Transworld Business Breaks Down Election 2008

mike lewis

• October 16 2008
• 897 views
• 18 comments

Illustration: Ariel Saari

Boardsports participants have always taken pride in their rebellion and individuality, but over the last couple decades, the business of action sports has become increasingly tied to the processes that make mainstream America tick. Regardless of whether you agree with the politics du jour, they affect each and every one of us on a daily basis, and perhaps few more than the small business owner. While there may still be plenty of areas where ignoring the man and his rules can make life more enjoyable, politics, which boils down to economics, social trends, and laws that ultimately play a huge role in whether or not your business survives, shouldn’t be one of them. Try telling the IRS to piss off when they roll in. It doesn’t work so well. Fortunately, we have a little thing called democracy that allows us to fly the proverbial finger with our votes.

There are so many issues going on in the world right now that have a huge impact on our industry, country, and us personally. In the big picture, the war, environment, housing fiasco, energy independence, foreign policy, and trade balance affect the economy and so much more. “On the political front there are more factors today that can adversely affect our industry than at any other time in the last 25 years,” says Dennis Nazari, owner of Salt Lake City’s Salty Peaks snow and skate shop. The next administration’s policies will play a major role in determining the health of the nation’s economy and its middle class, which fuels action sports. The media is awash in the nuances of the upcoming presidential election, but while Obama is a known body surfer, there likely won’t be much coverage of a boardsports agenda. While we may not rate our own policy, the next president will have a major impact on our industry. Transworld Business did the leg work to find out what issues matter most for boardsports, and the major candidates’ stances on them, so that when you go to the polls on November 4th, you’ll have some insight on how the Washington machine, that may seem a million miles away, will affect your business—for the next four years, at least.

Big Politics and Small Business Operations

With the economy looming large in the upcoming election, both candidates are placing a great deal of emphasis on policies designed to help small business owners and employees, such as the members of our industry, and fuel growth in this sector. Small businesses account for a huge portion of the jobs in this country, and with 44,000 new jobs reported in August alone by the ADP Small Business Report, it’s one of the few areas of the economy expanding at the moment. Both candidates are putting their efforts into ensuring this growth continues.

Obama is coming out swinging with proposed legislation designed to protect workers and improve their quality of life. His ideas include additional support for unions, increasing the minimum wage, and requiring employers to provide some sort of health care and retirement plan for all workers. The idea is to make these businesses more appealing for employees, and that a healthy working class will support small businesses financially.

In economics, there are two sides to every coin. While Obama’s plan would benefit workers without current access to similar benefits, their employers have to foot the bill. Bola Ibidunni, owner of Boulder, Colorado’s All Boards Sports, believes that the government should regulate programs such as minimum wage and finds himself in a quandary. “Left to businesses, it will be a downward spiral for workers, as businesses try to maximize profits,” however, as an owner, he knows that this will cause either prices to go up or expenses to come down.
McCain is also advocating a number of changes to benefit workers including tax incentives for people that purchase private health care plans and requiring retirement plan enrollment if a plan exists, but he is sticking fairly close to his party’s tradition of a more hands off approach to governing employer-employee relations. Nazari, whose company currently offers its workers health care, agrees that it should not be mandatory as plan costs have been going up 30-40 percent a year and can be prohibitive for smaller businesses. He thinks the focus should instead be on creating a national health care plan.

The Joy of Taxes

Taxes are also a double-edged sword in our economy. On the one hand, as a small businessperson, you want to have low corporate tax rates to keep hard earned dollars in your pocket and going back into your business. Income tax is also very important as both a businessperson and a consumer to keep disposable income high. On the other hand, well-managed government programs are essential for keeping up beaches, public skate parks, national forests, and highways to visit all of our favorite spots.
“If a business owner is thinking about how to make money, they need to realize that we need a healthy middle class,” says SOS founder/executive director and Eagle County, Colorado county commissioner Arn Menconi.  “The average income has fallen over $5,000 a year in the last eight years. The future of our sport is completely reliant on disposable income,” and as both candidates, and just about any American, will tell you, tax policy plays a huge roll in shaping this.
The two candidates have a basic philosophical difference on taxes. McCain is from the Reagan school, and believes in “Trickle Down Economics;” that low tax rates for all, including the wealthy, will encourage spending and benefit all members of society. Obama’s plan is to remove tax breaks for the richest Americans, and keep taxes low for the middle class down to support spending by these demographics, and shift financial support of government programs more squarely on the shoulders of the wealthier members of our society. On the corporate side, McCain is proposing reducing the corporate rate to 25 percent, down from 35, to encourage new businesses and growth. Obama is fond of creating tax incentives to encourage things like new job creation and research and development.

International Trade And You

The topic of international trade is huge this election for industries such as ours, which rely heavily on foreign manufacturing. This is especially true with the growing economies of nations such as China, which raises the price of goods produced there.  While the Chinese economy may be strengthening, there has been heated debate between the two candidates over whether the Chinese government is keeping its currency, the yuan, artificially low to keep export numbers high. Obama is in favor of pressuring them to raise the value of the yuan, and penalizing them with strict tariffs if they don’t; a policy that McCain opposes, which is in keeping with his overall strategy. McCain favors breaking down barriers to international trade to keep domestic companies’ foreign manufacturing costs and consumer prices low, and has consistently voted for treaties such as NAFTA and CAFTA, which have opened up trade in North and Central America. These treaties, which Obama supports reforming, have benefited manufacturers who choose to make their products closer to home. “Working under NAFTA, if it’s a North American product, it can cross the borders and not be taxed with import or export,” says Black Box Distribution partner Dolph Raasch whose company began building skateboards south of the border in 2004.

Obama’s stance focuses on making international trade more equitable for US manufacturers by leveling the playing field for employers required to obey US regulations. “It is absolutely critical that we engage in trade, but it has to be viewed not just through the lens of Wall Street, but also Main Street, which means we’ve got strong labor standards and strong environmental standards and safety standards, so we don’t have toys being shipped in the US with lead paint on them,” Obama said in a debate this February.
Trade policy and a devalued dollar are making domestic manufacturing more and more attractive and both candidates are combining proposed efforts to encourage global trade with policies that also make manufacturing domestically more attractive.

Gas Prices

One of the biggest issues for our industry, world politics, and day-to-day life is the price of gas, as well as its deeper-rooted causes. The candidates, like everyone else in this country, are itching to see the price trend down. Managing this increase and transitioning away from foreign oil dependence will be at the top of the list of debate questions.
“No matter who wins, we’re going to need an uncharacteristically balanced approach from Washington,” says Arbor president Bob Carlson. “If we don’t do something about global warming, there won’t be any snow left to ride.  But if the solutions drive the price of fuel up to a point where people can’t afford to drive to the slopes - then the industry will be equally screwed.  So I am hoping for an approach that keeps fuel prices somewhat reasonable, while we as a country work on reducing our carbon emissions.  This will be a tricky balance, but one that will allow us the time needed to develop and institute real alternatives to fossil fuels.”
McCain is focusing his efforts to lower prices on increasing supply from offshore drilling and by doing away with tariffs on foreign ethanol, both of which measures Obama opposes. Obama is taking the long view by focusing more on improving renewable technologies and redistributing record oil company profits back to consumers in the form of rebate checks funded from big oil’s coffers.
“Individuals and companies taking action is a step in the right direction, but it is time the government steps up to the plate to address these global issues at hand and make changes through incentive programs and funded initiatives that have a real impact,” says Sole Technology’s founder and CEO Pierre Andre Senizergues.