Advertisement

Business leaders should put politics aside and stick by the president

Trump announced the disbanding of the two councils -- the Strategy & Policy Forum and the Manufacturing Council, which hosted many of the top corporate leaders in America -- amid a growing uproar by chief executives furious over Trump's decision to equate the actions of white supremacists and protesters in remarks Tuesday at Trump Tower.

To summarize what Donald Trump wants to accomplish as president, one need only look to a single line in a speech he delivered last month in Poland. The setting was appropriate given that country's long struggle with empowering individuals while under the domination of fascism and later communism. He said the U.S . "became great not because of paperwork and regulations but because people were allowed to chase their dreams and pursue their destinies."

Attempting to find political and policy support to restore America's entrepreneurial spirit, President Trump created two White House panels comprised of business leaders shortly after the election. Differences over the travel ban, the Paris climate agreement and most recently President Trump's shifting explanations of racial protests in Charlottesville, prompted corporate chief executive officers to publicly terminate their involvement in the advisory boards. A number of these CEO's cited consumer ire directed toward them.

Advertisement

The trend is clear: Polarizing politics is making it impossible for corporate leaders to serve their country. Legendary economist Milton Friedman offered advice in 1970 that is more relevant today than it was then: "The social responsibility of business is to increase its profits," he said. Friedman explained the CEO acts as the profit-driving agent of a corporation, which is comprised of shareholders and employees. Friedman's assertion may come across as unemotional to some, but the best way for a company to "care" about society is to maximize profits, which in turn, increases employment and wages. Politicians forget that jobs are a societal goal in their own right.

Legislators, who often have backgrounds as lawyers, tend to measure accomplishment by the number of laws passed. The purpose of advisory boards is to apply business acumen to governance. I have served on two such panels for Gov. Larry Hogan and former Gov. Martin O'Malley. The work is never finished. The Maryland General Assembly introduces thousands of bills each session and an executive branch issues new regulations for new laws on top of existing regulations. Absent an employer's perspective, government at every level will strangle job creators with ever more bureaucracy and red tape.

According to the American Enterprise Institute, Barack Obama is the only president in modern history whose time in office didn't include at least one year of economic growth of at least 3 percent. AEI attributes the drag on GDP to an onslaught of regulations, the costs of which are 52 percent higher under Mr. Obama's eight years in office than under two terms of the preceding president. Cumulative effects of regulations since 1980 result in an economy that is 25 percent smaller, or $13,000 less per citizen.

Then there is the U.S. tax code, which has not been reformed in 30 years. Additional laws and IRS rules and regulations since 1986 have caused $409 billion in annual compliance costs today, according to the Tax Foundation. This figure does not include the costs of paying taxes themselves, but the expense of hiring attorneys, accountants and diverting other business resources to legally pay taxes.

Perhaps taxes and regulations are why new business start-up activity is at a 40-year low according to U.S. Census data. At the Kauffman Foundation, which tracks startups, an analyst concludes there has been a long-term decline in entrepreneurship. Without new business activity, we are looking at nothing less than the decline of a great nation. These are the issues White House business panels were intended to address and why Trump was elected.

One might reasonably ask what the purpose of advisory boards, commissions and other panels are. The value to society is when business leaders do their jobs and focus on barriers to hiring levels and innovation. Whether advising a mayor, county executive, governor, or the president of the United States, there are plenty of unaddressed issues.

Here are a few examples. Take confusing and complicated sales taxes where, according to one estimate, 10,000 jurisdictions each have unique compliance requirements, which demand a thorough understanding of statutes, ordinances and regulations. Another example is building codes where tens of thousands of U.S. political jurisdictions have varying enforcement criteria. Duplicative, and often conflicting, federal and state laws create yet more confusion. It's difficult to be a world leader in trade when commerce is stymied here at home.

President Trump campaigned on "making America great again" largely by reforming the tax code and reducing regulations. It's a daunting task, but business leaders can help by active involvement in these issues, and we as citizens need to stand back, show our support and leave our political views for the ballot box.

Jay Steinmetz is the CEO of Baltimore-based Barcoding Inc. His guest column will appear every other Sunday through October, He can be reached at jay.steinmetz@barcoding.com or on Twitter: @barcodeman.

Advertisement
Advertisement