If politics is considered in part theater, President Trump’s opening act has been a most colorful one. The media, critics and even supporters swing from being confounded, frightened or elated by the possibility of what might come next – but those perceptions can change in 10-minute increments given the administration’s blitzkrieg-like movement forward.
But politics is not theater. It is not entertainment. The seemingly unvetted immigration order signed on Friday reminds us of all the ways in which politics affects people’s lives.
And while immigration grabs headlines, it steals attention from the path the administration is charting on the economy. The business experience of Trump’s top appointees should certainly comfort anyone who cares about commerce, but there is a larger course being set that should concern all of us who believe in free markets and the things traditionally vital to U.S. job growth.
I raise this respectfully, as one who spent eight years of his life as a governor trying to encourage capital investment and all that flows from it. Our team in South Carolina was successful, and despite the headwinds of 2008 and the Great Recession, we saw $23 billion of capital investment.
Hopefully, waters will calm as the Cabinet moves from confirmations to operations. But at this point, what Trump is doing in the name of economic development will in fact prove counterproductive.
I offer three suggestions: One, ditch Twitter. Embarrassing companies into business decisions has a short half-life. Capital needs to be invited, not shamed, into staying. In fact, the saying is that capital goes where it’s loved. While it can certainly be buttonholed for a time, a long list of Third World countries stands as a monument to the fact that trying to trap money comes with a host of unintended consequences. Return of capital always matters more than return on capital. If the United States is ever seen as a place that resembles the Eagles’ “Hotel California” – “you can check out anytime you like, but you can never leave” – the giant sucking sound you will hear won’t be from the North American Free Trade Agreement.
Two, adding jobs is not enough; the operative question is how they are created. The ends do not justify the means here. It can’t be a job at any price. Bought jobs, or jobs protected by legislative edict, are not the same as those that flourish from the invisible hand of the marketplace. As governor, I tried to focus on bettering the soil conditions essential to capital formation. We knew if we built the right conditions to attract capital, the jobs would come. This meant things such as the legal, tax and regulatory climate. To his credit, Trump has talked of regulation, infrastructure and tax policy. What he has not seemed to recognize so far is the way in which our institutions are part of our competitive advantage relative to so many other spots around the globe.
Governors and presidents naturally want to be the ones credited for economic development efforts, but in fact we are all much better served in unrecognized efforts bettering soil conditions. One ingredient most vital is our tradition – the institution, if you will – of limited government. Federal power has always been checked by state and local government and, accordingly, “send in the Feds” should not be the default tweet. Deals can always get done. The fundamental question is whether they are good for the taxpayer.
Finally, Trump’s ability to sell his brand throughout the world was based on our country’s engagement with it. Since the horror of Smoot-Hawley and the Great Depression, our country’s bias has been toward more open trade and engagement with the rest of the world. This is ultimately not just about trading things but also the investment and capital flow that comes with it. Were it not for this, companies such as BMW, Bosch and Volvo would not have invested in South Carolina as they have. To hinder trade would be to hinder jobs in a place such as my home state.
So I write to say that if you’re in business, you need to make your voice heard. Politicians are risk-averse, and they won’t lead if you don’t. No one wants to be at the receiving end of Trump’s Twitter account, and Washington has a way of bending its will to the loudest voice in the room. Without a drumbeat from employers and employees alike, Republicans in Washington will be all too quiet on actions by the new administration that, if left unchecked, represent storm clouds forming over the Potomac.