If American business—and the metals sector especially—presented a Word of the Year award, 2010's winner would be an easy and probably unanimous choice uncertainty.
Throughout the year at conferences and roundtables, at corporate meetings and in countless interviews, metal executives and analysts exclaimed the word repeatedly as an explanation for why there wasn't more growth and also as a sort of talisman to ward off becoming over-optimistic about intermittent economic upswings.
The uncertainty, they said, was brought on by President Obama and Democratic control of Congress, exemplified by legislation dealing with taxes, energy, jobs, health care, trade policy, global warming, unions and a host of other issues. The line of reasoning had it that business could not, or would not, move forward until it became clear what the new rules were going to look like. Metal processing and manufacturing were particularly susceptible to government overreach and misguided policy, the story went.
So November's mid-term election results should have all but eliminated uncertainty from a repeat performance in 2011, right? Maybe not. An AMM survey of what to expect in the coming year found that less than half of respondents in the metals industry believe the new year will bring more certainty with it.
The theory underpinning the concern over uncertainty is that Democrats are bad for the interests of business—or at least this President and this particular set of Democrats—not just because they may be left of center, but also because their particular policies would be unhealthy for the economy and, ultimately, profits. Not knowing what they might do or when they might do it was too much—or maybe not enough—for metals industry business leaders to take into account when making decisions.
Yet if uncertainty truly is a fear unto itself, it wasn't just Democrats to blame. Much uncertainty was created over the past two years by a recalcitrant Republican opposition to anything the President proposed, especially in the Senate. By not allowing a large number of key bills to even come up for a vote, the climate became volatile. No one, not even members of Congress or the President let alone business leaders, could possibly have certainty under such circumstances.
And this is why the elections have not definitively resolved the issue. Republicans already have made it clear they will continue to use their minority position in the Senate to stop anything and everything Democratic. The House, on the other hand, is pledging to take up and pass a host of bills unlikely to survive a Senate fight or, if it comes to it, a presidential veto.
In other words, gridlock is not just for your morning commute anymore.
It is possible there will be some movement on the expiring set of Bush tax cuts, and there has been some early discussion about common ground on infrastructure investment, but don't count on it. Beyond these two issues, the signs are not encouraging. On the other hand, cap-and-trade legislation is probably dead, as are a host of workplace regulation issues—both topics that worried metals executives this past year.
But something bigger is at play The next two years threaten to become a fight not just over what government policies might pass, but whether the government has any business adopting policies at all. That would not be good for the economy or business. No individual, no single business, no particular industry and no general economy works and succeeds in a vacuum. The market requires a structured society, a common culture in which to grow and thrive. It requires investment and workers and resources and clients and credit and a court system and diplomacy and, yes, even safeguards.
In other words, government—which is not a dirty word—provides general and overall certainty, even when you disagree with the details of how to get there. Whichever side of the political spectrum you are on, the truth is that if one party or another denies this historical and experiential truth, then the uncertainty of the past two years is going to look like a golden age.
JOHN P. AMBROSIA