Forum: Blog

Free Speech in the Free Market – First Amendment Protections for Business

abitely — Tue, 21 May 2013 13:20:22 +0000

Voices:

Rich Cooper

Vice President of Research & Emerging Issues

One of America’s most cherished and fiercely defended liberties is the right to free speech. The First Amendment to the U.S. Constitution says that Congress cannot pass laws that abridge the freedom of speech. While the wording is simple, its meaning is anything but, and the discussion over what constitutes protected speech has driven debates and Supreme Court rulings for decades.

At its core, free speech protection is designed to uphold an informed electorate. It handcuffs federal, state and local power, ensuring that citizens have the right to speak out against their government without fear of legal repercussions. In addition to political speech, the First Amendment also allows defamation of public figures and indecent or symbolic speech. Overall, the government has no authority to regulate speech based on its content, unless it defames private citizens, incites violence or is obscene. Yet, while free speech was granted soon after the birth of the United States, commercial speech has only recently found protection under the First Amendment.

In general, commercial speech means expressions related only to the speaker and the audience’s economic interests. So long as that speech does not deceive the public or promote illegal activity, it is protected by the Constitution, and in 1980, the Supreme Court established the Central Hudson test as a means to determine protections of commercial speech. Yet, for most of constitutional history, the government interpreted its role regulating commerce to include regulation of commercial speech. About 40 years ago, however, that started to change.

Before the mid-1970s, for example, the Commonwealth of Virginia banned advertising for prescription drug prices. In a groundbreaking 1976 decision, the Supreme Court rejected this, deciding that price was an important piece of information for consumers navigating the free market. The same decision was reached in 1996 in a challenge to Rhode Island’s law against advertising liquor prices. Ruling against the law, Justice John Paul Stevens wrote that, "The First Amendment directs us to be especially skeptical of regulations that seek to keep people in the dark for what the government perceives to be their own good. That teaching applies equally to state attempts to deprive consumers of accurate information about their chosen products."

Yet, business’ right to free speech has encountered challenges, even recently. Last year, Hawaii introduced legislation that would put to a vote whether business entities are excluded from free speech protection. House Bill 119 encountered stiff resistance and to date has been deferred. Even if it passed and voters decided to amend the state Constitution, however, the free speech protections guaranteed by the U.S. Constitution and amendments would trump the state law in all cases.

There have been less direct legal challenges to business free speech. Recently, the owner of the fast food restaurant Chick-fil-A publically stated his stance on gay marriage thereby launching a firestorm of debate and media coverage. A position on either side of the issue is not related to consumers’ economic interests, but the statement did have an impact on the company’s sales. Consumer use rose 2.2 percent, increasing market share and ad awareness. At the same time, there was widespread negative public blowback, which produced calls for a nationwide boycott of the restaurant chain by those who held a different opinion than that of the Chick-fil-A executive’s stance. In the midst of the public debate, Chicago’s government exerted pressure on the company’s public stance.

Chicago Mayor Rahm Emanuel said, “What the CEO has said as it relates to gay marriage and gay couples is not what I believe, but more importantly, it’s not what the people of Chicago believe…I do not believe that the CEO’s comments … reflects who we are as a city.”

Chicago Alderman Proco Joe Moreno also protested Chick-fil-A restaurant openings in the Windy City, encouraging the restaurant to change its stance and end issue-focused donations. Moreno ultimately backed down, given company pledges to treat all people with respect, as well as evidence that the company was not donating to specific groups. No matter one’s take on the highly sensitive issue, this public pressure seemed to walk a fine line against what Justice Anthony Kennedy wrote in 1993: "The commercial marketplace, like other spheres of our social and cultural life, provides a forum where ideas and information flourish. Some of the ideas and information are vital, some of slight worth. But the general rule is that the speaker and the audience, not the government, assess the value of the information presented.”

Drawing from the wisdom of the Supreme Court, it would seem that in a free market, it is not the government’s call on where and whether a business can open. If Mayor Emanuel is correct and Chick-fil-A does not reflect Chicago’s views on a social issue, then consumers can use their purchasing power to decide whether the restaurant is welcome.

