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Written by HS Dent
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HS Dent - Posted: 04 Jan 2011 05:26 AM PST - I’ve got a TV interview in a little while to talk about the new plan for economic revitalization put forth by in-coming FL Governor Rick Scott. His plan is fairly straightforward…make our local economy more attractive to businesses, and they will come. The seven steps to create 700k jobs in seven years are laid out on his website, www.rickscottforflorida.com.
The steps are plain enough - cut government spending, cut government regulation, cut business taxes, create incentives, etc. But will it work? Not exactly.In the world of unemployment you first have to look at what you lost. In our area of central west FL we went from 5% employment in construction to 10% from 2000 to 2008. We are now back to 5%. Should we be trying to recapture those jobs? Of course not.Going for incentives is also something of a fool’s game in that it requires giving up tax revenue in exchange for jobs. Other states have tried this and it does work…for awhile, at the expense of the future. Profitable companies end up with, well, more profits, and the local area ends up with the same revenue issues that it had before. So incentives become a race to the bottom, pitting different areas of the country against each other to see who can give up the most the fastest. That might create some jobs in the short term, but it does nothing to solve long term revenue/expenditure issues.We should instead be looking at our competitive advantage - our beaches, our older population, our moderate weather, and our very low personal tax burden (we have no state income tax). This is what every business does - assess what it can provide better than competitors. Our beaches draw tourism, our weather draws retirees. Our retirees do not typically take jobs, they instead use their pensions to purchase goods and services. They also provide a built in market for all things medical and all research on the older set.FL has another incredible asset, but it is controversial - it has oil. Lots of it. The oil deposit off the coast of west FL is huge, holding billions of barrels, but there is popular support for drilling bans. There is a real and valid concern to the beach tourism. However the oil is to be drawn out anyway - the Chinese are starting to drill off the coast of Cuba, a mere 35 miles away from Key West. So a country w/ a poor record on environmental issues will be gaining all the advantage of an oil deposit that we could, and I think should, be extracting. This would be an incredible long-term boost to the economy.What is your state’s competitive advantage? |
