Even with the Egyptian demonstrations dominating the news right now, we still cannot afford to forget our own needs here at home. We have to concern ourselves with how we can create more jobs, and what our government can do to help the process. One way to create the future we want is to build, based on what we think the economy of the future will be. And it is clearly going to be more technological, more service-useful, and more dependent on innovations developed by existing and emerging businesses.
These businesses are going to need private sector investments to pay for the costs of developing the technology or expanding the facilities or equipment necessary to do more business and hire more employees.
We can do it. To borrow a phrase from President Obama, “Yes we can!” But to do it successfully, we need actions that will stimulate businesses to develop or expand. Here are a few things government needs to do.
First, get regulations out of the way that deter investment risks by businesses. Regulations are important in a large and complex society, but we are way over-regulated. And worse, regulations change all the time. It is hard to change a door in your own house without getting approval from local government. For companies, there are city, county, state and federal regulations, and who knows them all or can remember them all. Businesses must have a fixed business climate, so they don’t constantly have to hire lawyers to interpret new regulations, every year, from every agency. When regulations are put in place, they should last 5 to 10 years without change, unless emergency changes are necessary because the regulations are causing more problems than they are resolving.
Knowing what rules are will affect businesses, in a business-friendly environment, will encourage entrepreneurs to make investment risks that will start the economy rolling again. Second, high corporate tax rates must be reduced, to encourage companies in the United States, and those in other countries, to open new facilities here, so more American workers can be hired. We need to make our business environment more competitive, so American companies will want to bring their foreign operations back here.
We have one of the highest corporate tax rates in the world, and have the second highest rate among OECD countries. Our federal corporate tax rate is 35 percent, and most states add on additional corporate taxes.
Third, we need to stress scientific and engineering skills in our colleges, so that our students can have the skills to innovate and develop the new products and services of the future. Perhaps more scholarship support should go to students who are willing to study in important areas such as science, math, engineering and computer science, so that we can build a future where our own students become more adept in these fields, which are growing in jobs and in importance to the world economy. Fourth, if we want business to come to our regions, we have to improve our infrastructure. Highways, bridges, railroads, airports, ship loading piers and other transportation necessities have to be built or improved, so that manufacturers and suppliers can transfer goods from where they are produced or packaged, to where they will be sold. Many businesses need to have access to facilities for importing raw materials and exporting finished goods, and we have to support this, if we want to lower our trade deficits.
Also, companies won’t invest in areas where their supplies can’t reach them, or they cannot reach their buyers. Good investments in infrastructure give us a double value. In addition to attracting businesses, they create good jobs at decent wages, for large numbers of people.
The opportunity still remains for dynamic economic growth in American industries. We can still create good jobs for the young men and women entering our work force, with a combination of tax cutting and thoughtful infrastructure investments.
We can do it, but we need to start quickly. We cannot just keep taxing our companies out of business, or encouraging them to invest elsewhere, because we are not business-friendly. The federal government has to lead the way, but the states have to get in the game, too, and make support of business environments a high priority.
— Bernard Featherman is a business columnist and past president of the Biddeford-Saco Chamber of Commerce. He can be reached by e-mail: bernard@featherman.com.
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