Archive for the ‘Business & Economics’ Category
Oregon media fails in covering economic development
State government officials across the US love to publicize their aggressive efforts to draw outside businesses to their states. And the news media rarely fails to serve up the publicity the government desires. Case in point, The Oregonian’s headline on the front of the business section yesterday: “Governor will woo Europe for eco-friendly industry.”
Being the green guy that I am, I suppose I should be at the airport on March 29 to shout my approval to the governor before he boards the plane to Amsterdam. Sorry, no can do. I long ago reached the fed-up point with economic development strategies that favor recruitment of out-of-state businesses over cultivation of in-state entrepreneurs and businesses.
My philosophy is let’s first take care of those already here. Only after public officials and programs have exhausted efforts to help our existing firms succeed should they turn their attention to business recruitment. Research I did a year ago for an Oregon economic development organization made clear to me that the state has only scratched the surface of what it could do for existing Oregon businesses and the Oregonians who want to start companies.
Author Michael Shuman says the reason for the government bias toward recruiting big investments from outside companies has much more to do with politics than economics:
Presenting the public with one deal providing one thousand jobs seems to have greater payoffs than presenting one hundred deals with ten jobs each. Politicians would rather be photographed cutting a ribbon on page A-1 than having to schlep around to a hundred places, on a hundred different days, always for page D-6 announcements in the business section.
Of course, if the media didn’t fawn all over these large recruitment coups, our politicians might change their behavior. Reporters tend to favor one factor above all when weighing the significance of business news: what’s the impact on jobs created or lost locally or statewide. Let’s say a local firm promises to add 10 jobs this year — without public subsidy. Now along comes an out-of-state corporation that is promising 500 jobs — with public subsidy. Which announcement do you think the media will pay more attention to?
The media rarely scrutinizes the ROI of public subsidies for the recruitment of out-of-state firms to Oregon. It’s considered the cost of competing in a global economy, as if there is no alternative. Instead, when an outsider chooses Oregon over other states (or countries) the media celebrates it as affirmation of Oregon’s quality of workforce and life. The promise of hundreds of jobs is all that matters; not whether those jobs actually are produced and at what cost to the taxpayer.
When Dell Computer without warning closed its call center in Roseburg (Douglas County) last August and laid off 220 employees, The Oregonian reported:
Douglas County’s economy went into steep decline along with the timber industry in the 1990s, so Dell’s call center was especially welcome when it opened in 2002. Economic development officials helped lure the computer retailer with state tax breaks worth $250,000, and with $2 million worth of employee training funds largely from private organizations.
Dell’s departure presented a perfect opportunity for the paper to investigate the wisdom of showering tax breaks on outside firms, especially mega-corporations like Dell. But no such report followed.
The media is failing the citizenry and the businesses that were started and grown in Oregon. At the very least, reporters need to examine closely what public officials are doing on behalf of Oregon-based businesses and entrepreneurs and weigh that against the investments in external recruitment. In other words, stop the puff pieces on the governor’s overseas junkets and ribbon-cutting ceremonies. And start asking whether any of it really makes a difference.
If not, we have thousands of homegrown businesses in Oregon that could use the governor’s attention and support. You know, the ones that don’t demand tax breaks to do business here.
Hearing the message of a despised messenger
I spent more than 20 years in high tech marketing before recently moving my career in a different direction. I never thought I’d be in the position of defending Bill Gates, who for most of his years at Microsoft has been widely despised for his ruthlessly competitive leadership style.
I am quite certain many in and out of high tech are uttering something like “yeah, right” having learned of Gates’ speech before the World Economic Forum in Davos, Switzerland calling for “creative capitalism.” Gates has been creative all along — as in always finding ways to put his competitors out of business.
That’s the old Gates. The new Gates is the extraordinary, soon to be full-time philanthropist. And that’s who was speaking yesterday.
“We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well…I like to call this idea creative capitalism.”
Call it whatever you like, Bill, but it’s about time people of your stature use a platform such as the World Economic Forum to urge big business, in particular, to attend to the needs of the neediest.
We can kill the messenger, but his message must be heard:
“I am an optimist…But I am an impatient optimist. The world is getting better, but it’s not getting better fast enough, and it’s not getting better for everyone.”
Now consider for a moment how free market apologists construe the words of the world’s most successful capitalist of our time. Here’s Larry Kudlow, CNBC and National Review, spouting off:
Don’t you just love it? A guy without a college degree who invented a new technology process in his garage that literally changed the entire world, a guy who took advantage of all the great opportunities that a free and capitalist society has to offer and got filthy rich in the process, is now trashing capitalism and telling us it doesn’t work. What chutzpah…
So I just have to smile when billionaires like Bill Gates and George Soros turn cold shoulders to the blessings capitalism bestows. Or when their buddy, Warren Buffett, broadcasts the importance of hiking tax rates on successful earners and investors.
Look fellas, the command-and-control, state-run economics experiment was tried. It was called the Soviet Union. If you hadn’t noticed, it was a miserable failure.
Is that what Bill was doing, trashing capitalism and urging Communist state-run economics? Is that what the putative richest man in the world meant yesterday when he said, as the AP reports, “business must work with governments and nonprofit groups to stem global poverty and spur more technological innovation for those left behind”?
Thanks for clearing everything up, Mr. Kudlow. I always suspected business leaders who join the struggle to eradicate poverty are nothing more than closeted Communists. I mean why take personal action when you can just let the free market fix everything.
