Economists have always known the importance of uncertainty in the decisions business leaders have to make everyday, and on the economy in general.
The shutdown by the radial Republicans, AKA the Tea Party, has created unprecedented economic uncertainty.
This week, a senior Administration official in Washington asked me how long I thought the shutdown of the federal government would last. My response was that I have no idea, but I think as we witness the vast and ubiquitous reach of the Federal government into all aspects of all businesses, the pressure will mount to end this unnecessarily destructive and sad reminder that brains are not a prerequisite to being elected to Congress.
When political decision makers do not appear to be rational actors, then uncertainty becomes the norm.
The damage caused by this uncertainty is already being acted out across our state and country. Sikorsky, a division of United Technologies Corp., announced this week that they were going to furlough 2,000 employees. Sikorsky may be the first to have announced a furlough, but they certainly will not be the last.
On a personal note, the Greater New England Minority Supplier Development Council (GNEMSDC), which I lead, won a $1 million contract from the U.S. Department of Commerce to open and operate a Minority Business Development Agency Business Center in Bridgeport. This grant was to start in October. I cannot in good conscience hire a director until I have some sense that the expenses I start to incur will be paid for by the Commerce Department.
From businesses as large as Sikorsky to businesses as small as the GNEMSDC, decisions will be made because of this shutdown, and most will result in a contraction of the economy.
It will not just be labor that is impacted by the foolishness of the Tea Party that has voted 41 times to repeal Obamacare, only to be rebuffed by the Senate, and a certain presidential veto.
Business investment could grind to a halt if this shutdown continues another week. Corporations buy new equipment because they expect to be able to sell and profit from the products and services produced by that new equipment.
With the federal government shutdown, one of the largest customers is no longer in the market. Here is where the macro-economic multiplier comes into the story.
Sikorsky receives fewer orders for helicopters, and lays off workers, machine shops whose products go into the production of helicopters get fewer orders and lay off workers, metal suppliers to those machine shops get few orders and lay off workers. All these laid off/furloughed workers buy less TVs, IPads, meals in restaurants, airline tickets, gasoline, and other goods and services.
Not to mention the impact this contraction has on public sector budgets at all levels or the effect on financial markets and corporate profits in general. The impact spreads to businesses and industries many times removed from the initial ripple.
The actions of the political amateurs and economic idiots have brought the growing economy to its knees. I have to ask the question: Did Ted Cruz and the Tea Party know this would be the result of their political ransom? If they did have economic disaster as the real goal of their shutdown, and Obamacare was just the ruse, then these actions go beyond political irresponsibility; they are criminal. When you take money from people in exchange for nothing under the threat of violence, we call it robbery. The Tea Party has robbed millions of Americans of income and wealth by this shutdown. And they act like we should thank them for their trouble.
This shutdown will be resolved one way or another. However, as long as there are those elected officials who want to destroy the Federal government, at any cost, the uncertainty they have created will last a long time.
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Fred McKinney is president and CEO of the Greater New England Minority Supplier Development Council in Hamden. He will be writing the occasional column for the Hartford Business Journal.
