Welcome to the February “Green Business” issue of NorthBay biz. Several years ago, before the topic became so fashionably ubiquitous, we decided to dedicate a cover theme to green business—and it’s been extremely well received by our readers. We believe the terms “environmentally friendly” and “dynamic business marketplace” can be uttered in the same breath. We’re strong proponents of the idea these interests don’t have to compete and everyone wins when they work in concert. So please enjoy all the stories, special features and columns this month as NorthBay biz continues its 35-year tradition of serving the best interests of the business community in the North Bay.
There’s one thing that’s going to turn around the national and local economy—more private sector jobs—certainly, not more taxes, which seem to be every politician’s default solution. The recent “Jobs Summit” staged in early December in Washington, D.C., unfortunately was nothing more than a publicity stunt. All the posturing, platitudes and somber pronouncements ended with the same non-solution—we must spend our way out of this recession, which is blatant nonsense. Consider the following.
In January 2008, the nation’s unemployment rate was 4.9 percent. That’s when the first $170 billion stimulus was passed, aimed primarily at bailing out Fannie and Freddie. One year later, in January of 2009, unemployment had risen to 7.6 percent and 3.5 million Americans had lost their jobs. Convinced by these results that their plan was working, it was full speed ahead and the second stimulus plan, at $787 billion, slithered its way through Congress (largely unread). So, how’d that work out? Well, not so well. Unemployment is now above 10 percent and an additional 3.5 million Americans have lost their jobs. And still the clarion call is, “We must spend more!”
For a business to grow and thrive, it needs to spend money—hire new people, create new products, invest in itself. At the same time, a business must be frugal and control expenses. No business can spend more than it takes in and survive. Government, however, doesn’t work that way. It creates jobs on a whim and, years later, those hired will still be earning their salary regardless of consequences. Think of the hundreds (maybe thousands) of programs that have been created over just the past few decades to combat unemployment, homelessness, drug abuse, disadvantaged youth and so forth ad infinitum. How many of them still exist even though they’ve shown no results? And how many of those problems have been solved? And how many more agencies have been created to deal with the same problem? In the government’s world of spending “our money,” it’s always easier to create a new program than to admit one didn’t work and end it.
As millions of Americans have lost their jobs in the private sector, government has continued to hire. And apparently, government workers have been given the option not to participate in the recession the rest of us must contend with, given their average pay hike was $6,100, or 8.7 percent, last year. (As I’ve mentioned before, the average federal employee earns more than $71,200 annually compared with just $40,300 earned in a nongovernment job.) I guess, if you’ve had the opportunity to interact with any government agency, you’ll agree that the cordial, knowledgeable and friendly service you received merits the 77 percent differential in pay. While the nation’s private sector was shedding more than 7 million jobs, the federal workforce grew almost 10 percent, adding 193,000 new employees.
Let’s focus closer to home. Like most fairy tales, this one begins: Once upon a time in California, the state’s infrastructure and economy was the envy of the world. But if the story were to end today, instead of the dragon being slain and everyone living happily ever after, the dragon would win and the people would be fleeing the state. The latest example of this is the news that the 40-year-old, Ukiah-based Carousel Carpet Mills will be closing its doors and moving to Georgia, taking its 38 jobs along. Over the past decade, more citizens have left the state than have moved here. And California is losing jobs at a faster pace than almost any other state in the nation. Where are they going? They’re moving to states that provide better opportunities for success—Texas, Florida and Nevada. Places that have lower taxes, fewer regulations, affordable housing and where local government is more likely to work with you than against you.
Once upon a time, this was a state where things could be accomplished—businesses could be created, grow and prosper. The unofficial motto then was, “Yes we can.” Now it’s, “No you can’t!” Once upon a time, the Golden Gate Bridge could be built in four years. Today, it takes four years for a builder to run the gauntlet of red tape and obstructionists just to get a permit to build a shed. Our quality of life is determined in large part by our ability to get a good job. When government conspires to throttle enterprise, everyone’s way of life is threatened. More and more people are voting with their feet. As taxes rise and opportunity dwindles, the more the tax base is eroded.
I truly can’t fathom how these basic facts continue to elude our elected officials. Instead of being responsive and championing solutions that solve problems, they’re caught in a spend more, tax more loop that’s only worsening outcomes. To believe businesses will move here, start here or create jobs here, in a climate this inhospitable, is simply delusional. A rising economic time lifts all boats. An expanding economy is a job creation machine, expanding the tax base and bringing in additional revenues to the state to pay for all the programs. Creating obstacles through stifling regulations and fees and continually growing the tax burden accomplishes exactly the opposite of what’s so sorely needed.
That’s it for now. Enjoy this month’s issue.
