More and more, it becomes apparent that the government does not—and can not—hold the answers for U.S. competitiveness. At best, the government must be encouraged to get out of the way to enable businesses to be able to compete. Federal, state, and local governments, in their attempts to get more of the revenue pie to spend, spend, spend on programs and infrastructure (and arguably waste, waste, waste) … tax, tax, tax at higher and higher rates. Instead of looking to broaden the revenue base by encouraging the growth of businesses, it seems that the government “powers that be” cannot help themselves. They continually reach back into the antiquated bag of behaviors and lean on big-business tax breaks and incentives to lure companies to their states. They look to “big business” as the answer to stagnating local economies and job growth when even their own studies and reports say that small businesses are responsible for the only meaningful job growth the nation has had at any level. (For example, between 2002 and 2003 the Small Business Administration reported that business with fewer than 500 employees created 2 million jobs, while companies with more than 500 employees had a net loss of 1 million jobs. Of the 2 million jobs created, 1.6 million of those jobs were created in companies with less than 20 employees!)

Along with job creation, small businesses and the accompanying entrepreneurial spirit are the root of most innovation in products, services, technology, and—lets face it—business models. So the future lies not in the “big business behemoths” of the past that are the funders of lobbyists and political campaigns, but the microenterprises, small businesses, mid-size businesses, and those with the potential to generate exponential change and growth in the future—if they can survive the burdens being placed upon them today. That is a pretty big IF.

IF We Are to Compete

The biggest “if” we are facing as businesses within our nation—and within states where the government is creating cost structures that impact our competitiveness (e.g., taxes, trade agreements, regulations/compliance)—is that if the trend continues, how do we affect the other variables in our businesses to enable us to offset these governmental impacts so that we can be profitable and competitive? An alternative question: if we can’t offset them, how do we overset them? How do we take back control and get the government to comprehend the fallacy of their thought processes and approaches? Is either approach even possible?

Yes to Both

IF we are to be competitive as a nation and as individual businesses, we have to do both. We have to affect the factors in our business that can serve to make us competitive (despite governmental constraints) and we have to work to educate our representatives on new perspectives and ideas. We must get our representatives to recognize new ways of looking at the world. The world is changing and the old ways of viewing business and doing business are no longer valid. We have to get ahead of the change curve or get left behind.

Where is the Curve? Right—Now Left—Field?

Competitiveness has been left out in the cold for a very long time. For too long, excuses have been made and used that one group or another is solely to blame for various industries’ downfalls. The truth is no one factor has created the stagnation of industries. It has been a mindset and a legacy effect: holding on too tightly to past gains and methods of the past has made the pie smaller, much like the methods of “tax, tax, tax“ are on the verge of causing the economy to “contract, contract, contract.” Recession is the noun form of “recede,” meaning to draw back … shrink … get smaller …

Take the state I live in, North Carolina, as an example: Increased property taxes; increased sales taxes; proposed property transfer taxes; proposed tolls on the roads; income taxes; use taxes. “We need them for schools, for roads, for schools, for roads, for schools …” Yeah. I keep hearing that. I also drive the roads and hit the potholes, hear about the school problems, hear about the “misspending” at Department of Transportation, and hear about tax breaks for big businesses. I hear about jobs lost because of a lack of trained workforce, about the training programs at the community colleges, about plant closings, about big business layoffs, about tax increases for small businesses—it never seems to end.

Not only are there issues with taxes, but the use of those taxes for incentive programs for big businesses and big programs are also an issue. If we go back to talking about small businesses being the driving force of job creation, then we have to look at why so many states (including North Carolina) spend so much on big businesses—tax breaks, grants, and other types—to acquire a small number of jobs. Why, when arguably smaller programs for small businesses could have much larger impacts on job creation, do so many economic programs and stimulus packages focus on big name corporations creating relatively small numbers of jobs that may or may not actually materialize? Could smaller, more focused infusions of funding and tax breaks for small businesses actually have larger impacts, creating more economic stimulus, larger ripple effects and multipliers in the economy? Some states are actually shifting their focus to small business, and it seems to be working.

When Does It Change: Tomorrow?

“Change” has become the buzz word of the moment. Everyone seems to be talking about change. Talk is about the only thing that is still cheap. Well, except when it is done by politicians. Somehow, when they talk it seems to make taxes go up and other prices rise. So I guess talk isn’t so cheap after all. Change is constant. Every day something changes.

The need for meaningful change is obvious. The changes we see today are unfortunately more along the lines of order of magnitude, giving us more of the same. Our leaders are really followers and are more interested in polls and lobbyists than in strengthening the economy or the competitiveness of the nation or its industries. The nations who have been out competing us are now facing intense competition from emerging nations. These nations are actively looking for answers and learning how to do things differently: They are changing.

Our “leaders” are taxing and spending more on programs that haven’t worked for forty years or more and are questioning whether to renew programs that HAVE had impacts, like small business grant and loan programs. What are they thinking? I truly can’t imagine.

We are a competitive, innovative, and diverse nation. We can succeed and grow stronger in productivity and production. It is time to do things differently. It is time for change, but what kind of change? Not the options we are currently being offered; we need to demand them from our leaders, whoever they may be.

Copyright ©2008 Lea A. Strickland, F.O.C.U.S. Resource, Inc.

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