July 31, 2010


Warren Meyer, Forbes.com:

...My training is not in economics, but in business and management. Perhaps I am biased by my background, which includes 15 years of strategy and planning at large corporations and 10 years running my own business. But my framework for economic growth is a simple one: For growth to occur, someone has to make an investment.

When I use the term "investment," I am using it rather broadly. Clearly building a new steel mill is an investment. But hiring an additional employee and paying his or her salary ahead of any new revenues is an investment too. Quitting one's job and giving up a regular salary with a large company to start a new business represents an investment as well.

Here is my first law of economic growth: When we encourage more investment, and ensure this investment is being channeled to the most productive uses, growth will follow.

For all the talk about fiscal stimulus and jobs creation at the federal and state level, almost no one in government is doing anything about reducing the roadblocks to investment. For example, millions of people are newly unemployed, and in past recessions a large number of these folks have eschewed looking for a new corporate job and have started businesses of their own. Unfortunately, such prospective entrepreneurs will face a tangle of registration, regulatory and licensing hurdles, many of which have been backed by established businesses that want to avoid just this kind of new competition. Even steps like the extension of unemployment benefits tend to discourage such entrepreneurship by increasing the opportunity cost of working for oneself.

No one in government, that I have heard, has even suggested any sort of regulation holiday as a potential economic stimulus program....[my emphasis]

I really like his broad-brush use of the term "investment." Most of what the "financial sector" does is not investment, it is selling capital to the person who is making an investment. Capital always has to be paid for, just like labor and materials.

Posted by John Weidner at July 31, 2010 10:05 AM
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