Candidates Must Focus on Deficit, Spending Policy
Ron Lemmon, assistant professor of business administration at Alma
College, offers his perspective on global economic issues and how
Michigan can attract new business. Lemmon teaches global business
strategies, small business management, and principles of finance.
What are the key global economic issues facing this year's presidential candidates?
Lemmon: “There are several issues the candidates will face including the cost of the dual wars in Iraq and Afghanistan and the resulting ballooning federal deficit and the decline in purchasing power of the U.S. dollar. In addition, the increasing cost of a barrel of oil and the related impact on economic growth and inflationary pressures produce a very real transfer of wealth from the United States to oil producing countries. These issues, along with the general decline in the reputation of the United States around the world, produce a difficult set of problems that do not have easy solutions. Presidential candidates who possess the ability to address these issues with new policy initiatives that benefit both the business sector and individuals will have a better chance of being elected in November.”
How should policy makers proceed in attracting international businesses to Michigan? To the United States?
Lemmon: “There are three main issues that businesses focus on when looking to locate in the United States or in Michigan. The three issues are available natural resources, taxes, and a willing, able, and flexible, low-cost labor force.
“Michigan in particular has a long history of high taxes and high labor costs with a perception of inflexibility in the labor pool that is driven by a strong union presence. The inability of Michigan to attract businesses to the state cannot be blamed solely on taxes or on the unionized labor force; however, these two issues do form a sort of perceptual framework that many businesses outside of Michigan consider when pondering a move to Michigan vs. another state or country.
“Michigan must do three things to broaden its appeal to businesses. First, it should lower taxes across the board, not just provide incentives to new businesses coming to the state. Instead, with enactment of the new MSBT, Michigan actually increased taxes on businesses already in Michigan — and this is an old broken system that provides little incentive for Michigan businesses to stay in Michigan.
“Second, the state must consider enacting Right-To-Work legislation, which would go a long way to convincing international and domestic businesses that they will not be forced into a unionized situation.
“Third, and most importantly, the legislature and legislative leaders from both parties must have a good working relationship with each other and the governor and focus on business development above all else. Presently, none of these three main issues are in place in Michigan, and until that happens, Michigan’s economy will continue to decline.
Posted: Wed, June 4th, 2008 at 11:28AM