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What are the most important economic policy issues facing business today?
In your opinion, what are some of the most important economic policy issues business owners are facing today? What makes them so important?
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2 Answers
In my opinion, the single largest issue is investment in human capital. Business owners and decision makers in the US are faced with a big problem in this area. Domestic human capital costs are skyrocketing mainly because of out of control health care costs. However, at the same time, offerings out of India and Asia are increasingly competent and significantly less expensive. Advances in IT and telecommunications are driving down the cost of overseas outsourcing and driving up the quality at the same time. Even for the company who wants to hire domestic talent, it's very hard to remain competitive when others in your space are trimming fixed costs by outsourcing.
However, in order to generate healthy domestic demand, unemployment needs to come down. We need people to be working so that they can in turn buy our goods and services, but we can't afford to hire them.
I see several solutions to this issue, but none are easy or quick.
I think the largest issue is whether the economic recovery is actually real or a myth of government spin doctors and the risk of falling into a double digit recession. Although the government states that the unemployment rate is remaining stagnant at 9.6% that may be extremely misleading because it does not count the unemployed who have exhausted all their benefits. Estimates range from 17% to 20% as a more accurate assessment of actual unemployment.
The government has also said there is no inflation but apparently no official has gone to the grocery store in the last 2 years or to the gas station. If tax cuts are not renewed, then consumers will have even less income to spend on essentials let alone disposable income. That makes companies leery about investing in new employees or infrastructure if they lose customer base.
As mentioned above, the rising cost of medical insurance for companies, more of which they are passing on to their employees due to the changes caused by Obamacare, are also of concern. What remains to be seen is what if anything the new Congress will do.
Due to questionable statistical data, unknowns that will be in the hands of a new Congress and the ongoing credit crunch for companies to retool or expand, many companies are stagnant in terms of growth. Until businesses have some realistic answers and can see a way forward the "recovery" will remain stagnant as will the general business climate.
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