The Trump Administration is pursuing major economic policy shifts that can easily change the costs of doing business inside the US and around the world. In deciding it is not the responsibility of the US government to shield foreign business operations from the burden of taxes and tariffs when profiting from the US economy, i.e. tariff-free trade, Donald Trump appears to be moving forward with his pledge to pull back from tariff-free trade, which deleverages domestic operations and workers at the expense of lower prices for consumers. In loosening labor and environmental regulations, as well as oversight, businesses, e.g. the coal industry, are freed from costly constraints, yet not market realities, that discourage them from engaging in certain kinds of business practices while increasing the risk of health and environmental issues, i.e. long-term, unrealized costs, for everyone else. By rolling back “Net Neutrality” rules, Trump is empowering ISPs to disempower internet users.
Taxes, tariffs, regulations, the enforcement of regulation, and unions all add to the cost of doing business. Taxes and tariffs help fund government, which enforces regulations that, even when they are crafted to avoid unnecessary costs, restrict how businesses can operate. Like politicians, lawyers, and businessmen, union leaders are susceptible to corruption, often fail to adequately represent the interests of unions member, hinder business expansion by pushing higher wages, and discourage the hiring of more, less expensive workers. Taxes, tariffs, regulations, and unions are burdens and headache to those trying to run businesses. These things add to the cost of doing business no matter what, but they also help foster a stable economic environment, which businesses need to thrive. The restrictions imposed on businesses, which are analogous to restrictions imposed by the police on people who threaten public safety, also empower people and socially responsible businesses.
“Lower taxes, less regulation” has long been the battle cry for many proponents of business, especially those in the political world, but pro-business policies must also empower and serve people as well as workers, consumers, members of communities, and business owners or opposition will lead to an unstable economic environment. Free trade is, of course, a natural progression for those seeking to promote business interests. Until the election of President Donald Trump and the Brexit, the campaign for expanded tariff- free trade was marching forward with the Trans-Pacific Partnership (TPP) , but free trade agreements are not necessarily pro-business. Increased trade can open new opportunities for business to sell their goods and services. In turn, it can offers consumers greater access to those wares, including less expensive versions of domestically produced goods. For investors, it provides cheaper access to global investment opportunities. Above all, it provides businesses the opportunity to operate in whatever environment is most advantageous to their needs.
On the flip side, the benefits of free trade are derived from circumventing costs associated with taxes, regulation, and payroll. In other words, free trade helps neutralize the economic sovereignty (power) of nations and rewards economies offering the lowest cost environment instead of a sustainable business environment. From the perspective of those who believe government does nothing more than spend money and market forces will provide for the needs of displaced workers when the economy reaches a point of equilibrium, such issues do not matter. Unfortunately, these business-minded individuals tend to overlook geopolitical realities when they instinctively embrace public policies like free trade. Situations, such as the US-Mexican Border Wall Dispute, remind the world that there are hazards to relying on free trade for economic growth. The unpredictable and destructive nature of geopolitical events means diplomatic relationships can quickly disintegrate and plunge countries that are over dependent on trade into economic chaos.
For small businesses serving their own countries, free trade does not necessarily offer any real benefits. If a small business is able to export goods and services, free trade makes it cheaper to access new customers, but it does not mean they will have more customers or sales. Free trade puts downward pressure on taxes and wages, which can help cut the costs of small businesses. Unfortunately, less tax revenue and lower wages strain the communities these business depend on to survive by forcing local governments to raise taxes on a narrowing tax base, which includes increased taxes on local businesses, and decreased consumer spending. That said, the greatest benefit of free trade goes to bigger businesses that can cater to a much larger and more diverse customer base. For corporations, which are built and sustained over decades, degenerative competition creates a real hazard. Moving beyond the shortsighted mentally of “regulation is bad,” regulation creates standards by encouraging businesses to avoid displacing costs onto consumers in terms of inferior products, workers in terms of workplace accidents, and communities in terms of environmental and social issues.
When established companies with reputable products and services have to complete against a constant stream of cheaper alternatives, which thrive because they are willing to displace harmful costs onto others, market forces dictate sustainable businesses must compete by lowering their costs and standards. Recognizing the abysmal record of developing countries when it comes to intellectual property and worker rights, the kind of competition free trade promotes is not pro-business or pro-community. Ultimately, an economy must provide for the needs of the population it serves or it cannot be sustained. When free trade does not provide for the needs of a People, when free trade bankrupts the small businesses of communities, and when free trade undermines the long-term competitiveness of corporations, it is not pro-business. Instead of tariff- free trade, the world should focus on improving the quality of trade that already exists with countries like India, which is pro-business.
