Dean Barber

Suicide Bombers with the American Economy

In Uncategorized on October 6, 2013 at 7:23 am

Every morning when the United States Senate convenes, Senate Chaplain Barry Black opens each session with a prayer to guide the senators throughout their day.

Black, a retired Navy rear admiral with 20 years service, has delivered some tough admonitions of late on “the unfortunate dialectic of us versus them.”

“Have mercy upon us, oh God, and save us from the madness,” Black prayed Thursday morning. “We acknowledge our transgressions, our shortcomings, our smugness, our selfishness, and our pride. Create in us clean hearts, oh God, and renew a right spirit within us.”

But here’s the line that really got me to sit up and take note: “Deliver us from the hypocrisy of attempting to sound reasonable while being unreasonable.”

Now that said it all. Preach the word, preacher.

As anyone who follows this blog knows, I write about business trends and how it affects corporate investment (primarily site selection) and economic development (competitiveness for communities.) As a consultant for hire, this is my bailiwick. I tend to shy away from politics, because I don’t want half of you out there hating me.

Government’s profound effect

But the truth is that government – whether it be through laws, policies, regulations, action and/or inaction – has a profound effect and influence upon corporate investment in this country and all over world for that matter.

As part of a site selection process, and it is a process to which I speaking about this coming week at the Texas Data Center Summit in Dallas, government regulation, permitting, taxation and the like, goes a long way in determining if a place is best suited for a particular kind of investment. In a broad brush way, government is often a key component to whether a community has a “business friendly” environment. (I spoke to one real estate developer last week who told me that it took him 6 ½ years to get a piece of property rezoned.)

For years, there has been a faction of the Republican party, a minority to be sure, that believes that government is the enemy, the root cause for much of the nation’s problems. This can be sourced back to President Ronald Reagan who famously said that the federal government was not the solution but the problem.

In fact, Reagan was a master of government and used it in ways to provide solutions. A new book is out by Chris Matthews – Tip and the Gipper: When Politics Worked – reveals that President Reagan was quite deft at the art of compromise with then Democrat House Speaker Tip O’Neil in forging and passing legislation.

Real governing can mean growth

Reagan and O’Neil, stalwarts in their own respective partisan camps, were able to get past blame-game rhetoric, develop a personal relationship, and thereby find ways to accommodate, if not partially, the other side to make government function.

And it’s my belief that their collaborative effort provided for stability and economic prosperity. In short, the business community responded favorably by investing. Fifty-five months after the recession started in July 1981, the Reagan recovery had created 7.8 million more jobs than when the recession started, and real per capita gross domestic product was up by $3,091.

Fifty-five months after the recession that began in December 2007, there were 4 million fewer Americans working than when the recession started, and real per capita GDP was down $803. That would indicate, at least to me, that Corporate America does not have great confidence in the current environment in terms of capital investment and job creation. The Progressive Policy Institute estimated companies have delayed spending by as much as $2.2 trillion since 2008.

The cards dealt us

Today we have an intellectual if not professorial president who has not displayed the schmoozing skills of a Reagan or a Bill Clinton and who only fairly recently began inviting Republican senators to the White House for dinner.

Pair that with the fact that you have a modern-day know-nothing wing of the Republican party, mostly House members, who detest this president and will not concede that he is in office legitimately. They have proved that they will do virtually anything to thwart any and all policies coming from this administration. If Jesus Christ were to return and step foot on the White House grounds, they would deny it.

This Tea Party faction took office not to govern, but to destroy. And it is through their efforts that they have hi-jacked what I consider and venerate as the once Grand Old Party, the party of Lincoln and Teddy Roosevelt.

This may come as a hard blow to certain people – particularly those left and right who want to hate and demonize the other side — but I will say it nonetheless: I can actually respect the tenants of both liberalism (now re-termed as “progressive”) and conservatism. I find neither particularly threatening if and when practiced by reasonable, thoughtful people who understand that government is the art of compromise.

Which is why I have every intention of reading Matthew’s Tip and the Gipper.

Business askance with GOP?

Be aware that the current shutdown is costing the U.S. economy $300 million a day, according to IHS, a global market research firm. And it may signal a shift of sorts, a reconfiguration and a shifting of power. Judging from the comments I hear from business leaders, they are rethinking whether the Republican party is the party of business.

From the austerity imposed by the sequestration to the refusal to reform immigration laws to the shutdown and now another debt ceiling showdown, when the U.S. borrowing authority expires on Oct. 17, let’s just say the GOP’s actions have put a strain on its relationship with certain previously supportive CEOs.

For years, business people have been asking for at least a modicum of stability so as to make prudent business decisions on investment. Washington has been offering anything but that. And increasingly, the GOP is taking the heat.

