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The Voice Of 40-Something Cynical Optimism!

Tuesday, November 15, 2005

Bush is bad for business!

The last few months have not been good for the Smirking Chimp, to say the least. It seems from the article I'm posting below that corporate capital in the US might be turning against the great man, and once they lose confidence in Bush, he might as well turn out the lights (as happened in California a few years back) and start hitting the booze again. As Noam Chomsky has pointed out many times, once corporate America turned against the Vietnam war as being bad for business, a US withdrawal from South East Asia was inevitable.

Please send as far and wide as possible. Thanks, Robert Sterling Editor, The Konformist

Bush's Bad Business Empire
By Mark Engler
Thursday 03 November 2005

Making the world unsafe for Microsoft and Mickey Mouse.
The Bush administration has a reputation for creating an
unusually business-friendly White House. Put 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
George Bush and Dick Cheney aren't very good capitalists at all.

George W. Bush's history as a failed businessman is well known.
Dick Cheney, portrayed by conservatives as a brilliant ex-CEO 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 $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, "[o]verall, 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-

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 U.S. corporations, there's
no reason to assume that it has been doing so successfully.

Increasingly, the business press is suggesting that corporate
leaders, who once hoped the current administration would push the
corporate globalization of the 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 U.S. 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, Condi, and
the neocons 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 Shia mob, angered
by U.S. backing for President Pervez Musharraf and by reported
abuses at Guantánamo 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 U.S. 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
like "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 like 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 U.S. 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 that

"one-third of all consumers in Canada, China, France, Germany,
Japan, Russia, and the United Kingdom said that U.S. 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, Exxon-Mobil, Chevron Texaco, United Airlines,
Budweiser [good! Bloody yellow water! Drink Czech Budweiser Budvar instead!], 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 press 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 U.S. Banker magazine article from August relaying the results
of an Edelman Trust Barometer survey of global elites found that "41
percent of Canadian elites were less likely to purchase American
products because of Bush Administration policies, compared to 56
percent in the UK, 61 percent in France, 49 percent in Germany and
42 percent 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 U.S.
Banker article warned, "[T]he 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; U.S. 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 U.S. 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 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 U.S. 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 pre-empted 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, says 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 U.S. 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,, 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 U.S. 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
AWOL 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?

Back in 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 re-election campaign. (Business
being business, "at least three executives on Kerry's list also gave
the maximum $2,000 to Bush's re-election 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" like 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 U.S. 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, Newsday
and In These Times. He can be reached via the website Research assistance for this article was
provided by Kate Griffiths.


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