Does Regulatory Risk Matter?

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I'm frankly rather shocked that Steve Pearlstein would say something like this in a radio interview:

SIEGEL: If in fact this is part lobbying, part trying to generate the argument in Washington that business needs a better environment to encourage them to spend, is it something that's going to last a few months until the end of the elections, say? Is there a political calendar driving what becomes of that $1.8 trillion?

Mr. PEARLSTEIN: I don't think so. I don't think they're that Machiavellian and manipulative. What may be driving it is the annual budget reviews at most companies. And so in the fall, they'll decide to do stuff that they might have decided not to do last fall when the economy really looked a lot weaker than it does. So some of these is the natural budget cycle.

And some of it, to be quite frank, Robert, is an appalling lack of imagination and guts on the part of these same CEOs who are complaining and pointing the finger at every else. You know, these guys are very good at cutting. They're very good at blaming others. They're a little less good at coming up with creative new products and services, and they've got a little flabby in that regard in the last few years where the focus has been on surviving and cutting, as it should had been. But they're not the gutsiest group of people in the world.

And by the way, they get into this group think which you - you know, the fact that they all say it, it's sort of like a notion that starts in the country club locker room, and everyone is nodding, and then the one passes it on to the other. And now, you know, this similarity of the comments betrays this sort of group think that is almost self-fulfilling at this point.

Look, do you hear Steve Jobs complaining out at Apple about this? No, he's busy trying to figure out how to fix the antenna and produce more of those iPads, which he, you know, he can't get enough of.

This is the business reporter equivalent of an economic commentator asking why all those lazy slobs collecting extended unemployment benefits don't get up off their asses and find a goddamn job rather than whining to the government for a handout, because after all, LeBron James just got a new job and a raise!

Apple's a great company, but it's hardly an example that many American firms are going to be able to emulate, for reasons that anyone who writes a business column presumably understands--and any business columnist who's confident that he could easily imitate one of the most successful companies in the world should probably stop grinding out columns for chump change and go found his business empire.  On the other hand, if Steve Pearlstein, like most of the rest of us, does not know how to go about creating blockbuster new products, then it seems kind of fatuous to deride executive worries on the grounds that they wouldn't have to worry if they'd just invent an iPad now and again.

I myself have long been skeptical of the Amity Shlaes thesis on the Great Depression--but not skeptical enough to make fun of CEO's fighting a collapse in aggregate demand and a hostile new regulatory environment for being a bunch of unimaginative ******s who spend too much time listening to the boys down at the country club.  If there's one thing that business school taught me, it's that running a company is really hard, and that most people who think they could do better are merely displaying their ignorance of what's involved.

Don't get me wrong--I find the conservative "if corporations did it, it must have been the profit-maximizing thing to do" equally grating; corporations make plenty of stupid mistakes.  But there's plenty of reason that corporations should be worried about government regulation--you've got a sweeping new health care program, a pretty wide-reaching financial reform, and a host of changes in other industries that should give many different companies pause when they thing about expanding their organizations.  I see no reason to believe that it's a primary driver of the recession.  But given what we know about corporations, capital, and uncertainty, I also have a hard time believing that the regulatory environment is making no difference whatsoever.

More to the point, when executives tell me that they're worried about regulations, I see no reason to disbelieve what they say in favor of concocting imaginary scenes in country club locker rooms.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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