An important point, however, is that while the first amendment offers protections from the government, it provides no such protection from societal response. With the rapid development of cheap, easy digital mass communication, individuals and businesses alike have the capacity to speak to the nation and the world. If that speech runs counter to the prevailing public opinion, it can generate a negative public response. For individuals, this may bruise the ego; for businesses, it can damage sales and opportunity and shrink the customer base. Businesses exercise their right to free speech at their own profit and peril. This, however, is the beauty of the free market and a free society. Individuals and organizations are free to say what they please, and consumers are free to decide whether they will choose one product or service over another.

The Age of the Millennial has Arrived, but Are They Ready to Seize It?

abitely — Mon, 20 May 2013 13:12:26 +0000

Voices:

Michael Hendrix

Director, Research & Emerging Issues

This is the second in a series of blog posts about Millennials in the workforce. The first post: "What will Millennials Think of American Business?"

When every new generation joins the workforce, it can sometimes seem like they’ve entered the five stages of grief. It looks something like this:

1)     The freshly minted graduate faces denial that spring break is gone and a job is even necessary, followed by…
2)     Anger, as cynical detachment morphs into an attempt to assign blame on whoever confined them to a cubicle.
3)     Then they enter the bargaining stage, perhaps believing that it’s possible to delay full adulthood.
4)     That’s when the depression hits, when they realize that adulthood is inevitable and nothing in a career is assured.
5)     Finally, we see the generation coming to a point of acceptance with life in the workforce.

I should know—I’m a Millennial. This is a generation that’s just started to claw its way into the workforce and reports are already surfacing of a rising “tide of cynicism” and a “crisis of meaning.” Yet for as much as this angst seems both normal and justified (how can we ignore the headlines on student debt and unemployment?), it also seems particularly misplaced. Never before in America’s history has a generation enjoyed more opportunities to engage in meaningful work.

Millennials are America’s largest generation—ever. They are 86 million workers that carry a tremendous degree of influence and opportunity that will only grow as earlier generations edge closer to retirement. What drives this generation will necessarily inform the world around it, and we’re already seeing their aspirations sculpt reality.

Meaningful Work

This generation is optimistic, entrepreneurial, and tech-savvy. Twenty-somethings today have a profound desire for meaningful work. They want work that is transformational rather than simply transactional. They want to trust their employer and, even more so, to have a passion for what they do while at work. If that passion points beyond the career ladder to starting their own business, they will be in good company— according to the Kauffman Institute, 54% of Millennials want to start their own business or have already done so. It’s a good thing then that technology is woven into the lives of this generation. The digital revolution—which took off before many members of this generation were born—has broken down countless barriers between ideas and the marketplace. Crowdfunding is but one example of this dynamic.

Millennials still want to be on the road to success, but money may not be in the driver’s seat any more. A recent Pew study found that nine in 10 Millennials believe that they already have enough money now, and they expect that this will continue to be the case in the years ahead. This generation appears to place greater value in flexible hours and job development, for which the smartphone and laptop are essential tools. For me, I value having a voice in an organization and people around me who are willing to engage in conversation. Fine, let the Urban Institute forecast a “future of stagnant wages, diminishing job opportunities, and lost home values”—this generation is having none of that. It may well be that “confidence flows into overconfidence as a tactic to fend off a more appropriate depression,” as Zara Kessler so eloquently put it, but I think there’s something more going on. Millennials are finding meaning work in ways that go beyond money alone, both because they can and they must.

This new generation is the most educated in American history. Nearly 40% were in college in 2008 and half of those wanted to pursue graduate degrees, according to the Pew Research Center. By 2010, Pew had found that “more than half of Millennials have at least some college education (54%), compared with 45% of Gen Xers, 35% of Boomers, and 24% of the Silent generation when they were ages 18 to 28.” Yes, the cost of college is high and growing, but so is the return on this “investment.” With education comes the chance at a better job and a more fulfilling career. Learning doesn’t just come in one flavor anymore either—you need only look at the growth in massive open online courses (MOOCs) and even vocational schools to see evidence of this.

Trust and the Purpose-Driven Career

All of the resources and desires bubbling up around today’s young people are ultimately meaningless without the context of purpose, and here’s where we get to the fundamental dynamic that informs meaningful work. Purpose means not just knowing why you’re doing what you’re doing, but the ways in which your work is fundamentally part of something bigger and more enduring than yourself. In the Harvard Business Review blog, Nathaniel Koloc outlines four defining features of companies that offer what I’ll call a “purpose-driven career.”

