May God grant you clarity of vision and purity of thought as you move toward your purpose. Confront your fears, rope them down, and turn them over to Our lord and savior Jesus Christ. Like the mustard seed, your vision will take root.
 
 
​Author: Erik Gagnon - Managing Partner, Chi Rho Consulting

"It is business that generates the jobs, income and taxes that keep a country going."
 ---Mark Skousen (American economist)
 
If you keep up with current events, I'm sure you're aware that the Republican-controlled Congress passed a sweeping tax reform bill last week.  We’re not going to address the full minutia of the 2017 Tax Cuts and Jobs Act in this article. However, here are a few of the salient highlights for American businesses:

• The new Tax Act lowers the corporate income tax rate permanently to 21%, starting in 2018
• The new Tax Act establishes a 20 percent deduction of qualified business income from certain pass-through businesses. Specific service industries, such as health, law, and professional services are excluded. However, joint filers with income below $315,000 and other filers with income below $157,500 can claim the deduction fully on income from service industries.
• The new Tax Act allows full and immediate expensing of short-lived capital investments for five years. It also Increases the section 179 expensing cap from $500,000 to $1 million.  

The substantial cut in U.S. corporate tax rates is undoubtedly the single greatest change in our federal tax laws in the last 30 years. It also seems to be the most controversial portion of the new legislation.  Indeed, left-wing politicians and left-leaning media outlets have been quick to condemn the new Tax Act as a gift to the wealthy at the expense of the middle-class.

Before and after the House and Senate votes were taken last week, the pollical hyperbole was in full effect.  According to Senate minority leader Chuck Schumer (D, NY), the tax bill seemed to “stuff even more money into the pockets of the wealthy and the biggest corporations while raising taxes on millions in the middle class.”  House Minority leader Nancy Pelosi (D, CA) went even further stating, “This GOP tax scam is simply theft, monumental, brazen theft from the American middle class and from every person who aspires to reach it. The GOP tax scam is not a vote for an investment in growth or jobs.”

It’s interesting to note that the final votes in both the House and Senate fell squarely along partisan lines.  While a handful of Republicans opposed the bill in the House, not one single Democrat representative voted in favor of the legislation. The same was true in the Senate where all but one Republican (Bob Corker (R, TN)) voted yea and the entire Democrat Senate voted nay.

We'd be remiss if we didn't mention that an estimated 40-45% of all Americans pay no federal income taxes whatsoever today.  There are many factors behind this astounding figure. However, an economic stimulus package of this magnitude will most certainly reduce welfare and unemployment figures in the years to come. In addition, the average American worker who pays taxes is expected to realize a sizable tax reduction under the new plan.

More important to our nation's future, American industry will once again have competitive advantages in the global arena. The truth of the matter is that our nation benefits wholly when job creators have more capital available to create, execute and innovate.  Unleash the financial handcuffs from the John Galts of American enterprise and the free market will flourish.  The positive effects will certainly ripple though society much as Mr. Conerly stated in his recent Forbes column.
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In closing, a sad truth was revealed in the final Tax Cuts and Jobs Act debates and voting tallies last week. The leadership of the Democrat Party, as a whole, has now moved as far to the left on the political spectrum as the self-proclaimed “Democratic Socialist” Bernie Sanders (I, VT). They seem to have completely abandoned the virtuous, free market principles that have guided our Constitutional Republic for the last 241 years. Their "progressive" label appears to be a thinly veiled euphemism for neo-Marxist ideology. If John F. Kennedy were alive today, I imagine that he'd be aghast at what's become of his Democrat party.

​"Those who cannot remember the past are condemned to repeat it."
---George Santayana (1906)

Earlier today, President Trump held a press conference in New York City announcing his new infrastructure plan. One of the key tenants of the plan is an emphasis on leveraging private sector capital and expertise to rebuild our nation's crumbling buildings, roads, transportation and waste disposal systems. In his prepared remarks, President Trump asserted that the trillion dollar public / private spending plan will efficiently stimulate the economy - leading to at least one million news jobs, wage growth, and new business opportunities in a number of key industries.

When the President concluded his short speech, he opened the floor for questions from the press. Immediately, the line of questions turned to the violent events that occurred in Charlottesville, VA over the weekend. We watched the live press conference and only counted one legitimate question related to the President's infrastructure proposal.  The rest of the questions the President fielded from the press pertained to race relations and placing culpability on the individuals and groups behind the violent incidents in Charlottesville. Needless to say, we were disappointed that the questions strayed away from economics.


Why the New Infrastructure Plan Isn't Today's Top Story
The fact that most of the mainstream news media outlets aren't focusing their spotlights on the new administration's policy initiative roll-out isn't at all surprising.  Let's face it, they're in the ratings game. Sensationalism and emotionalism outdraw straight reporting. Couple that with the fact that more and more people are turning to online sources for their news (9 out 10 people according to Pew Research), and you begin to understand why partisan story lines are now superseding objective journalism en masse. News consumption is at an all-time high, attention spans are low and competition within the market has exploded exponentially.

Partisanship isn't a new phenomenon in American journalism. As James L. Baughman noted in a 2011 article, partisan reporting was a standard operating practice for newspapers in the years preceding the Civil War.  He sites, "Editors... unabashedly shaped the news and their editorial comment to partisan purposes.  They sought to convert the doubters, recover the wavering, and hold the committed."

