The 2012 Republican Convention’s theme for Tuesday, August 28 is “We Built It,” a riff on an unfortunate comment by Barack Obama. Obama was trying to make the point that government provides education, infrastructure, police protection, property protection, and other things that have to be in place before a business can be successful.
So what was it built on?
Entrepreneurs are touchy about other people trying to latch onto their success, because starting a business is hard work. Even harder is getting up every day and trying to get people excited about what you are doing so that they will part with enough of their money so that you can make payroll. Most entrepreneurs would far rather do what they do than have a regular job, but that doesn’t make their jobs easy. Even a liberal like me was soured by my experience applying for a City of Chicago business license; it’s pretty annoying to have a career bureaucrat talk down to you how to start a business — to say the least.
And yet, I rely heavily on the Internet, electricity, the telephone, and the public library to get my job done. No one goes it alone, whether we want to admit it or not. And I’m not a government contractor, Disadvantaged Business Enterprise, or Small Business Administration loan recipient. Unlike, say, Sher Valenzuela, candidate for lieutenant governor of Delaware, who received a great deal of government assistance to help build her business but who did not build a website for her company. Someone else did. Oops! She is scheduled to speak to the Republican conventioneers about how she built her business herself. Or something like that.
The theme reminds me of “We Built This City on High-Yield Bonds,” a version of their hit that Jefferson Starship recorded for Drexel Burnham Lambert. That was the brokerage firm that collapsed in 1990. Its stock-in-trade was high-yield bonds, more commonly known as junk bonds, which were risky bonds used to finance corporate takeovers. The securities themselves weren’t a problem, but some of the related practices such as insider trading were. The bonds became symbols of the excesses of an era, especially of companies that made money for shareholders by being broken up rather than by building new markets and technologies. Even better, or worse, one of the advantages of junk debt is that interest is tax deductible, so the shenanigans of the borrowers were subsidized by the US taxpayer.
And, of course, that’s what we got into in the 2000s: temporary affluence via leverage rather than long-term affluence from new markets and technologies. George W. Bush didn’t care about fiscal responsibility; he cut taxes, then started two wars, expanded Medicare, and oversaw a terrible financial crisis. So, yes, the GOP built this, and they built it on collateralized debt obligations instead of high-yield bonds, and now we are all Disadvantaged Business Enterprises. It’s come full circle.