Chris Kuehl
Managing Director • Armada
There has always been a struggle at the heart of American business development. On one extreme there is the notion that business should be completely unfettered and allowed to do whatever is necessary to promote greater revenue and profit. It is a “buyer beware” approach that tolerates and even encourages actions that could be detrimental to the “greater good”. It likely means exploitation of workers, cheating consumers and damaging the common environment. On the other extreme there is hyper-regulation, an attempt to protect everything and everyone from any negative outcome, a total focus on the community as a whole while ignoring what a business needs to grow and prosper. Ideally there is a balance but finding that point is extremely challenging. It seems that there has been a tilt towards regulation and government intervention from both sides of the political aisle but with differing motivations and this has created a level of uncertainty that has not been seen in years. A recent study prepared by EY indicates that business uncertainty over the last ten years has cost over $700 billion in profits for just the top 100 businesses in the US. This period of uncertainty has been ascribed to a number of events – the pandemic and its impact on the supply chain, turmoil in the London financial markets, Ukraine invasion and now the constantly shifting tariff and trade policies. All of this has dented that dynamism.
Both Democratic and Republican policymakers have been pushing agendas that have served to limit dynamism. In the first Trump term there was attention paid to issues that had been limiting growth. There was an emphasis on deregulation, tax reduction, streamlining approval practices, promoting consumer activity as well as improving export options to make business and consumer activity more efficient. The second term has been much different. The 2017 tax cuts boosted business significantly but even as they were extended in the recent tax bill the tariffs have essentially negated the advantages. There have been any number of government interventions that have added costs – restrictions on what can be sold to who, who can be employed and at what cost and what new restrictions and tariffs must be accommodated on an almost daily basis. This has eroded the business patterns that have driven much US productivity for decades.
The US is now and has always been a market economy and this is a good and bad thing. It means a focus on the consumer to determine where there is demand and at what price. If that means that a product is cheaper when produced somewhere other than the US, so be it. If it means that demand has slipped to the point that it is no longer profitable to produce the product the US stops – even if that means lost jobs and closed business. There is a legitimate attempt underway to alter this pattern but these moves have consequences as well. Consumers will pay higher prices, supply challenges will emerge, trade relationships will deteriorate. Dynamism was built on a minimum of restrictions but there are more of these in place than ever.