Furthermore, it is only when consumers are able to buy products and service that, businesses are able to stay open and pay their employees. This is only possible, because wealth is able to circulate throughout the economy at a continuous and sufficient rate to maintain consumer spending. Economic growth is one means of ensuring wealth circulates throughout the economy, yet economic growth does not necessarily guarantee enough wealth will circulate to all corners of the economy. As the economy is two-thirds consumer spending, payroll is the principle way in which wealth is distributed and circulated. Consequently, widespread employment, high worker productivity, and healthy wages create a strong, healthy national economy. As such, there is a need to empower workers and free the labor markets of destructive interference. Through political pressure, legal measures, policies, including free trade deal, public officials have intentionally undermined a key segment of free enterprise despite their professed devotion to it.
Quite frankly, attacks on collective bargaining are clear examples of government overreach and destructive private-sector interference in the labor market. People who believe unions only add costs see policies like so-called right-to-work laws as prudent and beneficial to workers, yet they actually deleverage, and thus disenfranchise, workers. Just as democracy functions based on collective group decisions, union membership must be based on the majority vote of a workforce, not the will of dissenters. Just as individuals cannot avoid taxes by opting out of a democracy, workers should not be able to opt out of union membership. Ironically, anti-union proponents of right-to-work laws often like to proclaim that the use of stock exchanges “democratizes" the pricing of commodities and the ownership of corporations while justifying actions against workers, because unions increase costs.
Where unions help sustain Middle Class incomes and standards of living for a broad range of employees, wealthy business elites looking to earn big when prices peak, often largely due to speculation, use stock exchanges to push up prices, thereby increasing costs and distorting the economy in their favor. The problem with right-to-work laws and the general decline of collective bargaining is, therefore, that proponents assume employers will serve employee-interests by offering employees viable wages and reasonable working conditions, instead of suppressing wages and creating abusive work environments. Markets work most efficiently when fundamental forces like supply and demand can act to properly price goods and services. If drivers, for example, could simply dictate what they want to pay for a gallon of gasoline, the price would fall to an undesirable, or even unsustainable, level.
The same is true of employers, i.e. consumers of labor, when their employees must compete against each other and their own financial interests. A lack of collective bargaining helps drive overall payroll costs down. This means lower pay, lower standards of living, smaller tax bases, and less consumer spending over time. In other words, less wealth is circulated when the bulk of workers do not have adequate leverage in the job market. When employees can work together in some fashion to help ensure their interests as employees are met, they improve their outlook and the outlook of the economy. For executives and other individuals with highly coveted backgrounds, this issue is of little concern as they have enough leverage to negotiate as individuals. When it comes to those individuals with little leverage in their industry and workplace, collective bargaining puts them on more equal footing with their employers, who can otherwise undermine worker demands by simply replacing them.
On the other hand, unions are also a source of interference. Today’s unions are businesses. Unfortunately, the leaders of these businesses are too often more concerned about their own paycheck and power than the interests and will of their members. Beyond corruption, unions have become far too involved in politics, i.e. selecting political leaders instead of ensuring worker rights. Unions have also failed to globalize alongside the globalizing economy. As the economies of the world merge into one giant global economy, effective representation is needed around the world, yet the unions of developed countries have turned inward. In fact, many have been willing to sacrifice the pay, benefits, and work conditions of nonunion members to further enrich their shrinking membership base, which means unions are creating an elitist middle class instead of helping the labor market reach equilibrium.
The major downside to the waning influence of union influence for business is a lack of competitiveness between employers over the best employees, which can result in lower workplace productivity and increased employee discontent. With or without unions, these issues can only be addressed with better employer-employee relations. Relationships between employers and unions have often been quite hostile due, in part, to the fact this free enterprise solution to unhealthy, abusive business practices was born in an era of violent corporate reprisals. As such, the solution is not to undermine collective bargaining, but rather, to improve communication between managers and union workers for the betterment of business. Frankly, unions and other collective bargaining organizations have their faults, which must be addressed internally by union leaders and members, yet they are a necessary part of a healthy economy.
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