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Japan Today
07-07-2025
- Business
- Japan Today
The rule of law is key to capitalism − eroding it is bad news for American business
By Robert Bird Something dangerous is happening to the U.S. economy, and it's not inflation or trade wars. Chaotic deregulation and the selective enforcement of laws have upended markets and investor confidence. At one point, the threat of tariffs and resulting chaos evaporated US$4 trillion in value in the U.S. stock market. This approach isn't helping the economy, and there are troubling signs it will hurt both the U.S. and the global economy in the short and long term. The rule of law – the idea that legal rules apply to everyone equally, regardless of wealth or political connections − is essential for a thriving economy. Yet globally the respect for the rule of law is slipping, and the U.S. is slipping with it. According to annual rankings from the World Justice Project, the rule of law has declined in more than half of all countries for seven years in a row. The rule of law in the U.S., the most economically powerful nation in the world, is now weaker than the rule of law in Uruguay, Singapore, Latvia and over 20 other countries. When regulation is unnecessarily burdensome for business, government should lighten the load. However, arbitrary and frenzied deregulation does not free corporations to earn higher profits. As a business school professor with an MBA who has taught business law for over 25 years, and the author of a recently published book about the importance of legal knowledge to business, I can affirm that the opposite is true. Chaotic deregulation doesn't drive growth. It only fuels risk. Chaos undermines investment, talent and trust Legal uncertainty has become a serious drag on American competitiveness. A study by the U.S. Chamber of Commerce found that public policy risks — such as unexpected changes in taxes, regulation and enforcement — ranked among the top challenges businesses face, alongside more familiar business threats such as competition or economic volatility. Companies that can't predict how the law might change are forced to plan for the worst. That means holding back on long-term investment, slowing innovation and raising prices to cover new risks. When the government enforces rules arbitrarily, it also undermines property rights. For example, if a country enters into a major trade agreement and then goes ahead and violates it, that threatens the property rights of the companies that relied on the agreement to conduct business. If the government can seize assets without due process, those assets lose their stability and value. And if that treatment depends on whether a company is in the government's political favor, it's not just bad economics − it's a red flag for investors. When government doesn't enforce rules fairly, it also threatens people's freedom to enter into contracts. Consider presidential orders that threaten the clients of law firms that have challenged the administration with cancellation of their government contracts. The threat alone jeopardizes the value of those agreements. If businesses can't trust public contracts to be respected, they'll be less likely to work with the government in the first place. This deprives the government, and ultimately the American people, of receiving the best value for their tax dollars in critical areas such as transportation, technology and national defense. Regulatory chaos also allows corruption to spread. For example, the Foreign Corrupt Practices Act, which prohibits businesses from bribing foreign government officials, has leveled the playing field for firms and enabled the best American companies to succeed on their merits. Before the law was enacted in 1977, some American companies felt pressured to pay bribes to compete. 'Pausing' enforcement of the law, as the current presidential administration has done, increases the cost of doing business and encourages a wild west economy where chaos thrives. When corruption grows, stable and democratic governments weaken, opportunities for terrorism increase and corruption-fueled authoritarian regimes, which oppose the interests of the U.S., thrive. Halting the enforcement of an anti-bribery law, even for a limited time, is an issue of national security. Legal uncertainty fuels brain drain Chaotic enforcement of the law also corrodes labor markets. American companies require a strong pool of talented professionals to fuel their financial success. When legal rights are enforced arbitrarily or unjustly, the very best talent that American companies need may leave the country. The science brain drain is already happening. American scientists have submitted 32% more applications for jobs abroad compared with last year. Nonscientists are leaving too. Ireland's Department of Foreign Affairs has witnessed a 50% increase in Americans taking steps to obtain an Irish passport. Employers in the U.K. saw a spike in job applications from the United States. Business from other countries will gladly accept American talent as they compete against American companies. During the Third Reich, Nazi Germany lost its best and brightest to other countries, including America. Now the reverse is happening, as highly talented Americans leave to work for firms in other nations. Threats of arbitrary legal actions also drive away democratic allies and their prosperous populations that