To End the Public-Private War

A call for a needed truce between Government and enterprise

During more than four distinguished decades of shuttling between the learned halls of Harvard and the corridors of power in Washington, John T. Dunlop, 66, became increasingly troubled by a damaging adversary relationship in U.S. society. Says he: "Why did American Government and business become so hostile during the last 75 to 100 years?"

Upon returning to Harvard in 1976 after serving as Secretary of Labor in the Ford Administration, Dunlop found an equally concerned colleague at Harvard, President Derek C. Bok. With Bok's backing, Dunlop began to explore ways to alleviate the tensions that divide makers of public policy and leaders of private enterprise. His vehicle: joint efforts by Harvard's venerable Business School and its younger neighbor on the opposite bank of the Charles River in Cambridge, Mass., the John F. Kennedy School of Government. With the aid of fellow professors, businessmen and another former Cabinet member, Dunlop has finally devised a way to bridge that tide: by offering students of the two graduate schools, as well as political and business leaders, some insights into the thinking of their presumed rivals. Their concept is contained in a collection of essays in a new, 118-page volume titled Business and Public Policy (Harvard University Press; $6.95).

The slim book cogently faces up to the U.S.'s peculiar public-private hostility--a phenomenon notably absent in other industrial societies, especially in West Germany and Japan. The book's basic message: the growth of Government control over business in the U.S. has been so rapid that almost no one in either the private sector or politics knows how to cope with it. The result: wasteful combat. Writes Irving Shapiro, vice chairman of E.I. duPont de Nemours & Co.: "For a long time the two [business and politics] have been circling around each other like gladiators in combat, blocking and parrying each other's moves."

Remembering his 1972-74 stint as Secretary of the Treasury, George Shultz, now vice chairman of the Bechtel Corp. and one of Ronald Reagan's economic advisers, emphasizes that much of the "abrasive interface" between Government and private enterprise results from differences in thought processes. "When a problem comes up, economic thinking says, 'What is the efficient way to solve it?' " writes Shultz. "Political thinking says, 'What is the equitable solution?' " In the search for equity, economic considerations are too often overwhelmed by special pleading by pressure groups and naive, overzealous Government officials.

Harvard Business School Professor Alfred D. Chandler Jr. traces the origins of the schism in the American system to the late 19th century, when large enterprises, notably the railroads, often ignored the interests of local communities. The citizens of these communities began looking to the Federal Government as a brake on economic barons. Since World War II, this process has gone wild. Richard G. Darman and Laurence E. Lynn Jr. of the J.F.K. government school estimate that 40% of all decisions involving corporate capital investment now are determined by considerations other than profits or the best interests of shareholders and employees. Instead, the determining factor is Government policy; and it, of course, is seldom based on a comprehensive grasp of relevant economic facts. Sums up Dunlop in a masterly understatement: "We need to find better ways to work on the problem."

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