president's calculus, or what speech he has to make on a given day.
Republicans, to be fair, are often no better, particularly the career politicians who make a living on the power of government over free enterprise. Red tape is squeezed out by both sides, for all the rhetoric the GOP has in shrinking government. Most Republicans want government only so small as they need it to be to keep them elected and their coffers full.
But President Obama should know better by now, because he has been here before. This is the man who, four years ago, told entrepreneurs that, when they created a company and had success, "You didn't build that." That still stings for many small-business owners in particular who did build their companies. If their delivery trucks moved along roads laid by the government, they were just as equally paved by the taxes private profits provided.
The era of blaming businesses for everything should end. The electorate seems to want it that way. Donald Trump's ascendency is driven partly on a business-minded approach to national problems, even if it comes from a person with a checkered business background. If nothing else, Hillary Clinton's email usage shows she prefers private means over something managed by the government.
There are a lot of good stories within the corporate community right now. Hate Big Oil? They are funding sustainable research to deal with Obama's largest priority: climate change. Hate Big Pharma? Those companies spend billions finding cures for diseases to make the world healthier, and these companies, rather than Vice President Biden, will lead the charge to find the "moonshot" to wipe out cancer. Big Banks? Wall Street still has a lot of work to do, but banks and financial firms are funding all the startups and small businesses that need capital to grow.
But that's a different speech, one, either out of lack of understanding or simply out of ideology, President Obama, regretably, could never deliver.
Ray Hennessey is the former editorial director of Entrepreneur.