ONE LESSON that continues to escape political leaders is that jobs are increasingly mobile, thanks to the Internet and globalization. So it’s noteworthy that 80 percent of our email respondents this month said the U.S. legal and regulatory climate is bad for American competitiveness (see page 14). Overall, the U.S. is moving downward on the Heritage Foundation’s Economic Freedom Index, coming in 10th after such countries as Estonia (sixth) and Denmark (eighth). Freedom creates income and wealth. But given a choice to invest in a country that offers a reasonable regulatory climate as opposed to one that doesn’t, CEOs will make the obvious choice.
A corollary is that healthy businesses create jobs, but companies in crisis don’t. Marsh & McLennan, for example, felt obliged to cut 3,000 jobs after New York State Attorney General Eliot Spitzer filed a complaint accusing the company of bid rigging. Didn’t Spitzer know that if he destroyed a company’s revenue model, overnight, people would lose jobs?
As a state, New York is shooting itself in its economic heart. According to the Tax Foundation, New York’s tax system ranks 49th in the nation in its business-friendliness. CEOs contemplating where to locate economic activity would have to be out of their minds to choose New York. So the next time you hear a New York politician decry the slow rate of job creation, quietly shake your head in disbelief. They just don’t get it.