So what has the renewed trend toward hyper-partisanship meant for entrepreneurs in recent years? While the financial viability of new news media startups remains in question, the shift has presented a number of opportunities for quick buck artists to reach niche markets online through targeted digital advertising. That said, news media hyper-partisanship should ring alarm bells for any entrepreneur with a long term  vision in most any industry category. Free market venture capitalists should be concerned as well.  Here's why:


News Media Partisanship Feeds Social Unrest
As we mentioned earlier, President Trump spent a good deal of his time during today's Q&A session fielding questions about the extremists behind the violence in Charlottesville. He defended his original statements that fringe elements on "both sides" [sic] shared blame for the inflaming the incident.  The media picked this up and ran with it.  
We have an AP news feed in our office.  The very first AP news report we received relating to the infrastructure announcement made little mention of the plan.  The headline spoke only to the President's comments on the weekend's events in Charlottesville.  The article was, in our opinion, a pseudo op-ed designed to further fuel a specific partisan political narrative.

Let's be clear here.  The President didn't handle the onslaught of questions very well. That said, his defense was truthful. Multiple fringe groups were indeed in attendance at the rally in Charlottesville this past weekend.  They included several white supremacist groups such as the KKK, Nationalist Front, and Rebel Yell.  They also included a loose collective of leftists he termed the "Alt-Left" [sic]: presumably referring to Antifa members, Black Lives Matter, and others that stood in opposition of the rally organizers and participated in the violence.

If you're relatively familiar with 20th century European history, the scene that played out in the streets of Charlottesville were eerily reminiscent of events in Germany in the early 1930s. Take a look at raw film footage captured by independent journalists covering the event during the melees. You'll see armed, similarly clad combatants engaging in a battle over ideologies. There were indeed two fringe camps fueling violence at the rally on Saturday.  However, we'd argue that they both represent the same side of the political spectrum: the far far left. Let us explain:


The Risk of History Repeating Itself
Fringe groups with disparate agendas but common core principles did indeed engage in battle on the streets of Chalottesville this past Saturday. Like most Americans, he fell into a trap and placed the fringe into two separate political camps labeled "left" and "right." By failing to point their similarities, we believe that President Trump missed a clear opportunity to rally consensus support for his message and unify the the nation.

If you visit the websites of the radical fringe groups that encouraged member participation at Saturday's rally, you'll find remarkable commonalities in their platforms.  Better yet, follow their blogs and read their social media postings ("left" and "right") and you'll realize a similarity in their end objectives.  They're both interested in dismantling many (if not all) of our founding principles including freedom of religion, speech, press, assembly, and markets — as well as limited government.

While we hear much ado about the neo-fascist "Alt Right", the media has given little or no scrutiny to the platforms of the egalitarian collective President Trump labeled the "Alt Left." The mainstream media has largely been sympathetic to the BLM and Occupy movements despite their overt hostility to core American principles. More disturbing perhaps, a handful of news outlets (including the Yahoo News and the Washington Post) have even run articles glorifying the anarchist activity of the the Antifa collective.

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​What we're witnessing today seems to be a nascent rise of Communist / Fascist ideology right here on American soil.  Historians and political scientists like Vladimir Tismaneanu are quick to point out that the ideologies often go hand in hand and feed off one another. The cancerous ideologies spread across European continent during the early 20th century, most notably in the Soviet Union and Nazi Germany "where the final destination was the deplorable Gulags and the gas chambers of Auschwitz." 

Communism and Fascism share some remarkable similarities: 

• They are both anti-democratic
• They both oppose the establishment / freedom of religion
• They both demand conformity
• They are both anti-free market

The core difference between the two ideologies is their organizational structures. Fascism is a class-based system while Communism is egalitarian. What that means is that you get a Fascist dictatorship or a Communist oligarchy - both are oppressive / conformist forms of rule.


What This All Means For Entrepreneurs and VCs 
We are definitely encouraged by the five tenants of the Trump Administration's infrastructure plan and their potential macroeconomic benefits. For entrepreneurs and free market venture capitalists there appears to be a lot of upside if this plan, or a similar plan with bi-partisan support, is passed through Congress.

As the president left the Press conference, he was asked by a reporter what it will take to begin to heal our nation's deep cultural divide? Mr. Trump offered a short response that emphasized two things lacking in this day and age: "jobs" and "wage growth."  Given recent studies showing that being healthy and having a good job are two of the most important ingredients associated with subjective well-being, he may be on to something.

The U.S. hasn't seen real wage growth since the late 1990's and our true unemployment rate remains a question. More significantly, the Millennial unemployment rate is more than double the national average. Opportunities to find gainful employment and begin to live the American Dream, would no doubt quell sympathy for the far far left agitators and the lose collective of anarchists who fuel them on.  

Conversely, a stalled plan poses serious concerns. A stagnant economy will only fuel more social unrest and further polarize our nation.  There are reports out that more rallies similar to the one in Charlottesville are being planned across the country in the upcoming months. You can be certain that leaders of both factions of the far far left (communist and fascist) see them as marketing opportunities and are actively engaging in on-line recruitment campaigns to attract new members (and sympathizers)  to their causes.

That said, there are glimmers of hope that responsible community organizers from the left and the right are starting to come together. Case in point, leaders on both sides of the Civil War statue debate held a joint press conference in Charleston S.C. today condemning violence and announcing their commitment to engage in objective discussion to reach a compromise. Although the platforms of the two group's spokespersons are well outside the mainstream, it does demonstrate that Americans with opposing views, who share our basic common values and principles, can reach agreement when they rise above  identity politics.

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Our Conclusion
We won't speculate on how future events will unfold.  We'll leave that to the talking heads in our polarized free press. That said, every American who values our basic founding principles ought to take stock of our mainstream news outlets and begin to hold them to account. Journalistic standards are dying before our very eyes.

It's important to realize we're not dealing with "Fake News" in a true sense. Rather, we're flooded with agenda-driven partisan propaganda (left and right) that threatens the very fabric of our Constitutional Republic. Obviously, free market capitalists around the globe have reasons to be concerned.