They get serious about impact. That means identifying where community challenges intersect with business priorities.
They are good storytellers, clearly articulating a vision and placing it well in the context of their actions. This necessarily reinforces trust, or a reliance on the character and ability of the company and the institutions they function in.
They prioritize talent, which also means that they recognize that human capital is the fundamental ingredient of success in today’s global economy. Continually finding the best people is also the best way to retain them.
They create opportunities with their own people’s well-being in mind, which means that pay, perks, and work hours all flow back into the goal of personal development. Personal and creative experience is also given sufficient space to flourish.

It’s never been easy to grow up. Millennials may at times seem to be taking this a little too personally, but remember that there is nothing new here. Every generation is uniquely born, coming to bear attributes that some may call remarkable, and they all soon learn to just get over themselves. They learn to trust in things larger than themselves because they must—whether those things are institutions, businesses, or family. Trust becomes their currency for functioning well in the marketplace and community. Today, more than ever before, that trust is increasingly being reinforced by a greater sense of purpose in work.

What makes the Millennial generation and every other generation before it “unique” is now being met by a range of opportunities that technology, education, and business values can now afford. Rather than having cause for grief, Millennials should celebrate. I’ll be right there with them.

Is the Price of Oil About to Plunge?

abitely — Fri, 17 May 2013 16:47:56 +0000

Voices:

Michael Hendrix

Director, Research & Emerging Issues

The U.S. Chamber of Commerce Foundation reads the Internet so that you don’t have to, sharing a short list of curated blog posts for your Friday reading.

Is the price of oil about to plunge? A new forecast from the International Energy Agency finds growing spare capacity in the global oil market, with many oil fields operating at less than full capacity. Recent years have seen oil markets sited on a precipice, with the merest hint of instability sending prices rocketing. Spare capacity will double next year and remain elevated through 2018. Here’s how this trend will impact the price of a barrel of oil:

“Brent crude is currently trading at about $102 a barrel. The IEA is forecasting $93 a barrel by 2018, and Brent futures on the ICE exchange are trading at $89 a barrel for that year. But prices could plunge more—last year, Citigroup forecast average $80-a-barrel prices through 2017, and they could drop even below that.”

Source: International Energy Administration (via Quartz)

Speaking of energy-related matters, it appears that a California comeback is possible thanks to the Monterey Shale Formation. This Rhode Island-sized patch of oil—stretching from Modesto to Bakersfield—holds upwards of 64% of all shale oil reserves in the United States. This could really benefit both California manufacturers as well as the struggling towns and cities in this stretch of California’s Central Valley.

What is the future of 3D printing? Bloomberg View has an excellent four-part series examining exactly this question.

“At the moment, 3-D printing is a very small part of the economy. The printers are typically slow, and the material they use is expensive and inconsistent. As the industry advances, however, printing on demand could reduce assembly lines, shorten supply chains and largely erase the need for warehouses for many companies. Reducing shipping and eliminating the waste and pollution of traditional subtractive manufacturing could be an environmental boon.
In a few decades, things could get really interesting. Engineers should be able to blend raw materials in new ways, endow products with nanotechnology and artificial intelligence, and create objects that interact with their physical environment. Imagine military armor embedded with sensors that track wear and tear, or a turbine blade that monitors its own temperature.”

Robert Strauss soberly writes on America’s demographic future and finds some causes for concern. While the United States has a solid birthrate and an educated workforce, three factors should temper any enthusiasm.

Labor force participation among men has been declining since the 1980s. Not only that, but Strauss finds out that American men in their late 30s seem to be on “permanent vacation,” with a labor force participation rate that’s lower than nearly every European country, including Greece.
America’s labor force quality is stagnant. “Uniquely among nations, the cohort entering the U.S. labor force is no more educated than the cohort currently retiring.”
American families experience far higher rates of disruption, which can have long-lasting consequences on children’s well-being.

Bill Gates visited DC this week bearing some good news :

“In 1960, 25% of kids died before the age of 5. And now we’re down below 6% of kids dying before the age of 5.” Increased data, large-scale vaccinations, and better coordination on health has helped make serious inroads against the afflictions that target the most vulnerable young people."

