In our strategy work, we often help clients flush out potential future scenarios based on facts already in evidence today.
Consider health care (for example). Many of the president’s health care reform measures are already gaining steam, and will be hard to reverse. The health care community is moving towards electronic medical records, an idea whose time has come independent of other components of health care reform. The health care sector is in a bit of a funk, as it is hard for businesses to predict what the rules of the game will be in a year or two. But health care is the exception, not the rule.
Generally, futurists view the political landscape based on which party is in control of the executive and legislative branches. As a nation, we are gripped by the nightly reporting on poll numbers, debates and the latest sex scandal. It is the Tea Party vs. Protest Wall Street. The unfortunate truth is that the balance of power has become completely neutralized.
The U.S. populace is so displeased with both parties, neither can win a clear majority, and the result is stagnation. Congress passes legislation that is neutralized by executive order or by bureaucrats at the Federal Trade Commission, FDA, EEOC and other agencies where politics trump responsibility.
This neutrality was clearly evidenced by the “super committee” that was a super disappointment. Congress is too big and dysfunctional to agree on anything so the thinking was that a smaller group could find consensus. No compromises were forthcoming in a political climate so polarized that the two sides couldn’t even agree on minor details like saving the country and the world from economic doom. Details, details.
This principle is so simple it is obvious. In the absence of any clear evidence to the contrary, it could be argued that we should run our businesses under the assumption that there will be little regulatory change.
It is ironic that based on the absence of any new action, $1.2 Trillion in spending cuts and tax reductions expire in 2013 (as agreed to the last time the government was on the brink of collapse). [i] The only thing the two sides can agree on is that such cuts to defense; Social Security and Medicare are “draconian.”
It beats the alternative. We simply can’t believe that the situation in Europe is so bad, that “austerity measures” are being used, as nations cannot meet their debt obligations. I only got a B in macroeconomics but I am pretty sure Italy and Greece paying 7% interest on their debt is problematic[ii] The writing is on the wall, and the ramifications for both parties are extreme: much higher taxes on the wealthy and deep cuts to entitlement spending.
So what is there to be learned from all of this gridlock? First, if your business is reliant on government, you had better diversify into the private sector quickly (especially if you do business with the military). Second, we should expect the status quo from Washington. Our representatives are simply too inept, and too political to change.
Some political experts are even suggesting that an independent could emerge during the Presidential campaign, which would threaten our two party system (it may not happen this year but is almost certain to happen in future years). As an American, I find that troubling but perhaps it would do us some good.
[i] Superbad by Paul Barrett Bloomberg Businessweek November 28, 2011
[ii] Monti under pressure as Italy’s borrowing costs rise Reuters.com December 14,2011