Winds of Change: Business and the US Political Season

The housing market numbers show significant cooling, as I and many others have been observing for some time, but the Fed seems to feel hopeful that inflation will not be much of a threat. Bulls point to the stock market's recent gains and describe scenarios involving that delicate, rare unicorn named "Soft Landing." Bears point out the current stock market highs still represent low annualized rates of growth over the first six years of this century, based on historical standards, and fret that consumers by and large have not benefited from recent stock market gains. Poll numbers seem to validate the notion that economic gains are not felt to be widespread at all.

All of this is fueling a furious political season in the US, as we head in to Congressional elections in less than two weeks. Republicans, ever the friends of our big business lobbyists here in DC, are poised for a bad, bad year, struggling to sustain control of at least one house in the US Congress. Pent up frustration among Democrats could lead to a lot of investigative ugliness for Republicans over issues like war profiteering on the Iraq war and other fronts. The Democrats will not likely have the power throughout congress to get new legislation passed and signed by the president, but they will probably promote highly popular working and middle class issues like a minimum wage increase, college student loan assistance and some form of universalized health care. In truth, many businesses are ready to take health care expenses off their income statements while having the country as a whole benefit from cost reductions through economies of scale, though specific industries will remain in opposition to any such changes.

What this election will probably bring with it a new phase of economic populism, whereby the middle class in America begins to see its interests more in line with the interests of working people and less in line with CEO's and big business. The benefits of economic growth are not being widely felt, and the Republican Party has been badly hurt by it international failures and misguided fantasies through the Iraq occupation. The public seems in no mood to sustain such international adventurism.

These political probabilities will have economic impacts. In the short term, the markets will likely be fretful in the face of rising Democratic power, and lobbying firms here in DC are rushing to find connected Democrats to hire after years of keeping Democrats in exile. But in the longer term, the Democrats have been the more fiscally responsible party (judging by the last 20 years), as surprising as that may seem to many, and better US debt management will, as ever, soothe the markets. One thing I hear from Democrats, Republicans, big business types, grass roots populists, basically everyone, is this: the status quo cannot hold and the current direction of US society will change.

But which way will things turn? That's anybody's guess, but the trends I discuss in this earlier article will, for my money, bring about more destabilization of the status quo, rather than less. Unless the telecoms and their allies in congress succeed in regulating the Internet against net neutrality, a new age of savvy information elites from anywhere in the world will continue to make news, disseminate video, set the agenda, change politics and change the ways that businesses operate. Google has become a highly accessible social memory and historical record, and this makes for much more populist accountability to those who traditionally hold and wield power. YouTube, recently sold to Google, allows anyone to create highly accessible video content. Anyone who's viewed videos on this website has seen YouTube video.