Wednesday, November 21, 2007
Rhode Island Woes
It takes a lot of hard work over an extended period of time to establish an abysmal state economic climate. Politicians in Rhode Island certainly managed to do it over the years.
On the SBE Council Small Business Survival Index 2007, Rhode Island ranks a dismal 48th, that is, fourth worst among the states and District of Columbia in terms of its public policy climate for entrepreneurship. To sum up, Rhode Island imposes very high personal income, corporate income, corporate capital gains and property taxes, an individual alternative minimum tax, a state death tax, a high state minimum wage, a very poor rating on eminent domain legislation, high unemployment and gas taxes, high electricity costs, and very poor rankings on government spending measures and highway cost effectiveness.
Yikes!
It should be no surprise then that the state currently faces rough fiscal waters. As reported in the November 17 New York Times, the state faces a $450 million budget gap next year.
Interestingly, Gov. Donald Carcieri is beginning to address this problem from the right direction. He is starting to reduce the bloated government payroll. According to the story, 153 workers got termination notices last week, another 330 were informed that their jobs would soon be gone, 168 contract employees were laid off on November 1, and 500 positions are going via retirement and attrition.
Of course, some people just don’t get it. An analyst from a liberal group in the state blamed the current woes on “a lot of tax cutting.” The clear implication – raise taxes.
In reality, the last thing that Rhode Island needs is even higher taxes. The state’s current burdensome levels of taxation have made it a hostile place for entrepreneurs to start up and/or run a business.
Rhode Island needs much smaller government, far lower taxes, less regulation, and therefore, greater freedom and opportunity for entrepreneurship to flourish – and with it, the state’s economy and private sector jobs.
On the SBE Council Small Business Survival Index 2007, Rhode Island ranks a dismal 48th, that is, fourth worst among the states and District of Columbia in terms of its public policy climate for entrepreneurship. To sum up, Rhode Island imposes very high personal income, corporate income, corporate capital gains and property taxes, an individual alternative minimum tax, a state death tax, a high state minimum wage, a very poor rating on eminent domain legislation, high unemployment and gas taxes, high electricity costs, and very poor rankings on government spending measures and highway cost effectiveness.
Yikes!
It should be no surprise then that the state currently faces rough fiscal waters. As reported in the November 17 New York Times, the state faces a $450 million budget gap next year.
Interestingly, Gov. Donald Carcieri is beginning to address this problem from the right direction. He is starting to reduce the bloated government payroll. According to the story, 153 workers got termination notices last week, another 330 were informed that their jobs would soon be gone, 168 contract employees were laid off on November 1, and 500 positions are going via retirement and attrition.
Of course, some people just don’t get it. An analyst from a liberal group in the state blamed the current woes on “a lot of tax cutting.” The clear implication – raise taxes.
In reality, the last thing that Rhode Island needs is even higher taxes. The state’s current burdensome levels of taxation have made it a hostile place for entrepreneurs to start up and/or run a business.
Rhode Island needs much smaller government, far lower taxes, less regulation, and therefore, greater freedom and opportunity for entrepreneurship to flourish – and with it, the state’s economy and private sector jobs.
Tuesday, November 20, 2007
Immigrant Entrepreneurs
The immigration debate, of course, is not just limited to the United States. Financial Times columnist Michael Skapinker talks about the United Kingdom’s point system for immigration scheduled to go into effect next year in a November 20 piece.
Will the UK plan work?
Well, Skapinker reports: “Had either the young Bill Gates or Steve Jobs decided to set up in Britain rather than the US, they would not have qualified for entry. Neither would Michael Marks, the Russian immigrant who started with a stall in Leeds market and built it into Marks and Spencer. Nor would Sir Montague Burton (originally Meshe David Osinsky), whose Burton clothing chain is now part of Sir Philip Green’s Arcadia empire. It is fortunate for Sir Philip that he was born in the UK, because he would not have qualified under the points system. Neither would other leading British-born entrepreneurs such as Sir Richard Branson and Sir Alan Sugar.”
What’s the problem? Skapinker continues: “The problem is not the people skilled-migrant programmes let in. It is the potential business creators they keep out – all those entrepreneurial types who were unsuited to university. The Home Office says its points system is based on ‘attributes which predict a migrant’s success’ but I doubt British governments are any better at picking winning immigrants than they were at picking winning car or computer companies. The Home Office says it has plans for potential entrepreneurs but cannot yet say what they are.”
Skapinker is absolutely right.
Whether it is in England or in the U.S., a close-the-borders or just-let-in-the-presumed-smart-people immigration strategy – rather than generally expanding legal avenues for immigration and then using taxpayer resources to stop the bad guys from getting in – means not only that labor demands will not be met, but also that immigrant entrepreneurs will be barred from entering.
