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Will the Outcome of the Election Have an Impact on My Business? Already Has!


09.08.16 Posted in Economic Forecasting, Entrepreneurship, Policy by

More so than in the past elections, this contest (in 2016) is causing many businesses to hold back investment in business expansion until after the November election. Why is this so? I would argue for the simple reason that we really have very clear, major differences in Clinton’s and Trump’s economic platforms. Consequently, the result will have an irreversible effect on how U.S. businesses compete in the future world economy.

Comparison of Approaches

  1. The Clinton Approach: Clinton’s economic platform promises a continuation of the current administration’s globalization agenda. They, Clinton and Obama, clearly believe that America has run on its own far too long and therefore need to embrace world trade agreements (i.e. NAFTA, TPP) and close alignment with entities (such as the UN and EU) for the common good of others in the world. A weakened, more collaborative, United States is ultimately good for everyone.
  2. The Trump Approach: The Trump economic platform promises a slowdown of the globalization acceleration of the present administration bringing back an economic agenda which puts America’s own economic interests first and the world interest’s second. As Trump states often, “We’re going to make America strong again.”

Implications for Businesses

So what’s the big deal if I choose one or the other? Well, it depends on where you sit in the economy.

If you manage a large multinational corporation, bank, or work in the government, a vote for Clinton, may help you, provided you have made sure that you are in good standing with the present administration. Continued globalization will further enhance new business expansion for those who have the economies of scale to grow quickly. However, if you are an employee, competition for your U.S. position will continue to be greater and therefore that position will be at a greater risk because of the higher U.S. cost of living and required Obamacare. (See Graph)

chart

If you manage a small, emerging business, the same dynamics apply as a multinational, although your risk and/or return will be greater depending upon how you manage the same new healthcare regulations and compete with overseas rivals. Consequently, because of higher financial risks, strategic growth planning requires exact forecasting, investing and flawless execution to produce a winning growth opportunity and/or competitive advantage.

Under the Trump economic platform, a reversal of this trend will occur; however, it will take a great amount of effort and patience to eliminate what the present administration has been able to put into place over the past eight years. Multinationals will continue to have the competitive advantage; however, Trump is perceived as having volatile operating norms causing many large company CEOs to think that the “status quo” is better than a Trump presidency. Smaller companies, on the other hand, may perceive (with Trump) the same risk as the multinationals, but seem to be willing to take the risk because of the perceived benefit from Trump’s economic policies.

So what’s so important about this election? Plenty. It is a very significant election for businesses, small and large, and will have a profound impact for the decades ahead. As an economist and business strategist, my hope is that we will develop a climate for growth and security for America.



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