The 2012 elections in the US brought disappointment to most business leaders. Many Washington observers hold that 'things may work out' – an improved fiscal policy and even pro-growth tax reform – but the ride will be choppy. Even with short-term smoothing, conflict keeps the influence system well oiled; lobbying fees are up and fund-raising has already begun. So, while the media asserts that bipartisan means conservatives should yield, many won’t; they will instead focus on 2014’s Congressional races. No incumbents lost because they failed to compromise.
A messy national business climate seems inevitable. For direct investors considering expansion to existing operations or in a new place in the US, the local business climate, always important, should take on even more importance. In Washington, the administration is not only beholden to unions for overwhelming financial and get-out-the-vote support, its leaders seem to actually believe in the value of organised labour. Private sector union penetration has now shrunk to 6.9%. Union leaders are urging their re-elected supporters to make appointments, issue regulations and propose legislation that will give unions new opportunities to increase their revenue base.
Leaders of many companies believe that unions do not fit in very well with the way they need to operate. They hold, privately if not publicly, that unions create barriers to success through burdensome rules, memorialised in lengthy bargaining agreements that inhibit nimbleness and innovation.
As companies seek business-friendly communities, an increased imbalance between gaining and losing locales could lead to punitive policies. Companies need to be adroit in making redeployment moves if they do not want to attract undue attention from a government that champions organised labour, especially a government that may also be an important customer as well as an increasingly intrusive regulator. Communities will also need to make sure that their selling propositions do not invite retribution. Elections do have consequences.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world's leading companies and served in the US public sector as director of White House operations. E-mail: email@example.com