As U.S. takes tumble, growing cries for government policy

DETROIT (Reuters) - Funny how a near-total meltdown of the global financial system can change your perspective on things.

For years the mantra of Corporate America has been that the invisible hand of the free market is best left unburdened by the heavy yoke of government policy.

But in the wake of the collapse of Lehman Brothers and the economic freefall that followed, there appears to have been a paradigm shift in corporate thinking.

Now, if you listened to the assembled executives and academics at the National Summit in Detroit this week, the heavy hand of government no longer seems so, well, heavy handed.

In various panels, participants have called for the U.S. government to come up with an industrial policy, an energy policy, infrastructure policy, education policy and others to help "define America's future" as the summit's slogan boasts.

"We can't hide from the global marketplace, so we have to prepare for it," said Sandy Baruah, assistant Secretary of Commerce under former U.S. President George W. Bush, who was not known for favoring government intervention or regulation of the markets -- with the notable exception of the massive financial sector bailouts in the twilight of his tenure.

"We need a national competitive strategy," Baruah, now a senior fellow at the Council on Competitiveness, said. "It's the right thing to do and time has run out."

ATTENTION DEFICIT ... WAIT, WHAT WAS THAT?

Others made similar calls to action.

William Ford, chairman of Ford Motor Co and great-grandson of company founder Henry Ford, lamented that the United States, unlike the rest of the world, has no established industrial policy.

"As a nation we've had collective ADD (Attention Deficit Disorder) when it comes to the issues," he said. "We have to have a longer-term outlook."

"People are waking up to the fact that our industrial base is eroding," he added. "Prosperous nations don't let that happen."

Joseph Welch, chief executive of electricity transmission company ITC Holdings Corp, warned that America's position as the world's top energy consumer would inevitably lead to problems as developing nations seek their share of resources.

"We are going to see a reallocation process that will have dire consequences -- not for us, but for our kids or grandkids," he said. "We need to start thinking now."

"Can you imagine that the largest energy consumer in the world doesn't have an energy policy?" he added.

Asked whether he expected the administration of U.S. President Barack Obama to produce an energy policy, Martin Koffel, CEO of energy transmission company URS Corp, said yes and added rather meekly that he hoped the private sector would be allowed to contribute to its formation.

BRAVE NEW WORLD

This policy wish list is a world away from the ethos that has held sway among corporate giants for decades that government should stay away from business.

As former U.S. Republican president and virtual conservative deity Ronald Reagan famously quipped, "The nine most terrifying words in the English language are: 'I'm from the government and I'm here to help.'"

None of the issues that have been raised at the National Summit are new, nor are the lack of policies on energy, industry and so forth. But many corporations have preferred not to have the government dictate which way to go and have long argued against prevailing scientific views on such issues as climate change.

In early 2008, for instance, General Motors Corp Vice Chairman Bob Lutz told journalists that global warming was a "total crock of shit."

But such sentiments have fallen out of favor, apparently, in the aftermath of the severe beating delivered to the markets last fall.

Indeed, the worst U.S. housing crisis since the Great Depression, the credit crunch and shredding of the financial sector, the bankruptcy of automakers GM and Chrysler LLC and the highest unemployment rate in 26 years have all apparently served to focus corporate minds.

"None of the issues raised here are new," said Bud Peterson, president of the Georgia Institute of Technology. "But the critical times we are in have raised the urgency of those issues."

"America has shown again and again that it can respond to a crisis," he added. "But what action will be taken depends on who is listening to what's being said here."

Whatever the cause of Corporate America's change of heart on government policy, James Quigley, CEO of Deloitte Touche Tohmatsu -- one of the world's largest accounting firms and a sponsor of the National Summit -- said the company's investment in the event had been worthwhile.

"We're proud to be a sponsor because this is a critical and important dialogue right now," Quigley said. "If this leads to collective thinking and collective action, then it has to be worth our time and money."

Baruah of the Council on Competitiveness chose to quote Winston Churchill on the chances the United States will tackle its stable full of problems:

"The Americans will always do the right thing... after they've exhausted all the alternatives."

(Reporting by Nick Carey; Editing by Matthew Lewis)