Maybe. Ben Stein worries. (Yes – the Ben Stein from Ferris Beuller’s Day Off – he’s a legitimate economist). Check out this article.

Sounds like an ad you’d see on late night TV for some dubious and expensive dietary supplement. But, according to this article it’s actually the difference in how the US spends its health care money compared to Canada. We’re getting ripped off! They spend $3k less per year per person and the average life expectancy is 3 years longer (plus infant mortality kills 3 babies per 1,000 births more in the US).

Are Health Care Costs a Problem for Your Business?
What the article doesn’t mention is how this problem affects business. I see several effects. One is that companies who can locate across the border will. A car plant in Ontario has significantly lower health costs than one in Michigan. Along with those jobs go all the business it sends to sub contractors etc.

Another is that it forces companies to compete on performance – not if their work force has too many pre-existing conditions which could raise your costs or lower that of your competition.

A third is that having healthier customers who live longer and don’t spend as much on health care is probably a benefit to more companies.

Takeaways:

• This is a problem with a political solution. I know it won’t be easy since it cuts across many deeply held beliefs. But sometimes the facts need to win out over the comfort of a deeply held belief.

[Note: My policy in this blog is only to discuss politics in the context of how it affects business.]

I heard it again last night – on NPR of all places. They said that the Democrats will make raising the minimum wage one of their first priorities – in no small part because most of the electorate thinks it’s a good idea. (Now there’s a concept.) But then they added that someone – I think they said Bush – would fight to exempt small companies from the devastating cost. The logic of that last statement is so out of touch with how my business works.

The traditional stand of pro-business thinkers is that anything the government does that costs them money is bad. That is way too short sighted for success. Here’s why. Anything you spend money on has a cost and also a benefit. The trick to a successful business is to spend money on those things that benefit your company and not on the other stuff. We know this when it comes to investing in equipment, advertising, training and that Lexus you drive (I’m sure it brings in a lot of sales). We know this because we can see the benefit directly connected to the investment.

Henry Ford knew this when he doubled – DOUBLED – the wage in his factories. Why? Because he as he said, cars don’t buy cars. In doing so, he was able to recruit and retain a better work force and more importantly, allow more people to buy his product, In effect he spent a little money to create a bigger market.

However, when the government makes us incur a cost we don’t always see the benefit so directly. That doesn’t mean there isn’t one. And of course just because the govt is spending money doesn’t mean there is a benefit – at least not one you and I enjoy. I know politicians can be stupid, selfish and corrupt.

My point is we have to look beyond the cost to see if the benefit is really there or not. And if it is, we have to make sure the money is well spent. If we do that, the government is in a unique position to help business. And by unique I mean no other institution on the planet is in a position to benefit your business like the government. Too bad we’ve had such jerks running the place. If you want more on this and like to read, check out Wealth & Democracy by Kevin Phillips.

Let me give you some examples. Obviously these are generalities and the devil is in the details.

Minimum wage. If you sell to normal people – not just the ultra rich, your company will do better if your market has more money to spend, and if they are able to make a decent living. A situation where the average CEO pay is a gazillion times more than the average worker is bad for most businesses. But left to their own devices, what board of directors would curb that? In fact you can argue that without a regulation that makes them pay everyone a fair wage, they’d be doing their shareholders a disservice to do so and put themselves at a competitive disadvantage. But with such a regulation that applies to everyone, they can be profitable in a situation where their customers are better off – and that’s good for business.

Health Care. If your customers and employees are sick, afraid they’ll be bankrupt if they get sick or in fact are bankrupt because a family member got sick that is bad for business. Health care costs somebody money. If you want to be “nice” or feel like you can get better workers if you spend some of that money fine. But if you’re in competition with someone who doesn’t, then they will have a lower cost basis than you and make it hard for you to compete in the market place. So, if done right, there should be a benefit to spreading the cost of health care in some even fashion so we all get the benefit. And have you noticed that compared to other countries we don’t get nearly the bang for the buck in this area that we could?.

The environment. Hasn’t anyone in power read The Tragedy of the Commons? You want protection from guys like Harry or they’ll put you out of business.

Alternative energy. What could be a more stupid waste of government money than to subsidize the oil industry? I’m talking direct subsidies as well as the security costs of propping up despotic regimes who happen to be built on oil fields. (No, I don’t mean Texas.) Look at the economic benefit this country got from a 10 year commitment of government spending to put a man on the moon.