Challenging the claims of drugmakers – finally
Arguing the merits of cholesterol-lowering medications wouldn’t seem to fit a blog devoted to issues of social, environmental and economic sustainability. But I can’t ignore a fascinating cover story by BusinessWeek that raises serious questions — finally — about the benefits of statins, especially among those who’ve never suffered a heart attack. I’m not a conspiracy theory type, but I’ve watched with growing suspicion the actions of statin producers and their surrogates who seem hell-bent on convincing all Americans they should be taking their drugs.
Congratulations to BusinessWeek for finally drawing attention to the serious questions behind claims of statin producers that have gone virtually unchallenged in the mainstream media:
Americans are bombarded with the message from doctors, companies, and the media that high levels of bad cholesterol are the ticket to an early grave and must be brought down. Statins, the message continues, are the most potent weapons in that struggle. The drugs are thought to be so essential that, according to the official government guidelines from the National Cholesterol Education Program (NCEP), 40 million Americans should be taking them. Some researchers have even suggested—half-jokingly—that the medications should be put in the water supply, like fluoride for teeth. Statins are sold by Merck (MRK) (Mevacor and Zocor), AstraZeneca (AZN) (Crestor), and Bristol-Myers Squibb (BMY) (Pravachol) in addition to Pfizer. And it’s almost impossible to avoid reminders from the industry that the drugs are vital. A current TV and newspaper campaign by Pfizer, for instance, stars artificial heart inventor and Lipitor user Dr. Robert Jarvik. The printed ad proclaims that “Lipitor reduces the risk of heart attack by 36%…in patients with multiple risk factors for heart disease.” So how can anyone question the benefits of such a drug?
Read the article and find out before you ask your doctor about Lipitor.
Times are tough, better go shopping
So it looks like you’ll be receiving an $800 economic stimulant come April 15 ($1600 per household). All of this courtesy of Bush and Congress (if they do the president’s bidding). I know what you’re thinking. You really want to save your tax rebate, pay down your credit card debt or donate it to charity. The last thing you want to do is head out to the mall, right? But wait, there’s our president urging you, as he did after 9/11, to go shopping. That’s what we Americans do when times get tough.
“Letting Americans keep more of their own money should increase consumer spending,” Bush informed the media today.
It’s practically un-American to even imagine you would sock the money away. Or hand it over to a family whose idea of consumer spending is putting food on the table. Or share it with an environmental organization that believes more consumption is the last thing we ought to be promoting.
No, consider it your duty as a citizen to indulge your fantasy for a new HD television and an overstuffed chair to plop down in front of it. After all, buying more stuff that you don’t need is what will keep our economy strong and growing.
As for those fringe dwellers who want you to believe unbridled consumer spending is exactly what’s wrong with our economy today, tell them to get a life.
Making the wrong argument for sustainability
Call me a hopeless idealist, but I happen to believe we need no other motivation for living more sustainably than simply doing the right thing. I’m no fan of leading with competitive, economic or profit-based appeals when arguing for sustainability, as The Oregonian did earlier this week in their editorial, “Racing to stay ahead of the pack.”
The editors cautioned Portlanders that we can’t stop doing what has made us a world leader in sustainability because other cities worldwide are “hellbent on catching up”:
Daily we are reminded just how global, competitive and interconnected the modern economy has become. The consequence is clear: In this new world economic order, only the nimble will thrive. This fresh market reality places cities — not generally known for being light on their feet — in extreme peril. Those that have a clear sense of purpose and direction will flourish. Those lacking this trait will wilt.
Accompanying the written editorial was a cartoon of man in a meeting room pointing to a large poster of a dollar bill and telling his colleagues, “Actually there is one rather compelling ‘green argument’ for sustainability.”
The message was clear: There’s money to be made in sustainability, and if Portland loses its position as a global leader in sustainability, we will also lose out on the economic spoils that go to the victors in this race. Maybe so, but in looking at sustainability through the lens of economics we lose sight of the much greater social and moral imperatives for changing how we live.
The editors got it partially right when they concluded:
Current consumption patterns cannot endure. We all will have to use fewer resources, use them more wisely, reuse them, then recycle them. That is the core of sustainability. That is the manner of living Portland must role-model for the world.
The very fact that our global consumption patterns are unsustainable is all the motivation we need to live more sustainably. And Portland should be the role model for the world because the world desperately needs one. Period.
Let’s just keep doing the right thing. If our economy grows as a result, so be it.
Playing with green Air Jordans in a dead-end game
Say what you will about Nike, they know how to market and sell products. And they seem to take seriously the challenge of becoming a more sustainable manufacturer. Witness the 23rd version of its most high-profile product, the Air Jordan basketball shoe. It’s said to be Nike’s “first premium product designed according to the company’s sustainable standards.”
My question for Nike, and virtually any other manufacturer, is how do you square your boundless desire for growth and its associated requirement to make and sell more products with your stated objective of reducing your environmental impact.
Isn’t it a bit like exercising madly while eating ever-increasing amounts of low-calorie foods, and still expecting to lose weight? You can only exercise so much. Meanwhile, your caloric consumption steadily increases and eventually so does your weight. At some point, you have to start eating fewer calories.
Nike, and consumer products companies like them the world over, must at some point realize that selling ever-increasing amounts of products, no matter how low-cal (green), is an environmentally dead-end game. The earth’s natural resources are finite. Using them in smaller quantities per unit ultimately changes nothing when unit volume is always increasing. And that’s to say nothing about the carbon footprint of companies like Nike that continue to expand office space, send growing numbers of employees on countless airline trips around the globe and ship their products thousands of miles from where they are manufactured to where they are consumed.
Whether Nike or anyone else wants to admit it or not, there’s nothing sustainable about an economy dependent upon growing material consumption. Something has to give. And right now, Earth is doing all the giving. You won’t hear that in the new Air Jordan commercials.