What will Millennials Think of American Business?

abitely — Thu, 16 May 2013 14:58:38 +0000

Voices:

Special Guest

This is a blog post from Jeff Lundy, Ph.D., Research Manager for the U.S. Chamber of Commerce Foundation Business Civic Leadership Center. It was originally posted on the blog of BCLC. This is the first in a series of blog posts about Millennials in the workforce. The second post: "The Age of the Millennial has Arrived, but Are They Ready to Seize It?"

The Millennial generation is the future of the American public. While the opinions of older generations might be set, this younger generation brings new perspectives on society that can change the perception of American business. As the key to future perceptions of business, on what side will Millennials fall? Will business garner a higher perception or a lower one from the youngest Americans?

This blog post is the first in a two-part series by the U.S. Chamber of Commerce Foundation on the topic of Millennials. In this post, we will consider their role in changing the public's opinion of business. In the next post, we will consider a potential crisis of conflict among their generation.

The Issue of Trust

There are several reasons for the business community to be worried about its perception among the American public. Survey research points to declining trust in big business, the financial system, and the CEOs who lead our companies. In 2000, Gallup found that 23% of Americans expressed “very little” confidence in Big Business (essentially the same amount found in 1973 when they began asking this question). By 2012, the number had risen to 34%, and nearly 80% of the public fell into the lower categories of “some” or “very little” confidence. In a 2010 Bloomberg survey, when forced to choose between two extreme positions, 56% of the public preferred describing big financial companies as parasites having a negative effect on the economy, while only 40% preferred to say that they were a vital part of economic growth. In 1966 Harris found that 55% of Americans felt a “great deal” of confidence about the people in charge of running major companies. In 2010 that number was just 15%.

Not all results are negative. Americans have much more confidence in people that run small businesses (50% expressed a “great deal” of trust in 2010) and in the institution of small business in general (63% expressed they had “quite a lot” or a “great deal” of confidence in 2009). In 2010, Gallup found that 95% of Americans had a positive image of Small business, 86% of Free enterprise, 84% of Entrepreneurs, and 61% of Capitalism.

The Good News

First off, as a generation, Millennials are very optimistic—41% of Millennials are satisfied with the way things are going in the country versus 26% of those over 30 years of age. Hence, Millennials are more inclined to be positive about all institutions, business included.

In fact, according to a 2010 Gallup study (see table below), the age group of 18-29 year olds had the highest percentage with a positive image of free enterprise, capitalism, big business, and entrepreneurs. Interestingly, they were also the group with the highest positive image of socialism too, reflecting the possibility that they are generally more positive than older generations.

	Free enterprise	Capitalism	Big Business	Entrepreneurs	Socialism
18-29	94%	68%	56%	88%	51%
30-49	83	58	55	88	36
50-64	89	64	41	82	30
65+	79	54	43	76	30

Second, Millennials appear to have a more enterprising spirit when it comes to business. In a 2011 Kauffman study, 54% of Millennials surveyed said that they would like to start their own business. Of the 160,000 startups created per month in 2011, 29% were led by entrepreneurs between the ages of 20 and 34 years old. This is an impressive feat given that the youngest Americans have the least access to resources like personal capital.

Along the same lines, Millennials seem more proactive when it comes to communicating with businesses. In one study, 86% of Millennials were willing to share information about their brand preferences online. This greater willingness to view business transactions as a two-way dialogue is an important way that Millennials differ from older generations. Rather than being passive consumers, it appears Millennials feel empowered to directly interface with businesses through production of online content.

The Bad News

One of the most significant challenges faced by Millennials today is unemployment and underemployment. Among those 25-34, 16.6% are underemployed (the rate is 28.6% among those 18-24). Among 25-29 year olds, 34% have “boomeranged” back to live with their parents. Their optimism in the face of these challenges is notable, but surely these levels of underemployment might leave them with a less-than-positive impression about the United States economy.

A second warning sign relates to Millennials and their education. The Millennial generation is reaching unprecedented levels of graduation both from high school and college (72% and 40%, respectively). Yet, this education may leave them sorely disappointed. Two-thirds of students predict they will perform in the top 20% of the population in their adult jobs. The mathematical impossibility of these expectations must lead to some personal conflict. What’s more, the cost of education is rising much faster than inflation, leaving many with student debt ($25,000 on average). This financial connection between education and debt may leave Millennials with a negative opinion about the economy, especially if their high expectations cannot be met.

Which way will they go?