We need the same kind of effort to develop alternative fuels that will allow us to be energy independent and environmentally beneficial. If we put our American ingenuity behind it (before someone else does) we’ll get the side benefit of developing a whole lot of high paying jobs in this country, and a lot of cool technology we can sell to the rest of the world. That would be a lot better use of the national debt than lowering Paris Hilton’s taxes.
Takeaway:

• My main point is that when it comes to political positions, the “traditional business thinking” is often bad for business.

I promised myself when I started this blog that I’d not write about politics unless I took the time to show the direct link to your business. But last weekend I rented a dumpster because we’re putting the house on the market [www.seiffer.org - make me an offer before we list it with a realtor]. And when the bill came there was a $15 gas surcharge (4%). Our company pays UPS about 5 grand a week. I don’t even look at how much they’re charging us in gas surcharges. And of course we charge customers a gas surcharge too. We get about 1,000 a month that way.

This hurts business in two ways – the added costs we have to charge make it harder to sell but don’t profit us any. And the added costs we have to pay decrease our bottom line. And who benefits? Not you, not your customer. Exxon is the one with record profits last quarter. But I don’t blame them (at least not for that). This is a problem with political roots. The world system of depending on oil has to change. And this kind of thing has happened before. Europe was powered (or at least heated) by wood hundreds of years ago till they burned all the forests down. So they figured out how to use coal till oil was put to use.

We knew this was coming and decided to go for short term, immediate comfort/profit rather than long term gain. Some of you are old enough to remember gas lines and no-gas-on-Sundays back in 1973. Then President Carter proposed we allocate some resources to developing alternative fuels and to conservation. As a country we didn’t really give it anything but lip service.

And we went back to business as usual. We justified it by taking comfort in those intervening years when oil was $10 a barrel. But that just allowed us to wallow in our denial. Even at $10 a barrel, oil pollutes the atmosphere. We enjoyed our denial about the environmental effect of oil addiction. And our denial about the control over our economy we were giving to foreign leaders who weren’t (and aren’t) exactly working in our bests interests – either economically or in terms of our values: freedom, democracy, human rights etc.

So we played along, ignoring the obvious consequences of our action (or inaction) and now we’re shocked, SHOCKED! that we have to pay 75% of what the rest of the world pays for gas instead of the 50% we’re used to paying. Just wait till we have to pay as much as Europe has been paying for years. And I’m just counting the pump price – not the price in lives lost to air pollution, or war, or _____________ (you fill in the blank).

But it’s human nature to go for short term solutions instead of long term ones. Somehow we believe that going for the long haul makes it less pleasant in the present. And it’s true in many areas (weight loss, quitting smoking, saving for a car instead of borrowing for one). But here’s the real tragedy. It’s not always true in business.

We’ve all read about companies that were forced to put restrictions on their pollution output only to find they could make a profit from chemicals they recovered. Or that were forced to treat employees better only to find they got improved productivity or lower turn over. Is it really so hard to believe that had we put as much effort into energy conservation and alternative fuels in the 1970′s as we did toward the moon shot in the 1960′s that not only would we be better off now, but we’d have been better off by 1976 (say) and the 1980′s and 90′s would have been even better than they were? Carter of course wasn’t as personable as JFK so it was harder for him to get support. Jimmy seemed more of a wimp to us than Jack (or Ronald). And it’s un-American to follow wimps – even when they’re right.

Can you imagine the new products and technologies American ingenuity would have developed? How many high paying jobs that we would have created? How much better our air and water and global warming situation would be? How much it would have affected our trade balance to be exporting that kind of stuff all over the world? Not to mention the effect on peace, if the oil producers had been made as economically and politically impotent as say the buggy whip industry?

Instead we took the short term route and look at the fine mess we’ve gotten ourselves into. It doesn’t take much to figure out which politicians are trying to prolong the status quo when it comes to oil, the environment etc. Unfortunately the ones who want to change things don’t show enough balls or leadership as I’d like to see. But let’s support them anyway. It may be too late, but our only hope is to vote and work as if it’s not.

Takeaways: The political takeways are the same as the business takeaways.

• Vote for (and support) leaders with a vision for the future that’s based on facts – not someone with a nice personality.
• Don’t ignore the facts because they are unpleasant and the consequences aren’t immediate.
• Don’t assume that working for a long term solution – one that’s supported by the facts and the science, even if unpopular – will always mean a long time of sacrifice. You have to be willing to sacrifice for the truth, but when you are, it might turn out better – sooner than you think.
• There’s a real problem with how most businesses think they are affected by politics. It’s too short sighted and hurts them in the long run.