Does this matter? Well, in May 2007, the "Kauffman Index of Entrepreneurial Activity: 1996-2006" was published by the Ewing Marion Kauffman Foundation. Regarding immigrants and entrepreneurship, it reported: "Immigrants continued to have a substantially higher rate of entrepreneurial activity than native-born individuals in 2006... The rate of entrepreneurial activity for immigrants increased slightly from 0.35 percent in 2005 to 0.37 percent in 2006, while the rate for the native-born declined slightly from 0.28 percent in 2005 to 0.27 percent in 2006." The 1996 to 2006 data from this report show the rate of entrepreneurial activity for the native-born ranging between 0.26 percent to 0.30 percent, versus a range of 0.30 percent to 0.41 percent for immigrants. In every year, the immigrant rate exceeded the native-born rate, with the differences being much wider since 2002, compared to 1996-2001.
Will the UK plan work?
Well, Skapinker reports: “Had either the young Bill Gates or Steve Jobs decided to set up in Britain rather than the US, they would not have qualified for entry. Neither would Michael Marks, the Russian immigrant who started with a stall in Leeds market and built it into Marks and Spencer. Nor would Sir Montague Burton (originally Meshe David Osinsky), whose Burton clothing chain is now part of Sir Philip Green’s Arcadia empire. It is fortunate for Sir Philip that he was born in the UK, because he would not have qualified under the points system. Neither would other leading British-born entrepreneurs such as Sir Richard Branson and Sir Alan Sugar.”
What’s the problem? Skapinker continues: “The problem is not the people skilled-migrant programmes let in. It is the potential business creators they keep out – all those entrepreneurial types who were unsuited to university. The Home Office says its points system is based on ‘attributes which predict a migrant’s success’ but I doubt British governments are any better at picking winning immigrants than they were at picking winning car or computer companies. The Home Office says it has plans for potential entrepreneurs but cannot yet say what they are.”
Skapinker is absolutely right.
Whether it is in England or in the U.S., a close-the-borders or just-let-in-the-presumed-smart-people immigration strategy – rather than generally expanding legal avenues for immigration and then using taxpayer resources to stop the bad guys from getting in – means not only that labor demands will not be met, but also that immigrant entrepreneurs will be barred from entering.
Does this matter? Well, in May 2007, the "Kauffman Index of Entrepreneurial Activity: 1996-2006" was published by the Ewing Marion Kauffman Foundation. Regarding immigrants and entrepreneurship, it reported: "Immigrants continued to have a substantially higher rate of entrepreneurial activity than native-born individuals in 2006... The rate of entrepreneurial activity for immigrants increased slightly from 0.35 percent in 2005 to 0.37 percent in 2006, while the rate for the native-born declined slightly from 0.28 percent in 2005 to 0.27 percent in 2006." The 1996 to 2006 data from this report show the rate of entrepreneurial activity for the native-born ranging between 0.26 percent to 0.30 percent, versus a range of 0.30 percent to 0.41 percent for immigrants. In every year, the immigrant rate exceeded the native-born rate, with the differences being much wider since 2002, compared to 1996-2001.
Monday, November 19, 2007
Bee Movie on Suing and Working
About a week or so ago, I took the family to see the animated “Bee Movie,” with Jerry Seinfeld starring as Barry B. Benson. Seinfeld also co-wrote the screenplay. The humor is very Seinfeld-esque, and the movie quite enjoyable.
But a point is worth noting from a business perspective. When Barry discovers that humans eat honey, he sues to get the bees their honey back. But as so often happens in our litigious society, the fallout from the lawsuit is quite grave. The bees stop producing honey, with flowers and vegetation – and therefore, all life on Earth – placed in peril.
In fact, my favorite lines from the film are when a cow asks Mooseblood the mosquito (played by Chris Rock): “You’re a lawyer too?” And he responds: “Ma'am, I was already a bloodsucking parasite. All I needed was a briefcase!”
In the end, the film also is generally positive about the value of work. When the bees stop working, no one benefits, including the bees. Perhaps we can say something here about the welfare state?
Or, maybe I go too far, and we should just have fun with “Bee Movie.”
But a point is worth noting from a business perspective. When Barry discovers that humans eat honey, he sues to get the bees their honey back. But as so often happens in our litigious society, the fallout from the lawsuit is quite grave. The bees stop producing honey, with flowers and vegetation – and therefore, all life on Earth – placed in peril.
In fact, my favorite lines from the film are when a cow asks Mooseblood the mosquito (played by Chris Rock): “You’re a lawyer too?” And he responds: “Ma'am, I was already a bloodsucking parasite. All I needed was a briefcase!”
In the end, the film also is generally positive about the value of work. When the bees stop working, no one benefits, including the bees. Perhaps we can say something here about the welfare state?
Or, maybe I go too far, and we should just have fun with “Bee Movie.”
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