Adam Smith famously wrote that "people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Smith opposed barring such meetings, but added, "though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary."
Smith is right, and for the reason he outlined there is no cause to regret that President Trump has disbanded his Strategy & Policy Forum and his American Manufacturing Council. It is regrettable that Trump has managed, notably with his comments about the fatal riot in Charlotteville, to alienate those who know that rubbing shoulders with the powerful is usually good for share prices. But there is nothing in the actual work or purpose of these two advisory groups that prompts concern over their extinguishment. It is odious to the principles of a market economy to see businessmen bathing in the light of presidential smiles.
Both sides saw profit in these meetings, but not to the benefit of the public. Presidents Trump, Obama, Bush, Clinton, Nixon, and all the rest undoubtedly raised political funds by gathering executives in the White House, while the executives got to showcase for shareholders their proximity to power, plus get an inside track on government goodies.
Similarly, now, corporate chieftains see that greater shareholder benefit will come from distancing themselves from Trump rather than cozying up to him. One cannot blame them for doing what they expect will benefit shareholders; that's their job. But we can blame politicians who create such commissions.
There are formal procedures and countless ad hoc ways for an administration to receive input from industries. The rulemaking process invites and considers comments, and businesses take advantage of that. Presidents can send undersecretaries of Commerce to conduct comprehensive surveys of the needs or concerns of business.
Picking a handful of CEOs and letting them into the West Wing for some back-slapping and subsidy-suckling isn't being pro-business. It's pro-cronyism.
Look at the CEOs who joined and left Trump's commissions and you can guess their motivations. Elon Musk, the billionaire founder of Tesla, Solar City, and SpaceX joined two of Trump's councils. All three of his companies depend on government money (green-energy subsidies for Tesla and Solar City, and federal contracts for SpaceX). When Trump announced he was pulling the U.S. out of the Paris Climate Accord, thus harming Musk's pursuit of green goodies, Musk quit.
Dow Chemical CEO Andrew Liveris sat on the manufacturing council until it disbanded. Liveris has long been a voracious consumer of corporate welfare and a lobbyist for regulations that funnel profits to his company at the expense of the rest of the economy.
The subsidy-suckling presidential commissions aren't a Trump invention. Presidents have been hosting these gatherings for decades, and they've been engines of cronyism.
Obama, for instance, placed an unregistered Google lobbyist (his job description was "evangelist") on a tech commission, thus exempting him from the ethics rules that would have prohibited him from lobbying Google alumni who were then working in the White House.
Obama named General Electric CEO Jeffrey Immelt to head his jobs commission. GE spent more on lobbying during the Obama years than any other corporation, and at every turn like green energy, stem-cell research, high-speed rail, subsidized exports, banning light bulbs, and so on, Immelt matched GE's business model to Obama's policymaking.
The head of Obama's manufacturing commission was the CEO of Boeing. Obama, who had blasted the Export-Import Bank as "a slush fund for corporate welfare," soon became its champion, and his Ex-Im spent nearly half of all its subsidy dollars to subsidize Boeing exports.
The dismantling of Trump's corporate councils reflects his mishandling of the Charlottesville chaos and murder. But it's still good news, as is Trump's decision not to form a presidential infrastructure council.
If corporate executives want to help construct a wealth-creating, high-employment economy, they should press hard for the sort of reforms that will benefit productive, creative, entrepreneurial endeavor, such as lowering tax rates and eliminating loopholes and special favors from the tax code.
We wish the White House commissions and their members a fond farewell. May they never return. And may the reason they never return be that the administration's economic and fiscal policies make membership of such commissions redundant.