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Lack of investment in public policy leaves industry wide open for legislative disaster

I’ve been switching back and forth between law and the public policy business for 35 years. Time and again, I’ve been amazed at how in one field (law) business leaders spend freely in an extreme aversion to financial risk, while in the other field (policy) those same executives live in constant denial of risk. If I’ve learned anything from my careers, it’s that people will spend whatever it takes to avoid a legal judgment. At the same time, however, they will spend very little to prevent the often greater costs that result from nasty legislation or activist groups driving consumer food scares.

Why does this happen?

Business lost six out of six state-level minimum-wage ballot initiatives last year. Success emboldens the “living wage” movement. The 2006 blowout makes it likely that there will be another big push for increased employer mandates in the near future. But how much is industry going to put into stopping this obvious threat, versus eating the cost? Very little.

Here’s an even more obvious threat: bird flu. A Harvard Center for Risk Analysis poll found that 46 percent of consumers say they’ll stop eating chicken if avian influenza turns up in American flocks—even though the bug can be killed simply by cooking. Lots of money gets poured into preventing flocks from getting infected. How much money is being spent on preventing a baseless panic among consumers if the virus hits? Very little.

Perhaps the king of all risks menacing business from the public sphere is the misnamed Employee Free Choice Act, or EFCA. Big Labor is fighting hard to get this bill passed by Congress, and it will fight even harder in 2008 to install a president who would sign it.

EFCA would enable unions to organize your employees without an election. It allows organizers to gather signatures by pressuring employees. Without a secret-ballot election campaign, your ability to tell your side of the story on unions may be nonexistent.

An enlarged organizing threat isn’t the only foreseeable risk from EFCA, either. Even if your business manages an education campaign effective enough to keep unions out, the businesses that do get unionized would pour untold sums of new employee dues money into organized labor’s coffers.

It is money that gives Big Labor its clout. Quite simply, EFCA would hand unions an enormous amount of influence, which they would use to force all sorts of legislative changes, including tax hikes, health and wage mandates, and new FICA levies.

We’re about to see a wave of municipal bankruptcies across the country, because too many legislators and managers failed to imagine that enormous pensions and lavish health benefits to public employees—unionized, typically—might not be sustainable when the economy isn’t booming. We’ve already seen airlines, steel mills and automakers crumble for similar reasons.

Why can’t it happen in retail foodservice? If rampant unionization forces your menu prices skyward, is it so hard to imagine that people might dine out less? What would happen if one out of five current restaurant visits became a home meal? That’s 20 percent of your sales. How many locations would you have to shutter?

Business leaders put a premium on imagination, and for good reason. So imagine what your business would look like if you do nothing to ward off very real and very preventable threats like EFCA. And how much is hospitality spending to avert these threats? Very little.

Everyone knows that employing lawyers for lawsuit avoidance is sound business practice, since a legal department’s budget is dwarfed by the financial damage lawsuits can wreak. It’s about time that industry leaders realize the same holds true for public policy exposure.

Richard Berman is president of Berman & Co., a Washington, D.C.-based lobbying firm specializing in research, communications and advertising.

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