John Gapper has a very good column in the Financial Times today. He issues a timely warning that governments are on the prowl, looking for any company that might give it an excuse to rip its wealth from its investors’ hands:
Willie Sutton, the robber, sagely observed that he raided banks because that was where the money was, and US politicians know this lesson well. The voters do not have a lot since they are recovering from a loss of paper wealth in the housing bust and governments around the world (as well as US states) face yawning budget deficits.
Who does have cash? Large, dividend-paying corporations such as BP. They include energy producers and utilities; consumer goods brands; food, drink and drugs companies – all of the mature businesses that cluster in indexes such as the FTSE 100 and the Standard and Poor’s 500.
Other companies may look at all this and believe that they and their investors are liability-free because they have not spilled oil in the gulf, sold cigarettes, made cars that do not brake or constructed synthetic collateralised debt obligations.
That would be a mistake. Many of S&P’s dividend aristocrats rely on the goodwill of consumers and politicians to keep accumulating cash for payouts. The mood following the bail-out of Wall Street is now so hostile to corporations, and public budgets so strained, that any slip would make them vulnerable.
What this means for Mr. Obama is that an anxious populace is now less likely to see his clash with BP as an instance of government’s standing up to a venal corporation, but rather as an instance of both sprawling institutions having once again failed to protect them. In a poll conducted last month by the nonpartisan Pew Research Center, 63 percent of respondents rated BP’s handling of the oil leak as fair or poor. But the government fared only modestly better, with 54 percent giving it the same dismal marks.
In other words, voters perceive both business and government as part of an interdependent system, and it is hard for them to separate out the culpability of either. Mr. Obama acknowledged as much in his speech Tuesday, when he asserted — in his lone criticism of government’s role in the crisis — that the bureau in charge of monitoring the oil companies had effectively been colluding with them instead.
All of which leaves the old kind of anticorporate populism — “the people versus the powerful,” as Al Gore put it — a beat behind the times, sort of like “flower power” or the Laffer Curve [up to a point, Lord Copper – ed.]. Mr. Obama and his party are probably right to presume that voters don’t trust BP or any of the powerful companies the president has taken to castigating on a regular basis. The problem is that they don’t trust Washington to stand up for them, either.