Every vote counts

by Myron Cherry

Small business is directly impacted by national and international financial policies.

My partners and I have a boutique litigation firm that gets involved in controversies throughout the United States. We have handled cases in almost every area of substantive law and our firm contains lawyers licensed to practice in many jurisdictions including: Illinois, Minnesota, Wisconsin, California, Florida and the District of Columbia. Our most recent case was recovering $25.5 million for a New York Stock Exchange company which received questionable advice from a large law firm. When a lawsuit warrants our attention, we often do it on a contingency basis. We often do public interest work and are active in fields involving energy policy and civil rights. We also keep our pulse on the political and economic scene.

I hope I can provide some comments from time to time in this space and I thought I would briefly talk about why small businesses should be concerned with who leads our country. Every vote does count and policies are made on the national and state levels every day that impact the ability of small business to grow and prosper. As I am sure you are aware, small business is a large key to the health and prosperity of our economy.

Many years ago, a United States Senator gave me a copy of the federal budget as a gift. He said I should read it because the decisions made by Administrations regarding what they include in budgets tell us about the details of which policies they wish to pursue and which they do not. When a President makes a public statement about what he will or will not do, it is often a good idea to read his Administration’s budget and see if he is willing to put his money where his mouth is.

We all hear about the Federal Reserve and sometimes its process seems arcane. When the Federal Reserve increases short-term interest rates, in effect, they are raising the price of money that banks borrow to stay in business. That means a direct impact on the borrowing rate of small business and unless you are a favored customer, your rate automatically goes up in some measure with a Federal Reserve increase. The reverse might not always be true, so when you see movement in the Federal Reserve rate, talk to your banker.

We also hear about the federal deficit. In general terms, this means the amount of money which the federal government borrows to do its business. A large federal deficit means the government is borrowing more money, and when the federal government does that, it removes funds from the marketplace available for others which causes a corresponding increase in interest rates. So, how and what amount the federal government spends has a direct impact on the cost of money to small business even when your taxes don’t increase.

A good example of this is the expense of the war in Iraq. Original estimates for the cost of the war in Iraq are but a fraction of what we are spending now. Once we get into a war, it is very hard to get out and the cost has a direct impact on the economic health of small business in the United States, even without considering implications of foreign policy. This doesn’t mean we should not support our troops or help other countries it just means we have choices to make and we should be aware of that.

Finally, the term “trade deficit,” in simple terms, means that consumers in the United States are spending more money for goods outside the United States than they are with U.S. producers. Often these products can be purchased cheaper outside the United States and this has an impact on not only the price a small business can charge for a product in the United States, but also whether that small business has a market into which it can sell its goods.

Even though you might have a small business in a small town in middle-America, your daily existence is directly impacted by these national and international financial policies. I suggest we learn something about them and like my old friend, the former U.S. Senator suggested, read a copy of the U.S. budget. You can find it online or at your friendly Government Printing Office.

In future remarks, I plan to cover such issues as healthcare costs, insurance rates, the real cause of litigation costs and the role of lawyers in our complicated society, as well as other matters of interest.

Be well and until then, Good Business!