I have been talking to a lot of CEO’s over the past week, asking about their business and pitching some new ideas. A couple of the ideas involve reaching out to new markets and thus most likely increasing staff. If I talk about existing marketing efforts (trade shows, internet, etc) most are excited and seems to want to increase their participation. However, when it comes to new ideas (international, different market segments, tangential approaches) they demur.
I note to them that they are willing to expand where they currently operate but not into new ventures, I get the same answers. “We don’t know what is happening with the economy and we aren’t willing to take a risk where the unknowns are so great.”
Think about it this way. There are a lot of companies that have a lot of cash. They are running their businesses conservatively because they fear the unknown. Not the unknown of their market, or their product, or their customers, but the unknown that is their government.
Will taxes go up? Will the new tax rates be the same for years or will they go up again? What about the mandates on health care? How will it work? After all, the law is only 20,000 pages long. Who can understand it? What about regulation? Every aspect of our lives is being reviewed? We are being told what light bulb to use and how much salt to put in our salads. Our government has told us that their policy is to raise energy rates as high as possible. How can a company plan an expansion if they don’t know what “possible” is?
So these CEOs are lying in the weeds. They keep their companies profitable, innovate where it costs them little, try to do more with less, and pass on that new expansion (for now.)
I’m told that if the costs were certain, there would be no problem. They would simply factor in the new taxes, the new regulations, the new controls and get on with it. However every day they see new government spending that takes money out of the economy, they see new regulation that may or may not affect that new product, export, or service, they see laws passed that have never even been read.
Most of the regulation that affects business today comes from sources that have no legislative control. You elect a senator or representative, but the rules come from appointed “Czars” who answer to no one. They are appointed and never see a congressional hearing. But they regulate just the same.
It’s ironic that government itself is feeling some of this uncertainty. It used to be that when you had a government job, you had a job for life. You had a good salary, excellent benefits, and a pension that most likely equaled or exceeded your salary. Not any more. The money has run out, at least at the state level. Bureaucrats are looking over their shoulders. Cuts are happening everywhere. What used to be certain, no longer is.
However at the federal level, hiring never stops. Spending goes on as long as the printing presses are allowed to run. The best place to find a job (except Texas) is Washington DC. And the people who actually create wealth, who create real jobs, who pay the taxes, are left wondering what to do.
I shake my head. I listen and understand. Who would build a house if they weren’t sure the land belonged to them, or that it couldn’t be taken away by fiat, or what was going to be built next door. Who would hire people if they didn’t know what the new employee was going to cost or whether they could fire them if they did a bad job? Who would build a factory if they didn’t know whether or not the government would come and tell them they had to move it somewhere else?
I’m sure I wouldn’t. It’s not the economy, stupid, it’s the uncertainty.