Wednesday, November 14, 2012

- Business Advice For Coping With FOMO

Some professional investor advice for business leaders in the continuing age of Obama.

There has been a lot of talk (most of it entirely predictable) about what lessons we should all learn from the election. I'm ambivalent about the wisdom of any of it. I don't think any of the people who are declaring that they now have a mandate actually have one. It doesn't seem to me that the people that voted for Obama did so because of his economic policies, and if they did, then we have an even bigger problem than I thought.

Anyway, I have some advice for business leaders on how to handle 4 more years of the Obama administration's war on commerce. You wonder how your investors are going to react to the (no doubt) politically unpopular but necessary decisions you make? I can answer that question for you right now.

The big question is, will we learn that leftism doesn't work after 4 more years of it, or does Obama's surprising victory in the face of his abysmal economic record represent a sea change for America. There are lots of reasons to believe both - I'll try to give you some perspective on how you should manage differently depending on how you see it.

In the end the war on commerce comes down to just a few items:

Healthcare:

This is the big kahuna of the federal choke hold on America's businesses. In my opinion there is no reason to believe that Obamacare will ever go away. There is only one thing Republican politicians hate more than big government and that's smaller government. For all their posturing all they've ever done was slow the pace of growth. So at this point you have to believe that Obamacare (and the single payer system that it's designed to eventually mutate into) is here to stay.

With that said, Obamacare is the policy that will do the most to bring on the next recession that we're all expecting in 2013. And regrettably, you already know the answer to what you have to do. Wherever possible, convert full time employees to part time, and outsource all your non core competency services to sub-contractors. Things like your internal IT services, many office and administrative services, and any other 'cost center' your business carries should involve sub-contracting your staff.

That subcontractor, if possible should have fewer than 50 employees. I know what you're thinking. You're imagining all the management inefficiency this will introduce. Well there will be accounting firms and business consultants who will have shrink wrapped plans to sell you in order to lower the administrative cost of that change, but the actual decision making inefficiency is going to have to go with the territory. In the end it's the cost of having your business decisions being made by the deputy assistant director for compliance enforcement in the department of centralized enforcement compliance, several thousand miles away. And whatever the inefficiency, it's better than the alternative.

Obviously this will be a politically unpopular process, and there are large numbers of your customers (not to mention employees) who voted for Obama and therefore believe that reality should be subordinated to politics. They'll call you greedy and nasty and demand that your business be boycotted. You shouldn't be intimidated by that, but don't go out of your way to make a political point either. Take your cues from political environment under the soviet system - praise the wonderful people's revolution, but quietly do what you have to do.

When speaking to your investors and employees, emphasize how the focus of your business practice will be preserve all the internal full time staffing you can, even while you plan to eliminate all the internal full time staffing you can. It's a lie your investors are smart enough to expect and will not be disappointed by it - while your posturing might be enough to fool some of the dimmest (and therefore most vocal) Obama supporters. It's tragic that there will be such a huge premium on lying, but this is what happens when everything is subordinated to politics.

Energy:

Unlike Obamacare, I don't believe the leftist view of Energy (and environmental policy) will remain a permanent law of the land. The effect of energy costs on the public is direct and simple - therefore they understand it. The environmental movement has faded dramatically anyway, and any new activity by the EPA looks and sounds like to the general public like bureaucratic abuse. Don't implement any marginal new projects of course - it's not worth generating the new EPA interest. But it might be more worthwhile to buy existing facilities that are being bankrupted by Obamacare. A lot will depend on the individual dynamics and your ability to placate the EPA.

With all that said, the cost of energy will be much higher under the second Obama administration, in spite of the economic slowdown that will come with it. Between monetary expansion and further supply intervention by the EPA and weakness overseas, your expectations should include a minimum of a 25% premium for energy. If this increased cost prevents hiring, so be it. The key to a time like this is survival and your investors will forgive lack of gain in exchange for perseverance.

Taxes:

The key to leftist economic policy is to promote 'good' (politically popular) business and punish bad (economically efficient but politically unpopular) business. And the key to implementing that policy is the special case (picking the winners and losers) tax and regulatory policy. For all the talk about reducing exemptions, the 'targeted tax cut' has long been a favorite of the left and right. It's only when the executive changes parties that those targeted tax cuts are magically transformed into 'spending in the tax code', but they all start out as the same thing.

So for all their posturing, when the Obama administration says "fairness" what they really mean is punishing the people they don't like with new taxes, new fees, and new regulatory burdens, and rewarding the people they do like with low interest loans, tax rebates and expedited regulation. But this is nothing new. For a century you could either run a company or run to Washington. And if you're unfashionable today you will be fashionable tomorrow.

So I think it's a mistake to assume that any changes the Obama administration implements will be permanent. Rather, you should base your expectation on the probability of America learning the needed lessons about leftism from 8 years of Obama, that it failed to learn from just 4 years. Don't count on the Republican party to help. At this point any future Republican victory (without a major change in it's platform) are exceedingly unlikely.

So that's it. We (your investors) know what you're going through. Most of us know what you have to do, and we know that you have to lie to us about your intentions when you do it. We're have the same boot on our necks as you do, and we will forgive what you do to endure. Just because 'the people' were foolish enough to give us 4 more years of Obama, doesn't mean we all like it. And like you, many of us will only do what we must.

