Thursday, November 25, 2010

Michael Ciamarra: The Business of Alabama is small business

  A national ranking of Alabama was released that could become the blueprint to follow over the next decade but it was little noticed. The prestigious news was elbowed out by Cam Newton, political corruption, and ongoing saga of the BP oil spill.

  Alabama was ranked the 10th best place in the nation by the industry journal Site Selection. This ranking was the culmination of excellent workforce skills, necessary low taxes, transportation infrastructure, incentives and access to utility networks. Those criteria appear to be a template for consistent success. But do all politicians pay attention to this minimalist government approach?

  North Carolina ranked first in the nation according to Site Selection magazine - again. The 'Tar Heel' state's ranking has demonstrated an iron determination of number one over a nine-year period.

  Can lessons be learned from their example? For starters, North Carolina's governor and legislature agreed that real job creation would be their focus, regardless of political parties and other differences. Jobs would be the number one agenda item in the portfolio of North Carolina.

  When government can encourage job creation and economic recruitment by low taxes, minimal red tape, solid education systems, predictable and fair tort laws and then get out of the way - therein lies success. Certainly, reckless stimulus spending, raiding trust funds, gambling or protecting special groups at the expense of taxpayers are not ways to create new jobs or to rank higher on economic indexes.

  The outgoing Riley Administration has an admirable record in recruiting large- and medium-sized businesses. The economic development team that marketed Alabama to out-of-state aerospace, automotive and green energy was one of the best in the nation.

  One can always learn from others and sharpen one's skills and drive. Alabama proved it could do well in luring big economic projects to the state. But it isn't big business that is creating new jobs... it is small business. Small business creates three of every four new jobs and is the backbone of the nation. Here, Alabama is on the verge of a major breakthrough that could push our state into the top five in the nation, certainly for small business.

  To be perfectly frank, the recently-defeated leadership that once ran the Alabama Legislature had little interest in creating a genuine pro-business climate, especially for small business. The old leadership was mired in placating special interests, weighed down by its own mediocrity and did not offer a single creative idea for the 21st century world that had left them behind.

  A new leadership team is taking the helm in Montgomery and small business can flourish as never before!  Let's be clear - government never creates a single private sector job, only the private sector does that. Government creates the incentives and encourages the genius of markets to work. Government, as stated earlier, can best assist by minimal interference.

  Taking their cue from Governor-elect Bentley, the new Republican super-majorities in Montgomery have prioritized small business job creation and small business development.

  To accomplish this, expanding tax incentives must be the starting point and centerpiece for the 2011 regular session of the legislature. Complementing that measure would be expanding tax credits for small businesses that purchase health insurance for their employees. Those actions, among others for small business, will clearly set the stage for a small business surge in Alabama.

  Governor-elect Bentley very insightfully has the intention to create a cabinet-level Director of Small Business.

  The Small Business Director's mission is not to create another protected bureaucracy or to 'oversee' small business but to look for ways and means to cut red tape and end meddlesome government interference that frustrates small business owners and would-be entrepreneurs.

  The small business advocate within the governor's office will be tasked with the creation of uniform, step-by-step directions for small business start-ups. Moreover, the small business advocate is going to develop a way to communicate rapidly with small businesses should any government regulations change. Governor-elect Bentley has in mind for this advocate to work with all of the small business offices at universities in Alabama. Why not pull together all the best thinking on ways and means to encourage small business growth from this collective expertise?

  I would suggest that the Small Business Director hold a summit early next year and invite small business leaders to meet without any lobbyists. The one-day summit would be a forum so that real small business owners and entrepreneurs could graphically relate how state government hinders and stifles small businesses. More importantly, a series of corrective measures and new ideas from the real world of job creators could be assembled and acted upon by the governor and state legislature.

  The Small Business & Entrepreneurship Council notes, "In the end, government does not drive economic growth... the ultimate source of growth is economic risk taking in the private sector...Without a doubt, the biggest obstacle to entrepreneurship and investment is public policy gone awry. While most politicians talk a good game about small businesses, public policy frequently raises costs, creates uncertainty and diminishes incentives for starting up, investing in and building a business."

  The new Republican super-majorities in Montgomery and Governor-elect Bentley have their mandate for small business - a new, smart, limited-government policy to see unprecedented business growth. 

  After all, the business of Alabama is business.

  About the author: Michael Ciamarra is vice-president of the Alabama Policy Institute. He can be reached at

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