Part 1 of a 6 Part Series
It’s no secret that change is in the air. A non-politician has moved into the White House for the first time since 1952, and he promises to be distinctly different in every way from his predecessors. There are rumors of civil strife among the opposition party, while the US stock markets have soared since the election. Clearly some people are euphoric and others are pessimistic. Whom should you follow?
While change often breeds uncertainty, change also brings enormous opportunity. Look back at the late 1990s when the emergence of the internet changed how everyone looked at the marketing and delivery of business good and services. The result was an historic upheaval in business, with new companies being formed every day, and old companies dying almost as often. The difference between the two was a management team who “got it” and those who didn’t, those who embraced change and those who feared it or fought it.
With the political upheaval that occurred on November 8, new opportunities are appearing. This time the changes have more to do with the structure of government than the emergence of a new technology, but these changes are potentially just as enormous and just as much empowering as any new technology. And once again, the people who exploit those opportunities will succeed much more than those who fear or fight against the new political landscape.
For too long, too many good ideas have languished because the high costs of starting up and growing a business have tipped the risk-reward ratio in the wrong direction. Now there is every indication that having a businessman at the helm of government will have a tremendously positive impact on entrepreneurship.
There will always be a remnant of “establishment” who will fight change—the ones who used to have lost power, influence, favors, and advantages in the change. But those people will not be contributors to society. I am writing this, because I want more people to be contributors to society, not detractors. The real contributors to society are the entrepreneurs who take the risks associated with starting and building their own companies based on their ideas. The more people who take advantage of these situations, the more wealth will be generated for all of society.
I can think of at least five reasons why the current changes will produce an environment for you to succeed—if you are willing to take advantage of the changing times. So here we go…
Common Sense Repeal of Senseless Regulation.
Regulation is how politicians and their minions (er…regulators) guide society. They promote regulations by telling us that their view of society will be best for us, that they know better than we do how things should be. But what regulations really do is they remove freedom of choice. The result of regulation is dislocated markets, higher prices, less freedom of choice. We all get less of what we want and more of what politicians want. Ultimately, almost all agencies are likely to be affected by the coming changes. Here are but a couple of examples of regulations that will probably be overhauled or eliminated.
Obamacare at its core is a government mandate to buy something defined by regulations: every company over a certain size must pay for specific health insurance plans for its employees, and everyone not covered by such an employer must buy private health insurance that meets government-mandated requirement; there are no options . This mandate and the behemoth structure of rules that support it is a gigantic weight on the economy. There is simply no place in a free market for such a mandate, and we’ve been told by market-oriented politicians that Obamacare will be one of the first things repealed. I suspect that the replacement will unleash a free market of health care provision. If the new government does this you should expect opportunities for creative healthcare and innovative ways to share the burden of its cost. And if the government goes far enough in the direction of freedom, we might even see prices of healthcare delivery decline as a result of those innovations. Look for signs that politicians finally are moving to repeal the terrible idea that employers should bear the responsibility of paying for health insurance. That concept was an accidental by-product of bad tax code after World War II and violates every principle of pricing. Consumers should choose and buy their own portable health insurance. If the government moves toward consumer-responsible healthcare, the power of market pricing could yield dramatic benefits to all consumers.
Dodd-Frank is another drag on capital creation. Talk to any business banker and they will tell you that Dodd-Frank placed know-nothing regulators right next to veteran loan officers to “guide” the loan making decision process. Bankers are not allowed to use their best judgment about the credit-worthiness of a business, lest the bank be fined for non-compliance. It reminds me of stories about the Soviet decision making process where the Party must be consulted on every matter. If the new Congress and Administration repeal this centralized control of capital, expect to see an opening of the loans spigot for new business formation and expansion.
Coming Next: Common Sense Corporate Taxation
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