purchase American-made goods and services. For example, arbitrarily threatening to punish or even annex a closely allied nation does not endear its citizens to that government or the businesses it represents. So it's no surprise that Canadians are now boycotting American goods and services. This is devastating businesses in American border towns and hurts the economy nationwide. Similarly, the Canadian government has responded to whipsawing U.S. tariff announcements with counter-tariffs, which will slice the profits of American exporters. Close American allies and trading partners such as Japan, the U.K. and the European Union are also signaling their own willingness to impose retaliatory tariffs, increasing the costs of operations to American business even more. Modern capitalism depends on smart regulation to thrive. Smart regulation is not an obstacle to capitalism. Smart regulation is what makes American capitalism possible. Smart regulation is what makes American freedom possible. Clear and consistently applied legal rules allow businesses to aggressively compete, carefully plan, and generate profits. An arbitrary rule of law deprives business of the true power of capitalism – the ability to promote economic growth, spur innovation and improve the overall living standards of a free society. Americans deserve no less, and it is up to government to make that happen for everyone. Robert Bird is Professor of Business Law & Eversource Energy Chair in Business Ethics, University of Connecticut. The Conversation is an independent and nonprofit source of news, analysis and commentary from academic experts. External Link © The Conversation
Axios
13-06-2025
- Business
- Axios
The only trade certainty is uncertainty
The latest U.S. trade deal with China may let the economy take a brief breather, but it's far from being able to relax. Why it matters: Months of real-time uncertainty are being replaced with longer-term uncertainty, with trade policy living on three-to-six-month cycles that make business planning a nightmare. The big picture: Tariffs are still in place, prices are still (at least anecdotally) rising, and deal deadlines with dozens of countries still loom over the summer. Stocks may have priced in the TACO ("Trump Always Chickens Out") trade, but that doesn't help companies planning their operations. So-called hard economic data — inflation, jobs — remains strong. But the anecdotes, the real-world commentary from businesses, are getting more negative by the month. "We have members now that the tariff alone will cause them to go bankrupt. The margins are so tight on their product that they can't pass the price on, and they get caught," Ross Perot Jr., the new chairman of the U.S. Chamber of Commerce, told Axios this week. Indexes that measure trade policy uncertainty are almost literally off the charts, and surging again after a brief respite last month. Catch up quick: The U.S. and China agreed to a trade deal in Geneva in mid-May, which both sides almost immediately ignored. This week's London deal is supposed to cement actually implementing the May agreement, including faster Chinese approvals of rare earths exports and relaxed U.S. export controls on software and jet parts. Yes, but: The London deal was barely 12 hours old when the Wall Street Journal reported the Chinese would only approve the rare earths export licenses for six months at a time. For the makers of the hundreds of products with components that require rare earths, six months of certainty is an improvement — but also the start of an expensive race to stockpile parts before it all turns over again. Zoom in: Treasury Secretary Scott Bessent moved the goalposts even further Wednesday, when he told a House panel it was " highly likely" the current pause on reciprocal tariffs would be extended for countries in talks. Hours later, President Trump told reporters he could extend the deadline if he wanted, but didn't think it was necessary, because the U.S. was getting ready to send out " take it or leave it" offers instead. What looked like a firm, universal July 8 deadline for dozens of countries now becomes a fungible, case-by-case affair. The intrigue: There's also the ongoing question of whether those tariffs are even legal or not. A federal court said no in late May, but an appellate court has stayed that ruling until at least the end of July. Administration officials say they have a Plan B if the courts ultimately strike down the current regime, raising the prospect of the global economy having to start over in the fall with a whole new program. By the numbers: The lingering uncertainty isn't really showing up in stocks, which remain near all-time highs, but the stress is unmistakable elsewhere. The U.S. Dollar Index, a basket of the dollar against other major currencies, has moved relentlessly lower even as stocks rallied. It remains the strongest example yet of the " sell America" trade that began in earnest in April, as investors seek safer havens elsewhere. "The US dollar remains a key barometer of trade sentiment, and its failure to extend higher in the wake of the so-called deal with China was telling. Now, it's under increased selling pressure once more, with the dollar index looking poised to hit a fresh 3-year low," Convera's lead currency and macro strategist George Vessey wrote Thursday morning. The bottom line: It's impossible to plan ahead with confidence in an economy like this.
