Depending on how you’ve arranged and cultivated your social media feeds, and depending on which cable news commentators you pay attention to, you might believe that the segment of American life known as the “business community” is comprised of craven capitalists bent on pulling every lever of power to build ever bigger fortunes. Alternatively, your news diet might have convinced you that business is on the vanguard of “wokeism,” spurning traditional mores and values, ready to jump into any cultural debate to publicly declare who’s on the right side of history.
Both caricatures are wrong. As a leader of a business advocacy group, it’s rare that I encounter a rigid ideologue more interested in pushing a political agenda than in growing a company.
Instead, what I hear most from business community leaders is their desire for certainty, for predictability, for stability. The threat of wild swings in policy undermines their ability to plan and to speak to investors and shareholders with even a moderate degree of confidence about the future.
A new report from the U.S. Chamber of Commerce gets at this desire for greater certainty from our elected officials in both parties, pointing out that despite the growth of entire industries focused on helping businesses assess risk, “one area that has defied easy quantification is risk emanating from changes in public policy, such as changes to laws, regulations, or legal enforcement.”
The report’s authors analyzed filings by publicly traded companies that show a dramatic uptick in business leaders’ concern about frequent changes in power, hyper partisanship, and an overreliance on regulation rather than the legislative process.
Searching a decade’s (2011-2021) worth of S&P 500 member companies’ annual 10-K report filings with the Securities and Exchange Commission for terms associated with public policy topics like “environment”, “labor”, and “intellectual property” reveals a 27% growth rate. Searching non-policy terms more typically associated with business like “capital” and “price” found only a 4.3% increase. The industries most likely to cite concerns over an erratic policy environment weren’t terribly surprising, with health care and utilities leading the pack.
The debate over whether to raise the debt ceiling is an example of a public policy threat to the business environment. Instead of worrying whether a new product will boost sales or whether financing can be secured to expand a plant, businesses are left wondering whether Congress will take the steps necessary to ensure the nation can continue to pay its bills or whether it will unleash chaos on domestic and international markets. On the regulatory front, examples include the Federal Trade Commission’s move to eviscerate noncompete agreements, and the Environmental Protection Agency’s proliferation of air quality rules so stringent they risk severely limiting states like Arizona’s ability to grow, especially in the manufacturing sector.
The U.S. Chamber’s report assesses the anti-business effects of unstable federal public policy, but there are plenty of examples to point to at the state and local level that have put Arizona’s reputation for stable governance and an attractive business environment at risk.
Businesses wonder whether the regulatory agency with oversight responsibilities for their industry will have a director confirmed by the state Senate, or whether the department will get continued. Health care providers worry that the Legislature won’t take the procedural steps to ensure that the state’s Medicaid agency can make payments to providers in a timely manner. Some legislators opened the legislative session predicting a state government shutdown due to a failure to reach a budget deal with the governor. The Phoenix City Council in March rammed through an ordinance and amendments without consulting or collaborating with the affected industry that will dramatically increase the cost of public construction projects. Thankfully, Mayor Kate Gallego was able to lead a reversal of the policy, but it set off alarm bells in the business community.
Much of this will be dismissed as just the nature of politics and the typical gamesmanship of a legislative session, the stuff that gets lost in translation between the state Capitol and the C-suite or out-of-state headquarters. But it raises questions among job creators who want to invest and thrive in Arizona. If policymakers in both parties can’t demonstrate a desire and ability to foster a stable public policy environment, then capital – and jobs – will flow to states that can.
The federal government has set a bad example on how to craft public policy that respects voters’ choices and that keeps basic government operations functioning. Arizona should set a better example and not follow Washington’s.
Danny Seiden is the president and CEO of the Arizona Chamber of Commerce & Industry