Growing Business-Builders Essential to Growing Economy

While the president painted a deceptively rosy picture of our economy in his State of the Union address, a more reality-based assessment was delivered recently by Gallup CEO Jim Clifton in Business Journal. He argues that American leaders, having misdiagnosed the cause and effect of economic growth and job creation, are making our economic problems worse.

"This economy is never truly coming back unless we reverse the birth and death trends of American businesses," asserts Clifton. "When small and medium-sized businesses are dying faster than they're being born, so is free enterprise. And when free enterprise dies, America dies with it."

• Approximately 6 million businesses with one or more employees in the U.S.—the real engines of economic growth—provide jobs for more than 100 million Americans and much of the tax base for everything, from military to social safety net spending.

• Since 2008, U.S. business "deaths" (shut-downs) have outnumbered new business "births" (start-ups), and we have fallen to 12th among developed nations in terms of business start ups behind countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy.

• Fewer businesses mean declining revenues and smaller salaries to tax, followed by declining aid for the elderly and poor and declining funding for the military, for education, for infrastructure — in short, for everything.  

Citing Gallup polling data showing Americans believe the economy (59%) and federal spending and budget deficit (58%) are cause for a "great deal" of worry, Clifton argues that ordinary people seem to intuitively understand what America's leaders do not:  that businesses and entrepreneurs are the critical drivers of a strong economy.

Our leadership keeps thinking that the answer to economic growth and ultimately job creation is more innovation, and we continue to invest billions in it. But an innovation is worthless until an entrepreneur creates a business model for it and turns that innovative idea in something customers will buy. Yet current thinking tells us we're on the right track and don't need different strategies, so we continue marching down the path of national decline, believing innovation will save us.

Because we have misdiagnosed the cause and effect of economic growth, we have misdiagnosed the cause and effect of job creation. To get back on track, we need to quit pinning everything on innovation, and we need to start focusing on the almighty entrepreneurs and business builders.

Source: American Entrepreneurship: Dead or Alive?, Jim Clifton, Business Journal, January 13, 2015

IBD: Shale Boom is Major Job Creator

IBD Enlarged Version

"The oil and gas boom is producing millions of jobs, and not just where you might expect," writes Mark Mills, author of a new Manhattan Institute report, Where the Jobs Are.

Employment is up 40% in the oil and gas fields since the recession began in late 2007. But in every one of the 10 states where hydrocarbon production is on the rise, overall employment growth has outperformed the nation. These jobs, moreover, are "sticky" — anchored in the local economy and ranging from information services to training, health care, housing, education and related manufacturing.

The gains have emerged from a profound change in the energy landscape. Since the recession officially ended in mid-2009, U.S. oil production has risen 60%, bringing about a 50% collapse in oil imports. Besides reducing the GDP-robbing trade deficit, this has had the immediate impact of creating hundreds of billions of dollars in new economic value.

The boom has also attracted a similar scale of new foreign direct investment. Because of low-cost energy abundance, 100 factories are set to come on line by 2017. When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.

This is proof that economic stimulus — of the right kind — works. ...

Mills argues that four strategies would ignite economic growth and jobs in the US: make sure new regulatory burdens don't throw a wet blanket over the industry; open up new markets by encouraging gas and oil exports; lower the business-tax rate to accelerate the flow of foreign investment into energy-inspired factories; and open more federal land to production.

Trillions in Economic Growth, Prosperity

We hear "trillions," and we think national debt these days. Now a new report uses "trillions" to describe our potential for new economic growth and prosperity.

The energy world has been turned upside-down—but not in the way that many expected. ... The United States, Canada, and Mexico are awash in hydrocarbon resources: oil, natural gas, and coal. The total North American hydrocarbon resource base is more than four times greater than all the resources extant in the Middle East. And the United States alone is now the fastest-growing producer of oil and natural gas in the world.

Get the Economic Growth Choice Right

"Get the growth choice right, and we'll be ok," argues Daniel Henninger at the Wall Street Journal. "Get it wrong and your kids will be talking Australia emigration."

Right now, with growth stuck below 2%, we're toast. With strong growth at 3% or better, there will be jobs. With long-term growth, Medicare, debt and the rest of the horribles that keep worrywarts awake at night are solvable. With strong growth, the U.S. will not have to cede world leadership prematurely to whichever Chinese functionary slugs his way to the top of their heap. With strong growth, your college graduate can move out of the house. With normal American growth, Europe may be irrelevant but it won't die, and a U.S. president won't look oddly small talking to the Vladimir Putins of the world.

Mr. Obama was exactly right in Cleveland when he said economic growth "is the defining issue of our time," that his and his opponents' views on growth are fundamentally different and "this election is your chance to break that stalemate." This he gets. Only the most obtuse "pragmatists" persist in believing the solution lies in a mystical center somehow combining elements from this ideological oil and water. ... Voters have to pick [between] two competing growth models, which means paying attention to what the candidates are saying about economic growth.