Call it the Big Beautiful Bill. Or view it as the Big Bad Betrayal. Trade Liberation Day or Disaster. Whatever your political leanings, make sure you remember basic economic principles when formulating your opinion about them. A principle is a foundational truth that drives economic behavior, e.g., people choose a product based on its perceived functional and emotional value. In this blog, I’ll review five fundamental economic principles that are central to understanding the impact of the BBB and tariff policy on our economic growth. Opportunity Cost When making purchasing decisions, we assess the value of the product or service. We also compare this value to what else the money could have been spent on, i.e., its opportunity cost. One opportunity cost of a purchase is lower savings. Another is forgoing a different purchase. If the perceived opportunity cost is higher than the…
Trump is taking advantage of America’s economic illiteracy – or is he illiterate?
Trump quickly responded to news that ships from China are no longer delivering goods to the US: “We were losing hundreds of billions of dollars with China. Now, we’re essentially not doing business with China. Therefore, we’re saving hundreds of billions of dollars. It’s very simple.” Why Trump is wrong No, it’s not so simple. Trump wants us to believe that if we decrease imports, everything else that factors into our economic wellbeing will stay the same. After all, he’d argue, the definition of Gross Domestic Product (GDP, which measures a country’s output) shows imports as a subtraction. We measure GDP as the sum of: Direct government expenditures (excludes transfer payments and interest on the debt. It’s federal personnel and purchases of goods like weapons) Domestic Consumption, which equals total Consumption minus the Consumption of goods and services we import Domestic Investment, which…
If federal government spending bloated? The facts will surprise you.
Is our federal government bloated?
Reducing uncertainty through expansive thinking
My friend and fellow strategic thinker Bill Welter asked me a great question: “Why do so many leadership teams get surprised by adverse events or fail to be prepared if previous uncertainties come to light?” Bill is the author of some great strategy books and has a terrific newsletter on how to advance your preparation for the future. The question has become urgent as Trump’s rapid-fire moves have generated considerable uncertainty. For example, supply chain experts must deal with on-again, off-again tariffs and biotech companies with cutbacks in research funding … or maybe not. And even without these latest moves, the world seems increasingly less predictable due to geopolitical issues and natural disasters. A required attribute for today’s leaders is the ability to deal successfully with uncertainty. What does that mean exactly? Let me present a matrix that will advance this discussion. This…
Off brand. On brand. Examples from which we can learn.
When companies depart from what makes their brand special, they are off brand. Disappointment arises in the emotions of customers, employees, and other stakeholders. Here’s one example. Off brand Boar’s Head is a premium deli meat and cheese company. The purported advantage of the brand’s offering is highest quality. The superior quality was so great, it earned a higher price. Once a customer, I now walk past the Boar’s Head refrigerated cabinet at the front of my grocery store. Why? I’m repulsed by its recent actions. At the end of 2024, 10 people died and many others were sickened across 19 states after eating its deli meat. The company then had a massive recall of 71 products and eventually closed its Jarrett, Virginia plant. More than a few companies have product performance blips which are then corrected. But the Boar’s Head issue was…