The two faces of USA Inc

THE leaders of America’s multinational firms are usually a picture of self-control, with sincere handshakes, grown-up hair and scripted sound bites. But ask them about the election and emotion takes over. At a drinks party in Manhattan, a mega-bank’s boss froths that Donald Trump is a madman. Thumping an office table, the head of one of the country’s biggest technology firms, and a rare Republican in Silicon Valley, solemnly vows to vote for Hillary Clinton. The chief of a huge transport firm giggles uneasily that a Trump presidency will destroy free trade—and his firm’s booming business with Mexico.

The feeling of contempt is mutual. On June 29th Mr Trump laid into the Chamber of Commerce, big business’s favourite lobbying organisation. “It’s totally controlled by the special-interest groups,” he said, to wild cheers from a crowd in Maine.

Big international firms do not share Mr Trump’s diagnosis of America as a country that has stopped winning. For them, it has been a golden decade. Share prices are near an all-time high; the operating earnings of S&P 500 firms have risen by 137% since the crisis year of 2009. Many of the trends that have hurt Middle America have made USA Inc stronger. Big firms have cut jobs to increase productivity and now make 40% of their sales abroad. They are more dominant at home because of a wave of mergers and their mastery of lobbying. They grumble about tax, but have become superb at avoiding it. The top 50 firms paid a cash tax rate of 24% on their global profits in 2015, compared with an official rate of 39%. Even the big banks have learned to live with more regulation: they are thrashing their European rivals across the globe.

At the very point that swathes of the public say the economy isn’t working, USA Inc is on top of the world, occupying all of the ten top spots in the global corporate rankings, measured by market value. Bosses of multinational firms think their country has everything to play for. The worst of the job losses attributable to cheap Chinese labour have already happened; with luck, Chinese consumers will start buying more from the rest of the world. America’s lead in technology has never been bigger. New trade deals, such as the proposed Trans-Pacific Partnership, are remarkably skewed towards American interests in areas such as intellectual-property rights. “The American model that got us through the last 30 to 40 years is stronger than ever,” declared Eric Schmidt, the executive chairman of Alphabet, the parent company of Google, to the Economic Club of New York last month.

The hostility of big firms towards Mr Trump goes beyond free trade. They know that America’s demographics are changing. The fastest-growing cohort of consumers are Hispanic, with their share of overall spending forecast to rise by about two percentage points by 2020, even as the share of white Americans drops by the same amount, according to Morgan Stanley, a bank. Bosses see a much more socially liberal America, too. None of this sits well with Mr Trump’s nativist agenda, which is perhaps why Wells Fargo, JPMorgan Chase, Ford, Coca-Cola and Apple have either cut their support for the Republican convention this month or will not support it at all.

Yet a thousand miles south of Manhattan, in suburban Florida, the mood is different. The boss of a construction firm says he is fed up. His firm does all its business within America’s borders and profits have not yet recovered to 2006 levels. The Obama administration, in his view, has crippled the economy. More generous welfare benefits means labourers have got lazy. Permits and local taxes have proliferated, raising costs. The crackdown on banks has hobbled lending. Vote for Hillary? Not a chance, he says. Trump it has to be—and if he is psychologically erratic and vulgar, better that than an endless stagnation.

The construction boss is not alone. Opinion polls suggest that Mr Trump is also popular with small-business owners. His campaign-finance disclosures show hundreds of contributions from the owners of small firms that no one on Wall Street or in Washington, DC, has ever heard of: Biagi Plumbing, James River Air Conditioning, Rosenberger Construction, Allen Unique Autos, Texan Drywall Inc and Podell Fuel Injection.

A demagogue and a hypocrite, with a point

The complacent response is that these entrepreneurs are fools who have been deceived. After all, Mr Trump’s business career has been built in the heart of the globalised part of the economy, not slogging it out in the trenches of Middle America. About 66% of the value of his business operations sits in New York, mainly in buildings in glittering Manhattan, according to Economist estimates. Global too-big-to-fail banks are tenants in two of Mr Trump’s most valuable properties. He has courted foreign investors, from Hong Kong to the Middle East, since the 1990s.

But Mr Trump speaks the language of business owners when he says he will abolish Obamacare, the health-care scheme that companies say has created piles of red tape. When he promises that no firm will pay a tax rate of more than 15%, small and domestically-focused business see not a fiscal absurdity, but a chance that they might enjoy the same treatment that multinationals already enjoy (Apple, America’s biggest firm, paid a cash tax rate of 18% in 2015). And when Mr Trump complains about special interests dominating the economy, and corrupting politics, he is right. Lobbying budgets have reached $3 billion a year. Two-thirds of industries have become more concentrated since the 1990s. With big companies ascendant, the number of new entrant firms being created is at its lowest level since the 1970s.

A sensible economic agenda for America would please—and annoy—both sides of the divide. It would pursue free trade but also attack oligopolies, lobbying and bureaucracy and reform the corporate tax system. In other words, it would listen to the polished sophisticates who run America’s biggest companies, but also to those business leaders who support Mr Trump.