Politics and market sentiment
ONE MINOR TOPIC in political discussions, below the impact of surveys and endorsements, is the effect of a candidate on the investment climate should he be elected as leader. Market sentiment embraces the investment climate and the projected regulatory regime, based on characteristics and policies of candidates like integrity, transparency, and the acceptance of a free-market regime and a vigorous private sector.
Even unlikely winners like the extreme left with its program of higher minimum wages, free everything for everyone, and the takeover of the private sector activities by government can be part of the discussion in a debate involving a survey frontrunner and those with asterisk ratings.
In economic briefings, the introduction of politics is almost apologetically introduced — we are not endorsing anyone, just discussing the impact of certain personalities on the economic climate. There is the demurral that economists do not dabble in politics, as if to reinforce the belief that discussions of pairings, surveys, and platforms are the exclusive purview of TV resource persons who fancy themselves as “political analysts.” To frame the unlikely topic of politics in economic briefings, the slides on elections are introduced at the end of the talk, as a reluctant foray into personalities rather than numbers — which candidate will be good for the market?
Sometimes, this relationship between politics and economics can be unhealthy when it is too cozily joined, sometimes at the hip. But their marching in step seems inevitable. Even in highly regarded economies like Switzerland, what the government does with bank secrecy laws and legitimate inquiries into hidden wealth are political realities. And in a hyper-connected world, a distant invasion in Eastern Europe can rattle the economic cages here as well.
Yes, it matters who becomes president. Here are some examples of corporate attitudes on politics, and what limited role it should play in private business.
Business shouldn’t have to check with the palace if it can do a gigantic deal which anyway conforms to the laws of the land. The private sector stays private. There is no need to “clear” with politicians every major move like mergers and acquisitions. It’s only the regulatory agencies involved, if any, that will need to be informed for requisite approvals. If the enterprise involves foreign investment, a courtesy call may still be welcome for the photo op that gives the assurance of government openness to business.
There should be no need for business to claim political connections. Anecdotes about childhood links with the newly elected leader is not a corporate topic of interest, except over wine. Intimacy with the inner circle of new appointees should just be fodder for small talk. These stories should not be seen as somehow giving comparative advantage to a particular group, even those who may have donated to a successful campaign.
Concentration should be on running the business. The economy will improve if the CEOs and major stockholders need not be bothered with paying homage to government leaders and remembering birthdays and what appropriate gifts to give. This alone reduces the cost of doing business and shifts the focus on efficiency and marketing for the private enterprise.
If political connections no longer apply, then market share will depend on better products, cheaper costs, more efficient delivery systems, better marketing, inventory control, and the ability to delight customers — and all those old-fashioned ways of making money for the stockholders… without using or needing political clout.
There is no “party politics” in the country which is driven by ideology and think tanks. The multi-party system has turned into a variant of the personality politics we are accustomed to. Who even remembers the parties that the candidates belong to? These constantly shift shapes like vampires when the sun goes down.
In economic briefings dealing with politics and politicians, it is personal history that gets the most attention. Is a call for unity a valid economic program? And does the invitation extend to foreign countries? (How’s the fishing, Gents?)
For sure, an advocate of using the country as a personal piggy bank does not help the economic climate. Market sentiment does not favor a porcine diet. In the metaphor for optimism and its opposite, we only find bulls and bears.
The pig is not usually part of the corporate fauna. The porcine role is limited to the roasted variety, with a bamboo pole through it… to keep it firmly in place.
Tony Samson is chairman and CEO of TOUCH xda
