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The State of American Business? Not Bad

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On Thursday, Thomas Donohue, chief executive officer of the U.S. Chamber of Commerce delivered his State of American Business address. The Chamber is the chief Washington, D.C.-based lobby for business, representing the interests of large and small. (Some prominent members, like Apple and utility Exelon have left the Chamber in recent years over clashes on its policies towards climate change).

Like the president's State of the Union address, Donohue's address was a mix: he struck a generally optimistic chord, pointing out problems and challenges, and laid out a set of policies that would lead to better outcomes. As we discuss in the accompanying video, Donohue finds plenty to be concerned about — the crisis in Europe, problems in Asia, political bickering in Washington, regulation and taxes.

While the private sector has gained some steam — it's created about 3.5 million jobs in the past two years — Donohue believes the government could provide it with a much needed shot of adrenaline. Donohue focuses on two large and related items -- easing regulation to promote the production of all sorts of domestic energy sources and investing in transportation, energy, and resource infrastructure to promote job growth and efficiency — where Washington can chip in. Makes sense. But given that the first is a great desideratum of Republicans and the second is a great desideratum of Democrats, we shouldn't expect big deals on either agenda item this year.

An irony emerges in Donohue's speech, and in our conversation. And it's one of the great disconnects that is helping to define our politics.

Donohue talks a good deal about how the U.S. economy might perform in 2012 and how that performance could be improved. But the state of American business and the state of the economy, at least as the typical American experiences it, may be two different things. Since the financial crisis, business has bounced back much more rapidly than the consumer and than the economy at large. In the three years since the meltdown of 2008, U.S. companies have returned to impressive profits, refinanced debt at low rates, cut costs and reaped efficiencies in impressive fashion, stormed into global markets. They're now collectively sitting on nearly $2 trillion in cash; the stock market has made up most of the vast losses it suffered. Labor unions have never been weaker, and with large amounts of slack in the labor market, management has been beating the living daylights out of its employees.

It's a great time to own a company. But it's not such a great time to work for one.

Because companies increasingly operate on a global scale, and gain an ever-larger percentage of their revenues from consumers and businesses outside the U.S., this dichotomy simply doesn't matter to today's executives as much as it might have ten years ago, twenty years ago, or thirty years ago. Thanks to productivity, smart focus on efficiency, and globalization, U.S companies can thrive even as consumers and workers in their home market suffer.

When confronted with this duality, the Chamber -- and American business at large — doesn't have much to offer beyond more of the same: more trade deals, more tax breaks, more relief from regulation, more reductions in entitlement spending. The challenge for professional business advocates like Donohue is that recent experience shows that such policy efforts can produce positive aggregate economic results without producing much in the way of benefits for the typical American.

The state of American business may be pretty good. But the great divergence between the one percent and the 99 percent, between company owners and workers, between global players and local ones, is increasingly coming into focus. And as former Massachusetts Governor Mitt Romney churns steadily toward the Republican nomination, this is a theme that is likely to be discussed with greater frequency.

Daniel Gross is economics editor at Yahoo! Finance

Follow him on Twitter @grossdm; email him at grossdaniel11@yahoo.com

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