Real Change for a Change

CHANGE. IT’S THE NEW MANTRA. It’s why caucusers in Iowa rocketed Barack Obama and Mike Huckabee into international stardom. Everyone [...]

January 15 2008 by Chief Executive


CHANGE. IT’S THE NEW MANTRA. It’s why caucusers in Iowa rocketed Barack Obama and Mike Huckabee into international stardom. Everyone wants it. Every candidate now claims he or she is an agent for it. Who knew? Even Marianne Pernold Young, the woman from Portsmouth, N.H., who asked the famous question that elicited the emotional teary-eyed response from Hillary Clinton on the eve of the New Hampshire primary, likes change. Young changed her mind after her exchange with the New York senator and voted instead for Barack Obama in the primary! 

But what sort of change? And how do we know it is for the better? Perhaps this an opportunity for those CEOs who have the ear of leading contenders for their party’s nomination to point out that “change” for its own sake is of little use. Leaders in the technology sector, for example, have been trying to shape the thinking of presidential candidates. In its “Great Nation” report, the Technology CEO Council, a Washington advocacy group, outlined a comprehensive set of policies such as patent reform and lower corporate tax rates, that promotes innovation and entrepreneurialism, not to mention ways that encourage more people to enter science, engineering and technology fields. 

One change advanced by the Council that definitely would be a change for the better is to allow more foreign technology professionals to work in the U.S. through an expanded H-1B temporary work visa program-something Chief Executive has advocated in these pages many times. Upwards of 60 percent of the revenues of this nation’s technology leaders, such as HP, IBM, Intel, Motorola, Dell and Unisys, derive from markets beyond our borders. If our leaders want change that enhances our competitiveness, remove artificial barriers to the free movement of talent. 

In addition, policymakers in both parties need to drop the rehearsed indignation over “corporate greed” -you’re not running against Enron anymore-and avoid the kind of protectionist rhetoric that leads to trade wars and dissuades other nations from dealing with American companies and trade negotiators. Expanding trade and removing barriers will do more to improve the well-being of the American worker and consumer than class warfare posturing. 

What Governors Should Know 

What do states like Texas, Nevada and North Carolina, which lead Chief Executive’s (see p.18) annual survey of best states in which to do business, know that California, New York, Michigan and Massachusetts, states that CEOs reckon are the worst for business, do not? The latter has a burdensome tax and regulatory structure, a workforce with diminishing skills compared to other regions, and a cost of living that dissuades people from staying. The former states enjoy a low cost of living and a higher quality of life. As one Texas CEO said, “The attitude and capabilities of the workforce are outstanding.” Several CEOs responding to CE‘s study pointed out that the worst states seem to have politicians who care mostly about themselves-however much they cloak their rhetoric in populism-while the best listen to their taxpayers. 

It is revealing that a state as beautiful as California, with a warm climate and beckoning beaches, has the second largest net population outflow. (These are high-income earners which, if current trends persist, will leave the state with fewer people able to deal with an oppressive tax structure.) The worst states tend to have lawmakers who cannot spend a budget surplus fast enough and then find that they must raise taxes to pay for bloated budgets. This then creates a downward spiral driving additional business and jobs away. 

Competitiveness is not a Democrat or Republican issue. Simply put, states cannot tax themselves into prosperity. (For that matter, as noted above, neither can the Federal government.) Governors Schwarzenegger and Spitzer take note.