Get over it, it’s the law

Look, Obamacare is law. It passed both houses of Congress. It was signed by the president. It was upheld by a conservative Supreme Court. Now it matters not if you like it or not (I’m personally taking a wait-and-see mode), it is the law of the land.

If Congress in its wisdom (now that is an oxymoron) wants to amend the law by passing a new law, that’s one thing. Have at it, boys and girls. But shutting down the government because a minority faction of legislators do not want a law enacted, well, that’s a whole different matter. You don’t hold the government hostage for such a lame-brained reason. That’s not the way government was designed to work.

Be clear that there is no exit strategy at work here. There never was. Was this Tea Bag minority so delusional as to really believe that the president would just keel over and dismantle, in whole or in part, the hallmark of his administration?

Again, Obamacare may prove to be good or bad (keep in mind that even the most conservative retirees do love their Medicare), but presidents going back to Teddy Roosevelt have been talking about a national healthcare system that would be accessible and affordable to all. It boils down to a philosophical belief on whether health care is a right. That concept is not currently embraced by the Republican Party, which means they’re on the wrong side of history on this.

Lunacy at work

So in a poorly-hatched scheme to somehow derail Obamacare, they shut down the government and what is even worse, flirt with the prospect of allowing the U.S. government to default on its debt. Folks, that’s not conservatism. That’s just damn lunacy. You don’t spit on Superman’s cape and you don’t mess around with the faith and credit of the United States government, which absolutely must pay its bills.

If a default were to happen, the consequences to the economy could be catastrophic. The Treasury Department warned Thursday that a failure to raise the debt ceiling could lead to a financial crisis and recession even more damaging than the financial crisis of 2008.

A failure of the U.S. to pay its obligations if the debt limit is not raised “would be unprecedented and has the potential to be catastrophic,” Treasury said in a brief report intended for members of Congress and also released publicly by the agency.
“Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse,” the report said.

Is that what you want, Ted? Is that your end game?

Grownups must take control

The only reason why I am deviating into politics in this blog is because too much is at stake in terms of not just my business as a consultant for industry and economic development groups, but for all business. Folks, this is important stuff.

Now it’s true that we have had shutdowns of the federal government in the past, 17 to be exact. Wall Street, more so than the business community, views Congress as a bunch of idiots but who will at the end of the day figure things out and do the safe thing.

But this Tea Party minority, which has undue sway in the Republican Party, is a different crew. We’ve never had a group quite like this before — suicide bombers with the American economy.

Look, the GOP already has a history of putting off immigrants, young people, minorities, suburban women. And now they want to alienate the business community? No, the grownups have to take control and wrench the party back from the influence of these waacko birds.

This isn’t just politics. This is business, and the economy is at stake. As Senate Chaplain Barry Black said in his prayer on Thursday, “save us from the madness.” Preach it, preacher.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas.

If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

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  1. There seem to be two kinds of Republicans: the tea-party-ones and the ones-that-are-afraid of the tea-party-ones. Now, if the ones-that-are-afraid of the tea-party-ones would actually stand up to the tea-party-ones, then what would happen? Well, at some point, because of Gerrymandering, and because, apparently, the majority of the voters that identify themselves as tea-party-ones vote in primaries, the Republican party would have the tea-party-ones as their majority. Conclusion: Trouble…with a capital ‘T’…

  2. well written today Dean. Well written! It troubles me when we think so much alike… I am concerned for your well being. This is the same way I feel.

    Sent from my iPad

  3. I’ve been concerned for awhile about the blurring of social conservatism and fiscal conservatism in your country, which influences their counterparts up north in Canada where I’m at. I’ve been watching and listening to the madness spew from their mouths wondering how business can support this group that in my opinion have some pretty crazy social policy ideas, but business was able to ignore that as long as they got what they wanted fiscally. This move in the Senate is just the extension of that madness and now it can’t be ignored. Medical care coverage for all reduces input costs for all businesses with the exception of the medical insurance industry, who didn’t have to spend there because it is an in-house item – the pharmaceutical industry will probably also suffer as their extreme prices will probably also come down – which will give the rest of us a sigh of relief. Your system has driven up medical cost/prices around the world and made it very costly. You have the most expensive system per capita in the world and it bankrupts your people and it isn’t even provided to all. This unique collective in your Senate only sees that government being involved in solving any problem is bad (unless it is security spending and then you can spend as much as you want) and that is their pat answer for everything – it is a fixed formula of thought programmed somehow into their heads without real thought or reason worked into it. That is the real underlined issue, an inability to reason outside of what their brains seem programmed to believe – if it is not what they already know to be true it is wrong. I personally moderate my beliefs with check-in points and see whether they still hold true with evidence and the test of time. I ask how does one find truth without the ability to reason and question ones own convictions and see if your beliefs stand-up against the evidence and the test of time? How long will it take before they recognize their own madness and can they? Americans have always had two parties and from what I can tell voting for which of those two parties tends to pass from one generation of the family to the next – this means they are voted in not based on what they stand for and what they say they will do, but based on tradition for most with only a small minority really voting on their actions – the swing vote that is. Maybe this is an opportunity for Americans to re-think about their hard won democracy and why they fought to have that right. This may be a turning point in your society and I really hope it is for the better. Not only do you influence other governments by your actions, it is hard to watch your neighbours to the south suffer and feel helpless with no ability to help them. I hope this ends soon.

