The Long View On Investing in America

The previous article called the US a "flailing superpower". I received comments about the hyperbole in that statement.

Politicians have a clear horizon of three to six months when making decisions and, in the US, less than a decade's window to make their impact. However, businesses have a much larger time horizon when making fundamental decisions about where to invest. If you are building a data center, oil refineries or other infrastructure, your event horizon is twenty to thirty years. You value stability.

You do not build in a country with a government that may overtax it, seize it, start a war where it becomes a target or take on a policy that significantly devalues it.

The American brand has been one of great steadiness in the application of its laws and policies, even in times of economic turmoil. The tarriffs on Canada, Mexico and China signal something else - a willingness to destabilize the world's trade routes to achieve unclear gains. This is intentional, and part of a strategy which presently appears incoherent.

This is utterly damaging to the US in the long term. The actions taken have proven to the world that America cannot be trusted to live up to the terms of recent trade agreements that it negotiated with its closest allies.

If you invest in the US you would be foolish not to price in the instability that comes from a country that operates without the assurances of consistent, stable governance that complies with the agreements that it negotiates. The American people have signaled that they are willing to elect and re-elect an internationally destabilizing force.

In the last two years, the United states has become a less predictable environment for long-term investment. It has proven itself to be a place where government prioritizes short term self interest over assurances of economic predictability. This leads investors to look elsewhere, including partnering with China.

And that, ultimately, is what a flailing superpower in motion looks like.