Axios
12-06-2025
- Business
- Axios
Midsize businesses struggle with high tariff costs
The trade war torpedoed the performance of midsize businesses in the U.S., according to a survey of executives at those firms out Thursday morning. Why it matters: Tariff turmoil is hitting smaller companies especially hard, raising costs they're less able to absorb than the corporate giants. The big picture: Though it will take some time, higher tariffs will likely slow the economy and raise consumer prices, the survey authors said, even if the headline inflation number reported Wednesday still looks relatively benign. How it works: The RSM US Middle Market Business Index fell nearly 19 points to 124.5 in the second quarter. A number above 110 is in expansion, or positive, territory. But this was the biggest drop (outside of the pandemic) over the decade that consulting firm RSM and the U.S. Chamber of Commerce have fielded the survey. "The trade war unleashed real, significant changes in trade policy and at best is going to result in a significant slowing in the U .S. economy," Joe Brusuelas, chief economist with RSM, said on a call Wednesday. By the numbers: The index is based on a survey of 412 executives at middle market firms, defined roughly as those with revenue between $10 million and $2 billion. They were asked 20 questions about their businesses, including changes in gross revenue, net earnings and capital spending. About a quarter of executives reported declines in gross revenue and net earnings. There was also a 20% drop in capital expenditures, or spending on buildings, machinery, long-term projects and more. Hiring also slowed and executives expressed more economic pessimism. 57% of executives said they had raised prices in the current quarter, and 63% said they intend to do so over the next six months. The fine print: The survey was conducted in the field from April 7 to April 29, so respondents had lived through both the "Liberation Day" shock and the tariff pause that followed, while absorbing the hikes that did go through. Effective tariff rates are substantially higher than at any time since 1937, according to the Yale Budget Lab, about 15.6% as of early June. The intrigue: The deal announced with China on Tuesday doesn't change that number, and that's a particularly rough problem for these companies. Very large firms have profit margins at around 13%, Brusuelas said, but among midsize businesses the number is in the 5% to 7% range, which isn't sufficient to absorb at 15.6% increase.
Yahoo
06-06-2025
- Business
- Yahoo
Can you get unemployment benefits if you're fired or quit your job?
(NewsNation) — When you're fired, you typically have the right to collect unemployment benefits. But what if you quit? According to the U.S. Chamber of Commerce, eligibility for unemployment benefits varies in both situations, since it's typically based on why an employee was fired. For example, if you were fired because of a violation of your company's policy, you may be ineligible to collect benefits. Who is Lucy Guo, youngest 'self-made' billionaire in new Forbes ranking? If you quit your job, you most likely won't be eligible for unemployment benefits. However, it's not always that simple. Unemployment benefits are run by the federal government and the state where you live and work. They are meant to offer short-term help for those unemployed and searching for a new role. The state decides how much you can receive, who can receive benefits and how long those benefits will last. In many states, eligible workers receive benefits for up to 26 weeks while looking for another job. However, nine states offer less than 26 weeks of benefits, and two states offer more than 26 weeks of benefits. Four states offer extended benefits programs. Americans haven't cooked this much at home since 2020: Campbell's CEO Unemployment programs are funded by businesses through the Federal Unemployment Tax Act and the State Unemployment Tax Act. Being unemployed doesn't mean you're eligible to receive benefits. Typically, the reason you were fired determines eligibility. If you were fired for reasons out of your control, you're likely eligible. These can include: Layoffs Downsizing No available work Furlough (like those due to the coronavirus pandemic) You must also meet work and wage requirements, as well as any additional requirements from your state. If you were fired for instances like theft or too many unexcused absences, you may not be eligible for benefits. Social Security: Study shows where seniors could face longest drive times to offices Other reasons for not being eligible could include: Failing a drug test Coming to work intoxicated Safety violations Sexual harassment Causing abuse or harm to fellow employees Intentionally violating a company's policy (in some states) If you quit your job, you likely will not receive unemployment benefits. However, if you can show that you had a good reason to quit, like harassment or an unsafe working environment, you could still be eligible. Most employment terms are 'at will,' meaning you can be fired at any time for any legal reason. However, you still have rights, including the right to receive unemployment benefits. You also have the right to receive your final payment and be paid