The Democratic and Republican National Conventions are over but the shouting certainly is not. Because the recent news has been filled with the various musings of both party’s candidates, I think talking about their COMMON THEMES (yes, there is one!) would be worthwhile and instructive.
NOTE: I will stay politically neutral here. It would be easy to avoid talking about politics when the country is so polarized, but then I would not be serving you well. My job is to serve you well, and thus the die is cast.
Come November we will vote for a new President of the greatest economic power on earth. Nobody around the world really debates the reality and importance of that last point. It’s why everyone in India knows who’s running for President in this country, but most people in this country have no idea who is running a country that has 300% more people (Narendra Modi is the Prime Minister for over 1.3 Billion people). That’s a testament to the sway of capitalism.
What is the common theme? Despite the fact that both parties are partaking in the bashing of corporations, both parties also believe that job growth needs to be improved. They differ on how they might get there, and I’m certainly not going to step into the political quicksand of debating their respective merits but let’s ponder some big picture points;
- Without economic growth, everything else doesn’t matter. Really. I am not overstating this point, and it has nothing to with ego. If a country does not grow, it incurs three monstrous internal problems;
- Low employment and promotion opportunities (people in the country are unemployed, or underemployed). If people aren’t adequately employed, they don’t buy first houses, etc.
- Government tax proceeds decline. All governments live on taxes, and primarily tax the profits of companies and the wages of individuals. Whether as the government you are paying employee salaries, building roads, tanks or healthcare, you have to do less of it because you have less money coming in
- If companies don’t grow, stock prices don’t go up. If stock prices don’t go up, the wealth of average households declines because the average household holds stock (~ 54%[i]). If people feel less wealthy, they spend less.
- Internationally, you become exposed to other people (countries) determining your future. If you can’t take care of yourself (economically or militarily), you are dependent on others to do so. You simply lose your independence, and in this country, we love our independence.
None of the above points are refutable.
The parties obviously differ on how to reignite growth, and what caused our current malaise. However, businesses are not growing at the rate of the past. Even with the lowest interest rates in 50 years, the launch of new businesses is down. Please think of the following two statistics, both of which come from government bureaus so it’s not capitalism tooting its own horn;
- Small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s[ii]
- The number of jobs created by establishments less than 1 year old has decreased from 4.1 million in 1994 to 3 million in 2015[iii]
That is a dramatic decline pointing to low business creation and the attendant job creation.In conclusion, for the protection of our current elderly and the social programs that support them, for the sake of our children’s future career opportunities, and for the control of our national independence, we must grow economically. Many other issues are important, but if you don’t grow, the painful reality is that sooner or later you don’t get to make the other decisions.
Whatever party you support, or eventually elect to support, I’d emphatically urge that it is in your individual interests, and your beloved country’s best interests, to make sure our government elected officials are talking about how to grow non-government jobs. Hopefully as a country we can unite on that singular point.
ii Small Business Trends (US Small Business Administration, July 29, 2016)
iii Business Employment Dynamics (Entrepreneurship, Bureau of Labor Statistics, July 29, 2016)