15 comments:

ikaika said...

the next few months are going to be interesting...

BHO has just placed a value on his soak the rich tax revenue target:
$1.6 trillion.
Apparantly under the "kill the 1%ers!" plan, that would only account for $42 Billion - an that would be if the federal government held "them" at gunpoint and took everything.
I project - based on Portugal and France taking similar actions, that we will add $4 trillion to the national debt by the end of fy 2013. I'm being conservative in my estimate and most pundits will say that the debt will hit that number in 2016.
The sooner, the better.

If Obamacare turns out to be a complete disaster where even the most stubborn limousine liberal has to admit it, It wouldn't be off-base to suggest amending the law.

In a way - maybe the Democrats and the looney left have fired their last bullet? nah... but if so, then it could open up for rennovation.

chess said...

I could be in mourning for a long time. keep waking up in am and the first thing I do is shake my head???

Its a bizzaro world. 150 years ago this country wanted to divide with a white republican trying give people their freedom. Now we have a black democrat that has the country wanting to break up because hes taking freedoms away...Jesus ill be wearing black for fomo.

Tom said...

The amendment to Obamacare will not be a free market solution.

We've already given up on the idea of the free market solving problems - and that will be the case until the living memory of 2008 fades. (I know... that wasn't a failure of the free market but a failure of government intervention in the free market, but no one cares.)

The amendment to Obamacare will be a single payer government run solution... which was the point in the first place I think.


chess said...

Tom. your last sentence is all of it in a few words. It was the point.

Got a phone call from business manager of my old group yesterday. He sees medicine going to that single payer in 3-5 years and itl be the end of my old goup cause you will have docs making 100k a year with no litigation stops in place. Everything will be reimbursed at medicare levels which is ? 33 cents on the dollar...all of you had better find several docs you can trust that are middle age or younger cause quality of medicine is already sliding off our "cliff" and it will only get worse.By 2020 there will be a 20,000 MD shortage in this country..

ikaika said...

The amendment to Obamacare will be a single payer government run solution... which was the point in the first place I think.
I believe that if economic dysfunction is the immediate result of Obamacare, you will see states demanding an Opt-Out.
It can't go single-payer program because that runs into schecter poultry territory.
If the government can demonstrate that Obamacare will be just like Social Security and won't require the Fed servicing re-insurance products, the you have your single-payer.



Tom said...

If we've learned one thing by this last election it's that rational economic outcomes are not a requirement of the American electorate. No one will care if 'the rich' need to be punished a little more to fund single payer healthcare.

either you believe we're the same as we were before (free markets, individual liberty) or you don't. If we're not, then all bets are off. If we are, then it will still take a generation of failure in order to beat the 'healthcare is a right' entitlement ideology out of the bottom 47%.

Either way, I think single payer is a done deal, and all the problems will be explained away with "it's the fault of the greedy X__________" or "it will be different this time".

chess said...

You will have to have rationing or everything goes to hell quickly. The easiest platform for that is a single payer system...
A friend and I were discussing what this country needs.Its a pandemic that affects 60s and older and kills very quickly. It solves all the entitlement issues with a quick yank of the bandaid and frees up jobs.... It works better than catching a 6 mile wide rock in the kisser!!

Tom said...

BTW dude, doesn't this line:

"It can't go single-payer program because that runs into schecter poultry territory."

...come dangerously close to believing that 'it will be different this time' electorally? Is there any reason at all to believe that our leftists are less grasping or power hungry than the leftists of the 30's? Is there any reason to believe that our leftists are better informed about unintended consequences or the hazards of over-reach?

In my opinion if anything they are dimmer than the first bunch because at least the first bunch didn't have a ready bad example they could refer to. So I see no reason not to expect an unconstitutional solution in the name of leftist pragmatism.

If my comments here seem too harsh please understand, it's my disappointment with the electorate not you (who have been carrying this blog for a week now). Please don't take them to heart.




ikaika said...

no problem with your delivery. You make a good point.
While I'm trying to find a shred of constitutional providence, my own research says "this time is different" in the sense that it is much worse than people expect.

As a student of the current malaise gripping "Progressive Europe", I see that we will be heading over the falls.

We may be asking the IMF to bail us out.

chess. said...

That Nana is going to hang around tells me that the left is already rolling towards the 2014 all in festival. She has visions of Boehner handing her that gavel .If they get all 3 branches the last 2 years of BHO's term look for the single payer and radical gun laws.....

ikaika said...

Pelosi is quickly resembling Norma Desmond or Joan Crawford with her latest presser...

chess said...

LOL!!!!!!!! Its just frightening to think of her as 3rd in line for the WH.

Baron Scepter said...

For the left, Schecter Poultry is a pothole to sidestep. We see chickens, and they'll throw a duck at you.

Tom said...

for reasons that will no doubt seem enigmatic, that last comment hits whole a new lever for "life imitates art" style irony on this blog ... eh Ikaika?

ikaika said...

true - speaking from recent experience, being clobbered by a duck. My neck still hurts.