Commercial Challenges to American Business

The political challenges and setbacks of the 1970s coincided with increased commercial challenges to American business. The dominance of American manufacturing, so complete in the immediate aftermath of the Second World War, was eroded by the increasing success of competitors from Europe, Japan, and the successful industrializing countries such as the Four Tigers (Hong Kong, South Korea, Taiwan and Singapore). By the late 1980s, the comparative economic decline of the United States was much discussed by Americans.13

The increased competitive challenge to American corporations encouraged their political activism in two respects. First, a large number of industries sought protection from foreign competitors. The American textile industry had long been given extensive, though generally unsuccessful, protection from foreign competitors. All Administrations, Republican and Democratic, had accepted the political need to make concessions to the textile industry in order to prevent it from becoming the core of a coalition which might endanger the United States’s general commitment to free trade. In the 1980s industries as varied as steel and semiconductors also received protection. Naturally, the pursuit of protection required extensive political activity to mobilize support in Congress and to persuade executive branch agencies such as the International Trade Commission, the Commerce Department and the Special Trade Representative to accept the need to help the afflicted industry. I4

Increased competitive pressures also increased the attractiveness of types of business from which in practice foreign competitors are in practice excluded, such as government contracts. It is often remarked that government is the largest single customer for business. As keeping or winning ordinary customers became more difficult for American corporations, they devoted increased resources to winning government contracts. Obtaining government contracts in the United States is a highly political process in which mobilising the support of powerful political allies is essential.

Business responded to a variety of challenges by becoming more active politically. This increased activity took a variety of forms. First, individual corporations increased their political activism. The best known sign of this increased activism is the growth in the number and importance of business political action committees (PACs). When election law changed in the early 1970s to allow the formation of PACs few expeded that business would use the new law much. However, corporate PACs grew much more rapidly than any other category. Business overtook unions as the largest source of legal campaign contributions to such a degree that business contributed twice as much to campaigns in the 1980s as did labour. Individual corporations also opened Washington lobbying offices in larger numbers; the number of corporations with their own representation more than doubled between the early 1970s and the early 1980s so that nearly 600 corporations had permanent embassies in the capital. Other corporations used either Washington lawyers or the new profession of contract lobbyists to represent them. The Washington bar expanded considerably in the 1970s to meet demand for lobbying. The 1980s saw the growth of firms of contract lobbyists that represented wealthy clients (usually corporations) who needed to persuade government officials or Congress to help them.15

A second development was that individual industries that faced particularly severe challenges to their collective interests improved the quality of their trade associations significantly. The oil industry, one of the main targets of critics of business in the 1970s and considerably regulated by government in that period, increased its spending on its trade association, the American Petroleum Institute, considerably. The chemical industry, again a frequent target for regulators in the 1970s, similarly boosted spending on its trade associations. Schlozman and Tierney16 found in the survey of interest groups in Washington in the 1980s that there had been considerable change in the quality of trade associations so that the description of trade associations in the 1950s as understaffed and under-financed was no longer valid. Admittedly, trade associations representing declining industries such as iron and steel, or industries temporarily fallen on hard times such as oil, lost revenue and staff in the 1980s. Most did not.

A third development was a series of attempts to create a more effective ‘umbrella’ organisation speaking authoritatively for the collective interests of American business. In the mid-1970s, a number of unsuccessful attempts were made to merge the Chamber of Commerce and the National Association of Manufacturers. Although these attempts were unsuccessful, both organisations increased their standing in Washington. Whereas the Chamber improved its reputation largely by becoming a skilled practitioner of ‘grass roots lobbying’ (mobilising members around the country to put pressure on their legislators to side with the Chamber), the NAM attempted to become a less consistently conservative organisation better able to contribute to specific policy debates. Most promising of all seemed the attempts by large corporations to create an organisation characterized by technical expertise rather than, as with the Chamber and the old NAM, by a commitment to very general conservative causes. The organisation created, the Business Roundtable, rapidly acquired a high standing in Washington. The first chairman of the Business Roundtable, Irving Shapiro of DuPont, became a frequent confidant of President Carter’s.

Finally, American business started to fight the war of ideas more vigorously. Most American academics, particularly those involved in the social sciences, are centre-left in their political orientation. Much the same is true of reporters working for network news programmes and quality newspapers such as the New York Times or the Washington Post. Business executives feared that in consequence the American intelligentsia encouraged the population in general to be more critical of business than they might otherwise have been, and generated a flow of policy proposals or issues damaging to business interests. In the 1970s, business began to fight back by funding such pro-business think tanks as the Heritage Foundation or the American Enterprise Institute.

By the end of the 1970s, American business appeared to be better mobilised politically than ever before. The improved representation of business in Washington led, in the view of many observers, to important defeats for public interest groups and unions even while the Democrats controlled both the White House and the Congress. For example, modest proposals for labour law reform and a consumer advocacy agency were both defeated by a Congress that had been thought to have not only a Democratic but a liberal majority. Even more exciting from business’s viewpoint, however, was the election in 1980 of the most explicitly pro-business Administration at least since the 1950s and possibly since the 1920s.