U.S. needs more focus on exports, entrepreneurs
It seems everybody is talking about jobs and exports as the catalysts for getting the U.S. economy back on track. With that thought buzzing in my mind, I was struck by four disparate items I read recently, which gave me some insight into how we might take some concrete action to stimulate both job creation and a better focus on international business opportunities.
• According to the Small Business Administration, in the last two recessions small and medium-sized enterprises (or SMEs, defined as having fewer than 500 employees) led the jobs recovery while large companies were still shedding positions.
• In a Forbes interview, David Wei, chief executive of www.Alibaba.com, a massive Chinese Internet service for businesses to find and sell to each other, said the U.S. has been his most important buyers' market, but that relatively few U.S. businesses are registered as sellers. Americans, he said, are "blinded" to opportunities overseas because of the size of their domestic market.
• My annual reread of the Austrian economist Joseph Schumpeter, who defined entrepreneurship as the "creative destruction" of rigid existing thinking and therefore the source of innovation and technological change in a nation.
• Fareed Zakaria noted in his Dec. 14 essay in Newsweek: "The history of great powers suggests that maintaining their position requires, most crucially, tending to the sources of their power: economic growth and technological innovation. It also means concentrating on the centers of global power, not the periphery ... it's important to remember that in the coming century it will be America's dominant position in Asia ... that will be pivotal to its role as a global superpower."
I know from personal experience that when bad times hit, they often lead to a surge of new enterprises as people who had nice corporate jobs suddenly find themselves out of work, and their creative juices ignite their entrepreneurial dynamite. In the 1970s, Boeing's troubles led to the caustic black-humor phrase "Last one out of Seattle turn out the lights." As a young engineer expecting a long career and comfortable pension with Boeing, I got a rude awakening — and went on to an exciting and profitable business career.
I'm afraid that our approach to the current recession is to try to patch up the old structure and hope the good old days somehow return, creating a kind of paralysis as everyone waits to see what will happen. Can we do more to stimulate the small businesses and entrepreneurs who will lead a jobs recovery?
Many new business people use the equity in their home for startup funds. With so many mortgages now underwater, this route is closed for many budding entrepreneurs. Banks are being super cautious, and SBA loans come full of red tape. Current laws create a lot of disincentives for hiring new people, such as unemployment and health insurance costs. Can we devise better tax and other laws, as well as loan rules, so we stimulate the kind of economic activity that maximizes job creation?
On exports, we have a major teachable moment approaching. The U.S. will chair the Asia-Pacific Economic Cooperation organization in 2011, with President Obama hosting the presidents and prime ministers of APEC — who together represent 41 percent of the world's population, 54 percent of world GDP and 44 percent of world trade — in Honolulu in November of that year.
Experts predict that most growth in consumer sales in the coming decade will be on the Asian side of the Pacific Rim. Can we get the blinders off American business, especially the SMEs and entrepreneurs, and focus them on the opportunities there — and in Latin America, Europe and Africa — as technology gives them ever greater direct access to global markets?
The paradigm should not be finding a cheap manufacturer overseas for something to sell in the U.S., but rather finding overseas buyers for the high-quality products and services we produce in America.