Given the good signs and the bad signs, how will Millennials influence public opinion about business? The best answer is that it is hard to say. Millennials offer fresh challenges but also some unique opportunities. If the business community seizes on these opportunities, this might be an especially influential time to shift public opinion by capturing the support of youth.

While the future is uncertain, one thing does seem clear: Confidence in big business has declined persistently over the past 40 years. If we do nothing to engage them, Millennials will likely continue the trend toward less trust (especially since many suffered during the recession). It behooves American business to adapt to this generation and seize upon their optimism.

Energy Prices and Public Understanding of Science

abitely — Wed, 15 May 2013 14:43:47 +0000

Voices:

James Slutz

Foundation Fellow

President and Managing Director, Global Energy Strategies LLC

Which natural resource is extracted with a process known as hydraulic fracturing (fracking)? This was one of several questions about science asked in a survey conducted by Smithsonian Magazine and the Pew Research Center to assess the American public’s understanding of science. In the fracking question, a little more than 50% of Americans knew that it was associated with natural gas extraction. Overall, the researchers gave the public a “D+” grade on science.

What does the public’s understanding of science have to do with energy prices?

Every day, the federal government considers policies and regulations that impact energy production and use. Groups from all sides of the issues are recruiting the public to support their cause. An informed public with a basic understanding of the issues and science can play an important role in the development and implementation of effective public policy. Policy decisions on fracking, CO₂emission regulations, pipelines, and gasoline formulation are just a few that will affect future energy prices in the United States. Regulations that are based on sound science protect the public at the lowest possible cost. If we want these policies to be based on sound science, Americans must be scientifically literate.

The Smithsonian article goes on to talk about the importance of science, technology, engineering, and mathematics (STEM) education; 45% of respondents believe that STEM education should be strengthened. In addition to the science assessment, the study asked, “Why don’t more young people pursue science and math degrees?” The most common answer, from 46% of respondents, was science and math is “too hard.” The idea that 46% of the public believes STEM fields are too hard is an interesting revelation. Do we need to change this perception first as a prerequisite to making STEM education appealing?

Science is all around us. It is in the chemistry of cooking. It is the biology of our gardens. It is the physics of cars and planes that enable our travel. And yes, it is an integral component of our energy systems. Instead of complaining about the need for better education, let’s begin the process of advancing scientific understanding by exploring a physical law fundamental to all energy processes: the second law of thermodynamics.

Simply put, the second law of thermodynamics explains that when a hot object is put in contact with a cold object, they will eventually achieve the same equilibrium temperature. If they are then separated, they will remain at the equilibrium temperature and will not naturally return to their original temperatures. The process of bringing them to the same temperature is irreversible.

One example illustrates how energy is always required in a conversion process. Energy is needed to convert crude oil into gasoline or to convert plant material into ethanol. Since energy is always required for conversion, the process that needs the lowest amount of energy and results in the highest energy-containing product will likely be the most cost effective for consumers. This is not trying to say that one product is better than the other; just that there are cost implications of the conversion process and the second law of thermodynamics explains this. In this case, gasoline requires less energy to process and results in higher energy content per volume than ethanol. In just a few sentences, you now understand one of the most important concepts of physics (in case you didn’t already) as well as why gasoline continues to be so cost effective.

When government policies ignore science, costs can be higher than they would be otherwise, which will result in higher prices for consumers. Consumers need to understand basic science to be effective advocates for good government policy and to ensure the best balance between costs and other factors, such as environmental protection. In the end, facts and science matter and can be the most powerful of tools used by decision makers of all types.

The basics of science are not hard. We can see examples around us. Let us all embrace being scientifically literate ourselves and perhaps we can collectively see science as understandable and within our grasp, rather than being “too hard.” That might be the most important step to increasing the interest of the next generation in science, technology, engineering, and math, and ensuring public policies based on sound science.

Enterprising States 2013 Report: Top Performers in Business Climate

abitely — Mon, 13 May 2013 13:38:18 +0000

Voices:

Sheryll Poe

Senior Writer

U.S. Chamber of Commerce

This article is part of a series on Enterprising States, a study produced by the U.S. Chamber of Commerce Foundation. The study, along with a accompanying Enterprising States Dashboard, was released at the U.S. Chamber's annual America’s Small Business Summit, April 29, 2013. This post was originally posted on Free Enterprise.

