Donald Trump’s ascent to president-elect is just one sign of growing global populism, a movement in which average citizens seek to take control of their government from the political elite. Having heard what the people had to say by their votes in the presidential, Senate and House races, engaging your business politically will help create the most favorable conditions for its future.
Trump’s populist appeal and attack on the political establishment could portend protectionist trade policies, increased restrictions on immigration, limits on foreign investment, and inflationary tax, spending and monetary policies.
Down-ballot candidates were affected, with Republicans keeping the Senate and the House. We can expect populist legislation to result. During this year’s legislative session, lawmakers have proposed stricter immigration policies and penalties for corporations exporting jobs overseas. Meanwhile, Republican leaders blocked a key trade agreement from being considered for vote by Congress.
Besides the U.S., other countries are experiencing waves of populism, including the UK, France and Germany. The most recent movement is being felt in the UK as it departs the European Union. Brexit’s long-term implications are unknown, but according to a report by Oxford Economics
, the gross domestic product could decline by almost 4% in a worst-case scenario.
France and Germany are also experiencing populist pressures this election season. Other countries are sure to follow.
“One of the remarkable traits of populist movements is that they need not win elections in order to see their programs implemented,” wrote Gabriel Stein, director of asset management services at Oxford Economics.
That’s why it’s important for businesspeople to stay connected after the election and make their voices heard to lawmakers, who have the potential to alter the business environment through policy changes.
“There’s a common refrain in Washington,” said Mary Moore Hamrick, national managing principal of Public Policy at Grant Thornton LLP. “‘You’re either at the table, or on the menu.’ Business leaders don’t have to become policy wonks or take a position on every issue. But they must have a point of view as to what’s happening in our nation’s capital, particularly as it relates to their business and the environment in which they operate.”
Oxford Economics’ Stein summarized worries about the global populist movement: “The current strength of populism means that we are likely to see at the very best a slowdown of globalization; at worst, some rolling back. …This is unambiguously bad for world economic activity.”
It’s crucial to stay in front of issues and let lawmakers know the risks. Even more effective is to go beyond identifying the problems and propose solutions.
A prime example of how business groups and businesspeople made a difference was in handling the problem of expiring tax extenders — including the research tax credit, bonus depreciation and the production tax credit. For years, negotiations over annual extensions of these provisions dragged into December, creating major headaches for U.S. businesses that couldn’t plan properly because they didn’t know if the credits would be renewed.
According to a 2015 CFO survey conducted by Grant Thornton,
more than half of the respondents who actually used the extenders did their planning with the assumption they wouldn’t have those credits. That undermined the incentive effects of the provisions and was a major barrier to growth.
After business groups and businesspeople consistently voiced the need to rely on the extenders by making them longer term or permanent, Congress made some of the provisions permanent in late 2015. It takes time and perseverance, but being engaged and proactive can generate strong benefits.
“Businesspeople shouldn’t ignore the populism movement,” Hamrick said. “A healthy discussion between the business community and Capitol Hill is instrumental in shaping balanced policies that move us forward.”