​Big Government Liberal Ideas that are Actually Good for Business

Joel Anderson  |

All too often, ideas tend to be presented from the false dichotomy of being either compassionate, liberal, and detrimental to the economy, or helping to bolster growth and new jobs...and never the twain shall meet.

As time goes on, though, I think it’s clear that thinking should be laid to rest. The simple fact is that there are a number of ideas that are geared towards helping consumers or saving the environment that would also arguably have a net positive economic benefit.

So, here’s a plea to cut through the increasingly partisan rancor surrounding our political debate that tends to put blinders on us all. Supporting business doesn’t have to mean you’re without compassion, and helping people is sometimes the best thing you can do for your business. Just to get us started, here’s a look at some popular policy proposals among liberals that could also potentially boost the entire economy.*

Paid Family Leave

Giving new parents the chance to take an extended leave is something virtually every other modernized nation on earth already does. However, in the United States, it’s frequently not protected by law, and can depend entirely on the employer. Many new parents find themselves pushed to make a harrowing choice between returning to work a few weeks after a birth or quitting their job.

One line of thinking is that family leave is bad for employers. Longer paid time off for new parents hypothetically means higher labor costs and lower levels of employment. Investing time and effort into training and working with someone only to have that person take a hiatus of two or more months can’t be good.

Well, the reality is that, while not easy to manage in the short term, the long term health of a business is greatly improved by offering paid leave to new parents. This is particularly true for new mothers. Mothers with access to paid family leave are much more likely to continue working and work more hours in their second year back than mothers who never had the opportunity..

Accepting the reality that workers have a life outside of work is an important part of building the strongest, most productive labor force possible - one that’s loyal, and will pay tremendous dividends over time. In fact, one report found that a huge majority of employers said that family leave had either “no noticeable effect” or a “positive effect” on productivity (89%), profitability/performance (91%), turnover (96%), and employee morale (99%), with small businesses less likely than those with 100 or more employees to report negative effects.

Infrastructure Spending

This one has come up frequently in recent years, as President Obama frequently presses for increased investment in infrastructure only to get resistance for congressional Republicans arguing that the increase in public spending would ultimately have a negative impact.

It’s an age-old debate. Money spent by the government is obviously good for the economy, but money take from individuals and businesses via taxes is clearly bad. Where, precisely, the appropriate balance of these two forces lies remains unclear. That’s not to say that there aren’t signs pointing in the right general direction.

However, the reality remains that certain large-scale projects, like bridges and roads, require public spending and provide major and broad benefits. Identifying those areas where private markets fail to adequately develop long-term strategies and spending tax dollars on them is worthwhile. According to one 2014 report from the Economic Policy Institute, debt-financed public funds invested in infrastructure would produce asymmetrical benefits, increasing GDP more than the money spent.

Nowhere is this more true than spending on education. A healthy and robust educational system pays immediate and long-term dividends in terms of economic growth by providing both jobs and training for a future generation of workers. What’s more, there’s plenty of reason to believe that increased public spending on education reduces public spending elsewhere, like on prisons, welfare, and health care.

Carbon Tax

A carbon tax would essentially be a tax placed on emitting carbon. If carbon pollution is costly, companies will scramble to find ways to avoid emitting it. Meanwhile, consumers would see higher prices for goods with a bigger carbon footprint, and companies producing products that help reduce carbon pollution would see a huge new market for their goods.

This, to me, represents an ideal approach to fighting climate change, as it harnesses the power of the free market. Rather than regulating or dictating change, it simply creates new incentives and allows the collective creative and entrepreneurial power of the American economy to adapt.

Now there’s a chorus of voices insisting that a carbon tax would hurt growth and slow the economy, including some prominent and trusted ones. However, the process of oil companies getting squeezed out while solar companies and their ilk rise into their place would be relatively chaotic, but ultimately beneficial. Short-term pain would ultimately be counter-acted by long-term change.

In fact, when you consider the real world examples, there’s plenty of reason to believe a lot of naysayers are underestimating the benefits. Most notably, Canada’s British Columbia has had a carbon tax since 2008 and both cut carbon emissions and fuel consumption while simultaneously outpacing the rest of Canada in GDP growth over that period.

Of course, there’s also the negative impact of climate change to consider. Even now, global warming is costing everyone money, and that only stands to get worse as time passes. If you consider the change to a low-carbon economy to be inevitable, doing it in an ordered and planned way is likely the best for everyone. For that matter, using revenue from a carbon tax to reduce things like payroll or income taxes would seem to be more than aligned with conservative principles.

Coming Together for a Stronger Economy

The debate over just how big our government needs to be is and will always be ongoing. Economics is not an exact science, and finding the right balance is next to impossible. However, the idea that government must, by definition, hurt businesses and the economy through action is an inherently flawed one.

Frequently, the same ideas that appeal to liberals are also ideas that would bolster long term economic growth the most, just like there are plenty of ideas that appeal to conservatives that are ultimately the most humane and/or compassionate. Dropping the trappings of partisan rancor should be something we can all do in pursuit of the greater good when there are policies that have every reason to appeal to both sides.

*Of course, as with any and all economics, this is up for debate. Long and constant debates that never really end. So, for all of the arguments presented here, there are clearly going to be at least one or two to the contrary.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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