Government-imposed or government-related costs can have a major influence over the incentives and resources that are available for starting, operating, or expanding a business. Like large businesses, small businesses are negatively affected by exorbitantly high taxes, energy costs, volatile markets, lack of access to capital, expensive regulations, and problematic legal environments. Higher top marginal tax rates on personal income, for example, have been found to reduce a state’s share of the national entrepreneurial stock.

However, small businesses lack the political muscle of their large business counterparts in dealing with state and local government, and they are more likely to suffer from the unfavorable effects of high taxes, conflicting and complex rules, or a burdensome legal system. Most small businesses cannot afford a team of lawyers and consultants to help them navigate the maze of government red tape.

Underfunded state and local pension programs threaten to undermine the business climate in many states by diverting resources from critical basic services. Estimates of unfunded pension liabilities range from $730 billion to $4.4 trillion, and the funding ratio for state plans dropped from 77% in 2011 to 73% in 2012. The situation varies among states; for example, North Carolina and Florida are in relatively good shape, while Illinois and New Jersey are in trouble.

No state has the best tax policy for all entrepreneurs; rather, different states have tax policies that suit certain types of companies more than others. Thus, the states that are best for new businesses are not always the most favorable for existing small businesses. Those that are best for new C corporations aren’t best for new sole proprietorships, partnerships, or S corps. Likewise, the most advantageous states for starting service firms aren’t always the best for starting manufacturing ventures. And states that offer the most favorable conditions for R&D-intensive firms are not the most favorable for low-tech businesses.

Many states are enacting commonsense reforms to legal systems in order to help ease the burden of wasteful and excessive civil lawsuits on small business. Small businesses produce just 22% of total U.S. business revenue, yet bear 81% of business tort liability costs. More than a third of small businesses report having been a target for lawsuits and, of those, 73% said the suit negatively affected their business. Since 2011, nine states have enacted significant legal system reform: Alaska, Arizona, Louisiana, Ohio, Oklahoma, North Carolina, Tennessee, Texas, and Wisconsin.

Six equally weighted metrics determine the top states for business climate:

Small business lending rate
Potential cost impact of legal reform (Institute for Legal Reform)
State and local tax burden (Tax Foundation)
Overall business tax climate index (Tax Foundation)
U.S. Business Policy Index (Council for Small Business and Entrepreneurship)
Cost of living

The following states are the top 10 performers overall in economic performance and growth for 2012:

South Dakota. South Dakota leads the way in business climate, with four top 10 rankings and no worse than 26th in any measure. Top rankings include 1st in the U.S Business Policy Index, 2nd in state and local tax burden, 2nd in business tax climate, and tied for 8th for its cost-effective legal environment.
Nevada. Nevada ranks 2nd in the U.S. Business Policy Index, 3rd in business tax environment, 6th in small business lending, and 9th in state and local tax burden. The state has no corporate or personal income taxes, no inventory tax, and no inheritance tax, easing generational transition of family-run small businesses.
Wyoming. Wyoming’s three top five rankings in business climate measures place it 3rd overall in this category. According to the Tax Foundation, the state has the best business tax climate in the nation, and its overall state and local tax burden is 5th. Wyoming ranks 4th in the U.S. Business Policy Index and 16th for its cost-effective legal environment.
Alaska. Alaska has the lowest state and local tax burden in the nation, the 4th best business tax climate, the 7th most cost-effective legal environment, and the 4th most active small business lending climate. Looking to spur new growth in the critical energy sector, Alaska policymakers are weighing adoption of a range of policy changes designed to drive increased exploration and production.
Texas. The Lone Star State is a strong overall performer in business climate, ranking in the top nine in four business climate measures and no worse than 22nd in any. Texas is a low-tax state, ranking 9th in business tax climate and 6th in overall state and local tax burden. Americans are moving to Texas from all over the country, attracted partly by the state’s 7th-lowest cost of living.
Utah. Utah ranks between 7th and 22nd in all six business climate measures, including 7th in small business lending activity and tied for 8th in both cost-effective legal environment and the U.S. Business Policy Index. Utah is home to comparatively low top corporate tax rates at 5% and is one of the lowest property tax states in the nation relative to income. Additionally, Utah lacks wealth transfer taxes such as the gift tax, and the estate and inheritance taxes on the books are currently not operational.
Arizona. Arizona has an active small business lending environment, ranking 3rd overall. Arizona also augments startup funding with its Angel Investment and AZ Fast Grant programs. The Angel Investment program offers tax credits to investors who make business investments in qualified Arizona small businesses, while the Fast Grant program helps small companies with promising technologies through the commercialization process.
Colorado. Colorado ranks 8th overall, led by a 1st-place ranking in small business lending activity. A series of “Pits and Peeves” meetings gathered information about regulatory barriers to job creation. Working with business leaders and other stakeholders, the state reviewed thousands of its rules and regulations, identifying potential reforms to streamline regulatory processes and eliminate barriers to business success in Colorado.
Florida. Florida ranks 5th in business tax climate and the U.S. Business Policy index and 8th in small business lending activity. Florida recently increased its corporate income tax exemption from $5,000 to $50,000 and adopted legislation making it easier for growing manufacturing businesses to qualify for sales tax exemptions on equipment purchases.
Idaho. Idaho makes the top 10 with the 5th most active small business lending environment, 9th-lowest cost of living, and 12th most cost-effective legal environment. A recent survey of small business owners by Thumbtack.com and Kauffman Foundation gave Idaho an A+ rating for business climate.