  4. Dean, Avery well written that says exactly how I feel. Thanks again, Al

  5. We have rightly reacted negatively to bullying in our schools. Why do we accept it in our Congress? I agree with Dean that Obama Care is the law, pure and simple. Constructively change what you don’t like through the process or sit down. Our economy will not recover from even a two week shutdown until 2014. This is an economic and political disaster. For the first time in my life, I wrote an email and tweet to John Boehner. My words were similar to Deans’ that they have to grow up and act like adults. To not pass a clean funding bill and/or allow default will bring the end to the two party system. Without that, we will end up like many European countries with a multi-party approach based on narrow views and goals. We need two parties that can think of a big picture approach but I guess we are asking our representatives to be “informed” and act like it.

  6. I guess The Tea Party is using the shot-down as an experiment to measure the effect of the federal government on the daily live of americans, in their opinion it shouldn’t have that much. That why they piecemealing the restoration of federal services based on what is federally important to the mass in their opinions.

  7. Dean – Great post. I want to reiterate your point that political behavior is tied to our Nation’s brand image. A brand is a promise. It sets an expectation of an experience. To the extent our Nation’s behavior is inconsistent with our brand promise, it erodes our global equity. The current political brinksmanship is not communicating a positive message to the world about our Nation’s governing process. To your point, it has multinational firms questioning what the experience will be if they decide to invest in building operations in the U.S.. And, it undoubtedly has the world’s best and brightest wondering if the U.S. is the location they should immigrate to. The fact is the Nation needs both foreign direct investment and immigration to achieve our full economic potential. I am reminded of Stephen Covey’s counsel that highly successful people believe “agree to disagree” is a reasonable outcome. Perhaps our elected officials should reread his “7 Habits of Highly Successful People” book before they reach a point of no return.

  8. Dean I always enjoy your posts…this one I agree with totally!

  9. You know… not RAISING to debt ceiling does not automatically obligate the US to default on it’s debt. But, reigning in rampant spending is an option Obama “will not negotiate” on…
    So, when exactly do you propose to stop the madness? We are already on track to spend over $500B per year on interest alone for our current debt. As the budgets get more ridiculous, and interest rates climb, it will be even more. While I do feel PPACA is an affront to the Constitution, and a mortal wound to medical innovation in this country – it is nothing compared to the current $1.1M tax liability to every tax-payer in this country for funded and unfunded Federal debt. When the debt ceiling is raised – it will be more.

    Well – this money is being spend to create jobs – right?
    Let us look at that… The numbers are pretty much in for the job stimulus bill that Obama pushed for, and signed into law February 2009. Using the latest numbers form the CBO, it has cost $831B, and created somewhere between 200,000 and 1,200,000 jobs. I’ll point out that’s a gross number – not net. But for the sake of generosity, we’ll use the 1.2M jobs, and not factor for the net – and do the math. Even at the absolute best case – each job cost the tax-payer over $690,000.
    Do you think that’s a good deal? I don’t.

    The monies spent since 2009 have followed a similar trend. In fact, I’d go so far as to say much of what has been spent in the last 3 years has not been as effective as the 2009 stimulus plan. The Fed’s quantitative easing policy has been burning $85B a month for over 1-1/2 years. While the stock market is loving it, REAL effect on the actual economy is questionable – with some results actually showing a detriment.

    I’m really saddened that the current debt limit quandary is focused on Obamacare. We really need to target the real problem. We are spending money stupidly when we can least afford to do so. You can not spend your way out of debt, and we are going to destroy our country trying to prove that we can.

  10. Seems many have forgotten that Obama swept into office bringing with him a majority in both houses and much hope for an enlightened Washington. Most Conservatives and political historians didn’t buy the latter. They were soon showered in sour vindication as Congress utterly ignored the citizenry ramming through the most costly legislation in our nation’s history.

    In 2010 ‘The People’ then dialed back the dangerously expansive Progressive agenda by sending the message “We trusted you and you blew it.”

    The Supreme Court did not uphold ‘Obamacare’, they upheld the Congress’s authority to tax. They struck down the health care mandate portion that made up the law’s premise.

    Next year we’ll see what ‘The People’ think of Congress’s recalcitrance.

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