All bearish about Bill

As thousands of cheering, clapping delegates formally elected Mr Clinton as the Democratic presidential nominee this week, business and financial leaders began to take a harder look. With the quick exit of Ross Perot, an independent who had garnered a big share of the business protest vote, their chances of punishing George Bush for poor economic leadership had narrowed to one. It is not at all clear that the US business establishment will be able to make this transition. Many approach the prospect of a Clinton presidency with 'fear, hostility and apprehension', according to Donald Straszheim, chief economist of Merrill Lynch.

This is not to say that there are no business supporters of Clinton and his vice-presidential running mate, Senator Al Gore of Tennessee. Last week, hundreds of delegates to the convention were admitted on to the floor of the American Stock Exchange as special guests of James R Jones, the Amex president who formerly served as a Democratic congressman in the House of Representatives.

It was a scene certain to chill libertarians and unreconstructed Wall Street 'bulls', especially those guided by the motto, 'the public be damned'. To them, Wall Street is the domain of the bright and the bold, not the poor, downtrodden huddled masses. And yet Mr Clinton's proclaimed 'New Covenant' between the people and government smacks to them of the latter. There is fear that this new brand of populism will engender the same hostility between business and government that characterised Franklin Delano Roosevelt's 'New Deal'. 'I see taxes, taxes and more taxes,' said a vice- president of Paine Webber, who wished to remain anonymous.

But are these perceptions fair? There is no real evidence, based on Mr Clinton's record in Arkansas, that he is anti-business or anything other than politically mainstream. Arkansas is a big, southern state with a relatively small population, run by a close- knit inner circle with Clinton at its centre. The governor worked closely with business leaders, sometimes too closely, according to his critics, to get things done. He believes in a hands- on business-government partnership, not a stand-offish one.

In addition, Clinton is not the wild- eyed protectionist that business leaders fear. He supports a new free-trade agreement with Mexico as well as the proposed Uruguay round of international trade talks. He blames the big US trade deficit mainly on the US itself for its failure to modernise, raise productivity, control spending and compete in world markets.

Mr Clinton would tax the rich, defined in his acceptance speech as 'those who earn more than dollars 200,000 a year', to pay for more education and social programmes for the middle-class and poor. But he also advocates tax cuts for businesses as long as they put 1.5 per cent of their payrolls into training programmes for workers. On executive pay, a big issue in the US, Clinton wants to limit tax deductions.

The rationale he outlined in a recent Business Week article was not hostile. 'In the ideal world, you'd give business more incentives to reward executives on a long-term basis and you would not care what they made as long as the compensation was related to productivity and job growth. If someone can show me a practical way to do that instead of saying 'no deductions for compensation over dollars 1m', I would be happy to entertain that.'

Where Mr Clinton clearly differs from his Republican opponents is in his emphasis on a modified industrial policy to spur economic growth and his belief that manufacturing jobs 'have a higher multiplier' in terms of long-term job growth. In the business community, this bears the hallmark of a policy of picking winners and losers, which has failed in earlier administrations and in other countries. However, the Clinton team insists that its approach is one of supplying incentives that will encourage the private sector to do the right thing, not one of injecting heavy-handed government into the process. Thus Clinton's emphasis on rebuilding America's infrastructure. For this, and for his emphasis on education and re-training, Clinton receives applause from many US business leaders.

But the positives are counter-balanced by some negatives, for example his failure to recognise the damage that strong regulation can do to the business community, according to the US National Association of Manufacturers. Wall Street also wonders how Clinton plans to pay for his new 'human capital' programmes. Many fear that higher inflation will be the result. So the word is still out on how the business and financial community would react to a change in Washington. The few confirmed supporters - Robert Rubin of Goldman Sachs and Roger Altman of the Blackstone Group, to name two - have their work cut out for them in coming months.