Walsh: Review and Comment

Walsh: Review and Comment

A wish list to reverse

economic trend lines

By Matt Walsh

Management gurus always remind chief executive officers that one of their most important responsibilities is to set the tone.

Preferably, of course, a positive one.

That came to mind while thinking about how to start off 2009 in this first installment of Review & Comment in the New Year.

"Ad astra!" we tell our colleagues. "To the stars!" Be positive.

Yeah, right. It's hard to do. There's this economic hangover that just won't go away.

But look at it this way: We're now on the back half of the downturn. The end is closer to us now than it was a year ago. Indeed, several economists we follow are still expecting the overall economic trends lines to begin turning up in the second quarter. Significant job growth won't occur, however, until well into the second half of 2009. It always lags the recovery.

The recovery is still predicated, however, on policymakers at all levels of government not doing stupid things. Unfortunately, that means the odds really aren't much in our favor.

We're going to be positive and wishful, though. Wishes do come true. That said, here are nine wishes for '09:

Wish: Economic recovery starts in April, not May. Sure, we all would like it to begin tomorrow, but it can't, and it won't. Not if Washington keeps doing what it has been doing - throwing fake money after businesses and activities that need to go away or shrink.

We hear all the time that the inventory of foreclosed homes needs to shrink dramatically. One way to speed that up is for the government to quit interfering with the price-clearing process. The sooner home prices fall to what the market determines to be rational, the faster home sales will occur and new building can begin.

Wish: Gov. Charlie Crist, Florida Senate President Jack Atwater and House Speaker Ray Sansom rise to the occasion and lead.

Do something different this year: Persuade and marshal lawmakers to buying in on across-the-board, equal-percentage budget cuts. Show Floridians that every state department can do what every family does when money is tight - cut back. Crist, Atwater and Sansom should be out in front on this, saying this is what Floridians expect them to do. It hurts, but it must be done.

Wish: Jolt the Florida economy with dramatic property-tax reform - the tax swap/elimination of local-effort school property tax. (See Review & Comment, Dec. 19).

Here's our broken record: States with falling tax rates always have the strongest, growing economies. This would move the recovery ahead faster than ever.

Wish: Florida's municipal and county elected leaders and top administrators begin the next round of budget cuts now.

Don't wait for the annual budget debate and property valuations in April and May. Be proactive. More budget cuts are inevitable.

Anticipating another six months of declining sales at the start of 2009, businesses cut payrolls in October, November and December. They will weather the downturn the best.

Likewise with cities and counties: Make cuts now.

Wish: City and county managers quit acting like union leaders and act more like business leaders.

We saw it repeatedly in last year's local budget negotiations. Too many city and county managers and school superintendents resisted - strongly - the reality that when you have to cut big amounts of expenses, you have to go where the big expenses are: people. Eliminate jobs.

The public sector must recognize and copy what the private sector practices: The only way you increase your personal standard of living or your business' standard of living is to increase productivity - do more with fewer resources (i.e. people).

Wish: Job growth is job one.

This should be the mantra of every elected official, especially those at the municipal and county levels.

Dead economies with zero job growth or shrinking job bases are yuck. We have to learn that lesson, it seems, every 10 years.

While local leaders cannot control such economic influencers as money supply and easy credit, nonetheless they can have a great influence on sustainable job growth. And the best way to influence that is to create an economic framework that makes it easy for businesses to create jobs.

That means low property taxes; an end to gouging businesses with impact fees; and no-hassle, quick permitting processes.

Before every vote local elected officials cast, they should always ask themselves one question: Will this ordinance help or hinder job growth? Job growth is job one.

Wish: Accountability and incentives for bureaucrats.

This is a corollary to wish number six.

Little frustrates a business owner more than to wait for an inspection or a permit from the local or state bureaucracies. This goes right to the heart of one of the biggest problems with government: No accountability and no negative consequences for moving slowly and inefficiently.

Because we have the inefficient system of government being the lone supplier of inspections and permits, government bureaucrats have learned what all hourly, union types learn quickly: They get paid the same whether they move fast or slow; they get paid the same whether they approve one permit or five permits a day. So why rush?

Building-permit officials typically don't give a fig or have any concept that every day an office is unable to open and generate sales is another day of lost income and accumulated interest that the owner must pay. Time is money.

This attitude creates an antagonistic atmosphere and ultimately retards job growth.

Wish: Government-funded economic development organizations disappear.

Talk about insanity: We pay taxes to hire government-paid economic development officials whose jobs are devoted to fighting through our taxpayer-funded government and its red tape. If there were no red tape, there would be no need for EDCs to focus on business retention, only recruitment.

Wish: Spread the virtues of capitalism.

We are well down the Road to Socialism, largely because we are a nation of economic illiterates. Just as the greenies have brainwashed Americans that economic growth is destructive (they're wrong, of course), business leaders must campaign just as relentlessly on the virtues of capitalism. When Margaret Thatcher became prime minister of the United Kingdom in 1979, her country was an economic disaster - worse than we are now. But in fewer than five years, through reasoned repetition, she convinced her citizens that capitalism was far superior to socialism. So must we do the same.