severance if it is in your contract. Families earning under $200K can only afford to live comfortably in 7 states: Report If you're fired, you should also be offered continued health care coverage through COBRA. If your firing is part of a larger layoff or the closing of a business, then you also have the right to be given advanced notice. Growing number of Americans say tipping culture is 'out of control' If an employer thinks your unemployment benefits claim is invalid or misleading, they can contest it. When you make a claim with your state, your former employer will receive a notice either from the state itself or the federal agency. That claim will include details of your termination. An employer then decides whether to accept or contest the claim. If you believe your claim is wrongly contested, you can fight it. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
30-05-2025
- Business
- Yahoo
US Chamber launches 6-figure ad campaign behind GOP tax bill
Congress's bill cutting taxes and spending will receive an advertising campaign from a major business lobby as it faces widespread criticism for redistributing wealth and resources toward the upper strata of American society. The U.S. Chamber of Commerce, one of the nation's largest business lobbies, will run the six-figure campaign across various media in targeted states and congressional districts, though the group didn't specify in a Friday release where exactly those would be. 'The campaign will include a total of 32 billboards across the country and matching paid digital advertising. This initial ad buy will run for at least the next month with the intention to expand to additional states and districts,' it said. The ads will mention 14 congressional representatives and two senators and will '[draw] attention to those Members of Congress who are not supportive of the bill,' the group said. The campaign likely has an eye toward the 2026 midterm elections, which could see Republicans lose their trifecta. Republicans are gunning for seats currently held by retiring Democrats in Michigan, New Hampshire and Minnesota and have vulnerabilities in the Senate in North Carolina and Maine. The economy and languishing economic sentiment as a result of the White House's frequently changing tariff policies factor significantly in Republicans' 2026 strategy, according to reports. Their goal is to 'overcome negative economic sentiment by rekindling the energy Trump brings when he is on the ballot,' according to one report by NBC News based on interviews with about a dozen GOP strategists. Public opinion surveys of Trump's 'big, beautiful bill' are hard to come by, but some show that the public does not view it favorably. One poll from YouGov earlier this month on the 'budget proposed by Republicans and Donald Trump' found that 43 percent of Americans oppose it, while 36 percent support it and 21 percent have no opinion. Along party lines, 76 percent of Republicans support it and 80 percent of Democrats oppose it, according to that poll. A different March survey by McLaughlin & Associates that was paid for by the Chamber of Commerce found that 64 percent of respondents favored extending the 2017 Trump tax cuts, while 20 percent opposed doing so. The 2017 tax cuts, which form the core of the current tax legislation now under consideration by the Senate, were opposed by the majority of Americans in Gallup polling from that year, with 56 percent of Americans disapproving and 29 percent approving. The tax-and-spending cuts are heavily skewed toward the rich, according to many different analyses of the legislation. The Congressional Budget Office (CBO) found that Americans in the highest tenth of the income distribution will gain wealth as a result of the bill, while those in the lowest tenth will lose wealth. The tax cuts themselves, which would add $3.9 trillion to the deficit through 2034, are also much more advantageous to the wealthiest Americans, according to the Joint Committee on Taxation (JCT). There will be hundreds of billions more in cuts for top earners than for the many more Americans making closer to the median income of about $80,000 per year, the JCT found. The legislation will kick millions off of public health insurance and food assistance programs, according to the CBO. Some Republicans have voiced opposition to the policies in the bill on various grounds. Sen. Josh Hawley (R-Mo.) has staked out territory as a defender of Medicaid, which his party's bill would cut through increased reporting of work requirements — a barrier to the program by means of increased paperwork. He wrote in a New York Times op-ed earlier this month that cutting health care for working poor people 'is both morally wrong and politically suicidal.' Rep. Thomas Massie (R-Ky.) attacked the bill — and voted against it — on the grounds that it was a ticking 'debt bomb.' All told, the legislation passed by the House could add in the ballpark of $2.3 trillion to the national deficit depending on how different parts of the bill interact with one another, estimates of which are forthcoming from the CBO. That's roughly $255 billion on a yearly basis, or about 7 percent of the total $36 trillion national debt stock per year. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
