By Tony Samson
CAN AN ECONOMIC BRIEFING be complete without introducing such political topics as the impact of China’s growing influence, the stalled infrastructure program, the short-lived water shortage, or the impact of the coming elections, even if this is just a mid-term one? Are politics and economics intertwined like two snakes doing the tango?
The introduction of politics by economists in a business briefing is almost apologetic, and needs some throat-clearing — and now, for the elephant in the room. There is the demurral that economists prefer not to dip into political analysis, as if to reinforce the belief that discussions of surveys, the latest pet peeve, and candidates’ debates (or their absence) are the exclusive purview of “political experts.”
Even in a clean and transparent economy, what government enacts as laws, like tightening the rules on foreign labor for local businesses or limiting foreign ownership of properties, influences the way business is conducted. Such governments too do not have the distraction of a contentious media and vested interests.
Political developments in a less transparent and non-compliant environment can only multiply the risks and raise the level of economic influence, especially in an election year, even if only a mid-term one where thousands of positions are being contested.
The mid-term elections have a numerical impact on the economy in terms of a rise in consumer spending arising from the purchase of voters’ attention and efforts and ferrying them to particular locations. It’s not just tarpaulin billboards and rented loudspeakers for rallies that bump up. Expected too is the media spending as elections get closer. This last one though has taken a hit with the use of social media and the tightened budgets of corporate donors, who can no longer afford to fund insurance candidates.
What kinds of political analysis figure in economic briefings? Here are some recurring narratives:
Business shouldn’t have to check with the political hierarchy and their gate-keepers if it can do a gigantic deal if it conforms to the laws of the land. The private sector stays private. There is no need to “clear” with politicians when one private company seeks to merge with another. It’s only the regulatory agencies involved, if any, that will need to be informed for requisite approvals. Maybe certain countries or business investors seem preferred, but that’s just conspiracy theory.
There should be no need to prove political connections. Anecdotes about regional links should only be mentioned over mojitos, and among close friends. Intimacy with the inner circles of power should just be fodder for small talk. There are no favored groups. Now, out-of-favor groups can be argued to exist.
Focus should be on running the business. The economy will improve if the CEOs and major stockholders do not need to bother with paying homage to government leaders and remembering birthdays and what appropriate gifts to give on Christmas. This alone reduces the cost of doing business and should spur efficiency and improve return on sales. There is no necessity in tracking wedding sponsors of the rich and famous.
Competition is purely an economic contest in this free market environment. If political connections no longer apply, then market share will depend on better products, cheaper costs, more efficient delivery systems, better marketing, inventory control, and the ability to delight customers — and all those old-fashioned ways of making money for the stockholders…without needing political clout.
Because there are no “party politics” in the country, driven as the election is by personalities and family connections, there are no dogmatic ideologies that define conservatives versus populists, or capitalists versus socialists. It is headlines and scandals that are in the forefront of subjects to discuss, never a 12-point program, addressing wealth creation or the need for inclusive GDP growth. This is the reason they abolished debates prior to elections — nobody shows up.
What business is looking for as far as politics is concerned is simplicity itself. It just wants to be left alone. And the candidates who promote benign neglect as an approach to national issues (except maybe water shortages and the elimination of the drug menace) gets the business vote.
Economic briefings that include the political landscape and its impact on the economy can be summarized in three words — wait and see.
Tony Samson is Chairman and CEO, TOUCH xda