According to a recent report from Deutsche Bank, a major recession is on the way. Goldman Sachs believes there’s a one-in-three chance of a recession within the next two years. Former Treasury Secretary Larry Summers, who predicted today’s 40-year-high inflation rates, now says that recession is the “most likely outcome for the US economy.”
Prices continue to skyrocket. Wars in Europe and pandemic shutdowns in China are throttling supplies. The Federal Reserve is poised to significantly increase interest rates. Markets are dropping. Many of my clients are already reporting softening in demand.
No one wants a recession, of course. Except, maybe, one person: Sen. Elizabeth Warren (D-Mass.). Based on a recent op-ed she wrote for The New York Times, Warren seems to be doing everything possible to promote policies that would not only accelerate a recession in this country, but make things even worse.
The opening line of Warren’s column says it all: “Democrats are the party of working people.” When business executives from both large and small companies read this, their interpretation is always the same: businesspeople bad! Working people good!
Right out of the gate, Warren warns us that her party would promote policies that help workers and thereby inhibit and create more costs for businesses. What businessperson would take risks, make investments and grow in that type of political environment? Few of my clients would. When businesses hoard cash, avoid investments and cut expenses to counter these policies, economic growth is significantly impacted. Which means that, unfortunately, without business-friendly policies in these difficult times, a recession becomes even likelier.
Warren wants to stop companies from “jacking up prices to increase their profits.” She scolds Kroger’s chief executive for admitting that “a little bit of inflation is always good in our business.” Shame on him for being transparent.
She cites dubious surveys that claim that “by a margin of two-to-one American voters don’t buy the explanation that companies are just passing along costs” and she blames “giant corporations” for raising prices “simply because they can.” She wants a global minimum tax, an increase in domestic corporate taxes and more regulations on business activities. Will that help avoid a recession? You tell me.
And what corporations are we talking about? The ones that provide a livelihood for tens of millions of workers? The ones that hire small businesses, from landscapers to office cleaners, to support their operations? The companies whose employees spend their money at local restaurants, dry cleaners and coffee shops? Or those that, by generating whatever profits they’re legally allowed, are providing increased shareholder value, which in turn elevates the retirement savings and household wealth of tens of millions of more people? Are we talking about those corporations? Will Sen. Warren’s policies help them help our economy grow? She thinks so. I don’t.
Warren wants to “promote competition” and end “price gouging.” In doing so, she calls out Amazon (“yes Amazon, I’m looking at you,” she warns) as if millions of small merchants, developers, authors, artists, delivery drivers, warehouse managers and technology firms aren’t already thriving thanks to their ability to offer their products and services to a worldwide audience as part of the online giant’s platform. (According Amazonmore than half the products sold on its website are sold by a small business.)
Why does the senator insist on blaming firms and people – including Amazon, Facebook, Google, Elon Musk and those in the energy industry – who are responsible for the country’s economic success? I’m not saying these organizations are angels. But shouldn’t we be a little grateful? Will attacking them help us avoid a recession?
Speaking of Musk, Warren’s continued attacks on the entrepreneur have garnered much media attention. No matter that the man runs companies that are solving some of humanity’s most pressing issues — from climate change to space exploration to free speech. Instead, Warren wants him to hand over the wealth he’s using to fund these world-changing endeavors and give it to the US government because we all know the US government will spend it more wisely.
My opinion: If we want to avoid a recession and continue to be the world’s leading economy, Elon Musk and other great entrepreneurs should be exempt from taxes, not taxed more. Let them invest my money. I trust them more than I trust Elizabeth Warren.
Finally, Warren wants to spend trillions on her party’s Build Back Better legislation. She wants to cancel student debt without punishing the main culprits of this problem, our universities, which have shamelessly burdened younger generations with oppressive liabilities to fund their bloated administrations and cushy working environments. She wants the government to pay for more child care, spend on clean energy projects (but not Musk’s clean energy projects, of course) and fund universal pre-kindergarten.
That’s all great. My clients would also like to buy more equipment, build better offices, implement the newest technologies, purchase new cars for all their employees and offer free health care. But guess what? We can’t. Because we know that, as great as these things are, there’s a price for all that. And if we don’t exercise prudent management of our money, we’ll potentially ruin our businesses.
Warren – ignoring our already bloated money supply caused by trillions spent (with much waste) on pandemic aid and stimulus checks – doesn’t seem to understand that Christmas isn’t every day. Putting her policies into place wouldn’t just cause a recession; they would be economically catastrophic.
Many economists and businesspeople are already warning of a looming recession. By attacking the very organizations and people who could save us from this fate, Warren’s policies would serve to accelerate an economic downturn — and make things much, much worse.
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.