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Gambling on the US

One wonders what Glanbia and Hochland are thinking of the latest news from the US, about the executive order banning nationals from seven countries from entering, even with valid US permits. Both have set up joint ventures and purchased cheese businesses in the States.

On the one hand, it should not impact them as there is no restriction on nationals from either Ireland or Germany coming into the US.

On the other hand, as Google and other technology companies are pointing out, it will impact their companies’ ability to attract and keep the best and the brightest globally. And, if a business is global, what is the attraction of staying headquartered in a country where doing business can be difficult, with your employee’s visas and so forth? To say nothing of causing poor Sir Mo Farah more grief when he goes back to the US to be with his family and train.

In the longer run, it does make bad policy and makes for an overall view that the US is not actually open for business. Despite the current president being elected on the basis that he will bring more jobs back to the US, most business leaders take the view that stability and a steady hand are good for share prices.

I draw your attention to the sad tale of Venezuela, which when I visited 20-odd years ago, just before the election of the populist president Hugo Chavez, was one of the wealthiest countries in South America. Rich in natural resources, it had a well-functioning oil and metals industry. At the time, Chavez was running for the post, and the company presidents I interviewed were understandably nervous of what he suggested for their industries while on the campaign trail. I do not know what happened to them, but I do know those industries were nationalised, and I suspect anyone with the wealth and means left the country. The economy collapsed as populism and rhetoric trumped common sense. Now, there are long queues, inflation and hunger, in a country that used to export food. Tragic.

The US is a bigger economy with more safeguards and the current president is a right-wing demagogue instead of a socialist, but the capacity for suffering is still there and campaign slogans are not the best plan for governing. I suspect most companies will be treading carefully in the future when it comes to investing. The US isn’t the safe bet it used to be.

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