Tonight Larry Kudlow will bid farewell to The Kudlow Report, the single most civilized place to discuss politics and economics in a rigorous fashion that television has ever seen.
Larry's show, and Mad Money, too, came in the wake of our decision to create two hours of television from one -- our forerunner, Kudlow & Cramer. The show's hallmark was fairness to both sides of the aisle and to each other. It was only befitting that we did a coin flip, run by a real NCAA referee, to determine whose name went first in the credits. I obviously lost.
Last night I got a chance to say goodbye to the gentleman who worked alongside me for three years. As with any reunion, emotions ran high and we both had to stay focused on the substance, as Larry always insisted -- to stay focused on the matters at hand.
The arc of the interview spoke volumes about Larry's strengths and teachings, and the impact they have had on me and on Mad Money. First Larry asked me whether I thought the advances in the market averages were part of some big bubble that could be deflated any minute, as so many believe.
When you are on live television, you usually don't have enough milliseconds for genuine revelation. But just when I was about to begin my defense of the market's climb, to say that corporate profits are behind the advance, I recalled where I first heard this argument. It was from none other than my erstwhile partner. "What did you teach me? You taught me that profits drive the stock market," I told Larry. Bountiful corporate profits are behind this run-up, I said -- not the Fed, and not overenthusiasm. As long as those profits stay strong we will be fine, and if we actually get some revenue growth the market will go higher still.
Larry smiled, perhaps in reminiscence of the days when he taught me the macro, how it all fits together, while I lectured on the micro, the actual companies that toiled in the landscape that Larry traced out so eloquently night after night.
But, Larry said, what's holding it back? Why aren't we having a more robust economy? Why don't people want to create more businesses?
Indeed, why isn't small business, the true generator of jobs, taking off here? Nine years ago, when Larry and I last worked together, I would never have given him the answer that I tossed out instantaneously to his query: regulation -- too much regulation. My old partner smiled, Cheshire-like, knowing that, somehow, I had come to see the light that he has emitted daily since the ascent of President Obama to the White House.
But how could you not think that? Remember, I am of the micro, and just an hour before sitting down on the set of The Kudlow Report, I had interviewed the CEOs of TriNet (TNET) and Paychex (PAYX), two immensely profitable companies designed to help small- and medium-sized businesses deal with the government and all of its rules that are now too hard to understand for just about any businessperson. Taxes, mandates, healthcare, rules for hiring and firing and processing: These are now well beyond the ken of any company, save the multinationals.
So you either use a company like Paychex or Trinet or Workday (WDAY) or Cornerstone (CSOD) or Automatic Data Processing (ADP), or you succumb to red tape that can either wreck your business or land you in jail. These two alternatives keep you chained to your current enterprise, rather than creating one yourself.
Now, it is easy to argue that the government has simply become much more pro-labor and that all of these regulations boost workers' rights. That may be true, but all of that is being sacrificed upon an altar that makes starting a new business too hard to do in the first place. You want to protect workers, but first you have to be able to create a company that can hire those workers, and the rules have simply become too difficult to follow. I know this all too well, not just from the companies in interview, but from the inn and restaurant I own -- two new developments that have emerged since I first sat across from Larry.
I could tell Larry was pleased with my evolution toward his position, even as I sure wish I hadn't needed to evolve at all. And, with that, we smacked fists, as we always did every night on Kudlow & Cramer, and bid each other a fond goodbye. Larry is now embarking on his next chapter of spreading patriotism, optimism and much-needed civility into an American polity starved for all three.