Politics of Business
The title might be a little misleading but I believe you will get the point after you read this. It’s more about the impact of politics and political decisions on business and through every administration, political motivations and decisions have impacted the business of business in this country. From tax hikes to tax reform. From increases in defense spending to creating a semi-welfare state. What happens in Washington has major impact on business in this country.
Lately, it’s about spending. Spending and more spending. And guess what? More spending. A lot of this spending will go to helping people that may or may not actually need all that help, but the government wants to put cash in people’s hands so they will spend, spend, spend. Ah, ok, nice try. The spending so far, has been in forms that if anyone had actually thought about it, will have less of a direct impact as hoped. Paying down credit card debt, savings or turning that cash into gold by investing in Bitcoin or some other high risk investment. Not what Congress envisioned I am sure. I have gone over this in previous articles so I won’t bore you with it again but the point is, money was given out to help the US economy rebound and expand. It isn’t working exactly like that and while this windfall is helpful to some individuals, the overall impact may not live up to the cost.
Mondays are usually reserved for some sort of business commentary and with the previous thoughts in mind let me digress a little.
When President Biden took office he signed a slew of executive orders that sort of, kind of, fulfilled campaign promises but ended up being a much larger and more expensive mistake than he anticipated.
This is where politics intercedes with business and not in a good way. I am talking about the cancellation of the Keystone XL Pipeline. The immediate impact was the loss of over 11,000 union jobs and remember, every full time Union job can effectively count for a total of 1.4 jobs so that cancellation probably cost a total of 15,400 jobs throughout several regions and I think I am being a little conservative. There is also a much larger cost as well and very few in the media have covered it and that is the overall economic cost of oil prices rising 30% since the executive order was signed. The price of gas has risen even more over that time frame and Americans, especially those that can least afford it, are paying more for gas. Somewhere in the neighborhood of 100 billion dollars to be precise. The march towards a Carbon Neutral future is going to be way more expensive than we expect.
Another genius signing was dismantling all of the Trump policies regarding immigration. Surprisingly, even the New York Times is jumping on the “crisis” bandwagon and President Biden’s own party is starting to question this move. Economically, the impacts are more about the border states and thankfully, those states economies are doing very well ( except for California) and I expect to see their growth continue as populations shift to those lower tax regions. Politics has caused another unforeseen (?) crisis and there will be a cost both financially and socially.
The Biden Presidency has not gotten off to a great start to be frank. He may not have been the right man for the job to begin with. However, he is what we have and we have to deal with it. To be fair though, neither he nor the previous administration signed up for dealing with a pandemic like we have now.
Prior to the pandemic the American economy was roaring. Trump policies for the most part were doing exactly as designed. Bringing some jobs back and giving corporations the ability to expand and grow their businesses. The success was widespread. While I may not have agreed on some of his environmental issues, other facets of his rebuilding America were working. Energy independence started prior to Trump’s Presidency but his policies did nothing to slow that momentum. Jobs were created for all income levels and full employment was a reality. Getting the American economy back to those pre Covid levels will not take wishful thinking by Janet Yellen but positive action by the administration. Creating a welfare state will not do it. Creating an environment where businesses are allowed to succeed will.
The longer the administration holds to an unsuccessful strategy, i.e. Anti-oil industry, the longer it will take to rev the engines of commerce back up.