Posted by: JanF | February 10, 2011

“Open for Business”, Part 2 – Rowing together

“Open for Business” is the latest catch phrase being used by Republican governors. As with many catch phrases it is clever but meaningless without context.

As we saw yesterday, “Open for Business” pits state against state, and is just rearranging the chairs on a ship headed for an iceberg.

“Open for Business” in TeaSpeak means cutting taxes (even if it defunds education) and gutting regulation (even if it harms the air we breathe or the water we drink) to attract businesses. It does not matter that it doesn’t work. Why should it? Cutting taxes is really about making sure that the wealthy become wealthier not as some mythical “engine of economic growth”.

So true are the tea party Republican governors to the “cutting taxes will bring business” meme that the governors of Iowa and New Jersey swooped into Illinois to gather up those businesses clamoring to escape the states after their tax increase:
Iowa: “Branstad said … that he’s already drafting letters to Illinois businesses, asking them to move to Iowa.”
New Jersey: Gov. Chris Christie is heading to Chicago to provide Illinois “business leaders with certainty”.
State Rep. Danny Bubp of Ohio fired this shot across the bow of all the other states: “Ohio is at war with other states … for jobs.”

It isn’t the taxes …

As we noted, businesses do not relocate over taxes alone. Kim Maisch, director of the Illinois chapter of the National Federation of Independent Business said “Small businesses are different than corporate America. Many of them have two mortgages, as opposed to the CEO in Chicago making $10 million. They’re part of their community, their kids are in Little League, and you just don’t get up and leave.” When Florida tried to woo Jet Blue, they found out “it’s not exorbitant costs that are holding Florida back, despite the calls for lower taxes we hear out of Tallahassee. It’s education, transportation and other quality of life issues.”

The sort of companies that a state would really want to entice would be those who value your state for it’s smart and healthy workforce (education and social services) and it’s good roads and clean water (accountable government). Those kind of companies are going to be disgusted by the “open for business” = “free-market free for all” theme.

Most businesses actually want smarter workforces and value safety nets that keep their employees from suffering harm. They don’t mind paying taxes to keep the roads paved and to have rules promoting clean water and breathable air. Really.

We also dissected the other GOP talking point: “certainty”.

As commentators have pointed out:

First we’re told investors deserve to make big profits because they’re “risk takers.” Then we’re told they won’t invest without “certainty.”

I am certain that we misunderstood, then. Because that would certainly be blatantly hypocritical.

Make plans, not war

Instead of states going to war with each other, why don’t we take President Obama’s advice from the State of the Union address and work on increasing exports?

Moving forward, America’s economic growth at home is inextricably connected to our competitiveness in the global community. The more products American companies can export, the more jobs we can create at home.

This vision for the future starts with innovation, tapping into the creativity and imagination of our people to create the jobs and industries of the future. Instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s. It’s why I challenged Congress to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources.

It means leading the world in educating our kids, giving each of our children the best opportunity to succeed and preparing them for the jobs of tomorrow.

We must build a 21st century infrastructure for our country, putting millions of Americans to work rebuilding roads and bridges and expanding high-speed Internet and high-speed rail.

Or take to heart President Obama’s message to the Chamber of Commerce?

Now, right now businesses across this country are proving that America can compete. Caterpillar’s opening a new plant to build excavators in Texas that used to be shipped from Japan. In Tennessee, Whirlpool is opening their first new U.S. factory in more than a decade. Dow is building a new plant in Michigan to manufacture batteries for electric vehicles. A company called Geomagic, a software maker, decided to close down its overseas centers in China and Europe and move their R&D here, to the United States.

These companies are bringing jobs back to our shores. And that’s good for everybody.

So if I’ve got one message, my message is: Now is the time to invest in America. Now is the time to invest in America.

Today, American companies have nearly $2 trillion sitting on their balance sheets. And I know that many of you have told me that you’re waiting for demand to rise before you get off the sidelines and expand, and that with millions of Americans out of work, demand’s risen more slowly than any of us would like. We’re in this together

Or respond positively to President Obama’s Message on the Budget?

…this Budget includes plans to encourage small businesses to hire as quickly and effectively as possible, to make additional investments in infrastructure, and to jump-start clean energy investments that will help the private sector create good jobs in America. Long before this crisis hit, middle-class families were under growing strain.

For decades, Washington failed to address fundamental weaknesses in the economy: rising health-care costs, a growing dependence on foreign oil, and an education system unable to prepare our children for the jobs of the future. In recent years, spending bills and tax cuts for the wealthy were approved without paying for any of it, leaving behind a mountain of debt. And while Wall Street gambled without regard for the consequences, Washington looked the other way. As a result, the economy may have been working very well for those at the very top, but it was not working for the middle class. Year after year, Americans were forced to work longer hours and spend more time away from their loved ones, while their incomes flat-lined and their sense of economic security evaporated. Beneath the statistics are the stories of hardship I’ve heard all across America.[…]

In the aftermath of this crisis, what is clear is that we cannot simply go back to business as usual. We cannot go back to an economy that yielded cycle after cycle of speculative booms and painful busts. We cannot continue to accept an education system in which our students trail their peers in other countries, and a health-care system in which exploding costs put our businesses at a competitive disadvantage and squeeze the incomes of our workers. We cannot continue to ignore the clean energy challenge and stand still while other countries move forward in the emerging industries of the 21st Century.

(Budget here)

And I would like to add another one: there is nothing wrong with a little protectionism if for no other reason than to remind us that our enemies are not the other states but the mindset that encourages us to move our industries overseas. Andy Grove, former CEO of Intel:

The first task is to rebuild our industrial commons. We should develop a system of financial incentives: Levy an extra tax on the product of offshored labor. (If the result is a trade war, treat it like other wars—fight to win.) Keep that money separate. Deposit it in the coffers of what we might call the Scaling Bank of the U.S. and make these sums available to companies that will scale their American operations. Such a system would be a daily reminder that while pursuing our company goals, all of us in business have a responsibility to maintain the industrial base on which we depend and the society whose adaptability—and stability—we may have taken for granted.

If what I’m suggesting sounds protectionist, so be it.

(By the way, it doesn’t sound like Andy Grove would have agreed with Eric Cantor that the government can’t ask businesses to take responsibility for creating jobs).

I think we need a new catch phrase, one that reminds us that we are all in this together and that the states need to act more like subsidiaries of the same corporate parent rather than as competitors.

In the olden days, we used to call this “working together for the common good”. Wait! I’ll bet we still call it that.

And more importantly we can try to live it by rowing together out of this mess we are in instead of fighting over the chairs.

(A version of this was originally posted on 02/10/2011 at BPI Campus)

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