Is America More Resilient Than You Think?

abitely — Fri, 10 May 2013 19:30:01 +0000

Voices:

Michael Hendrix

Director, Research & Emerging Issues

The U.S. Chamber of Commerce Foundation reads the Internet so that you don’t have to, sharing a short list of curated blog posts for your Friday reading.

Ted Alden finds that, despite the poor economy, Americans have surprisingly resilient values. Based on a recent Council on Foreign Relations report, he finds that “there is little indication that beliefs in individualism, the efficacy of hard work, and the potential for personal progress have been seriously eroded by the economic body blow the American public has absorbed.” The report goes on to note that “Americans remain broadly committed to the core precepts of the free market.”

On most nights, Netflix accounts for one-third of all Internet traffic in North America.

Do declining fast food sales portent a “new normal” in the restaurant industry?

Bureaucrats around the world: A photo essay of red tape.

The interplay between debt and demographics—is an aging world making our economic challenges that much greater?

What is the best way to learn?

“The most important story in global economics nobody is paying attention to is” … more liberal capital controls in China? Relatedly, Gwynn Guilford at Quartz profiles how China may have tapped out its traditional sources of investment-driven growth and is looking for ways to spur consumer spending.

Saxum has produced what must be the best infographic yet on America’s energy resources. It looks at 9 types of energy resources—natural gas, oil, coal, nuclear, hydroelectric, wind, geothermal, solar, and biomass—and then focuses on the areas with the greatest potential for future development. The result is an incredible visualization of America’s energy wealth.

How Does Your State Rank?

abitely — Thu, 09 May 2013 12:16:57 +0000

Voices:

Sheryll Poe

Senior Writer

U.S. Chamber of Commerce

This post is cross posted from Free Enterprise.

The vitality of state economies, like that of the national economy, is directly tied to the success of thousands of small businesses. And state policymakers know this. Every state has policies and programs to encourage entrepreneurship and support small business development and expansion.

Many states have introduced legislation or established programs to help startup companies, and many states have bolstered policies targeted at helping existing businesses grow and expand their markets. State funding of programs for entrepreneurial development increased by 30% between 2012 and 2013.

But which states are best positioned to grow, create jobs, and prosper in the coming five to 10 years? At America's Small Business Summit, the U.S. Chamber of Commerce Foundation released it's fourth annual Enterprising States report. The report measures state performance overall and across five policy areas important for job growth and economic prosperity:

Exports and international trade
Entrepreneurship and innovation
Business climate
Talent pipeline
Infrastructure

Top Performers

The Enterprising States study examines each state for overall economic performance and performance in five policy areas through a total of 33 measures, each adjusted for a common 1-100 scale to allow for comparison. The states were then ranked according to their job growth and economic health, and their performance within each of the five policy areas using a weighted index for each category.

Top performer Utah lands in the top 10 in each of the five policy area rankings and 3rd in overall economic performance, the only state to finish in the top 10 on all six lists. Texas and Colorado appear on four top 10 lists, and Washington ranks no worse than 17th on any list.

Nevada and Georgia land in the bottom half for overall economic performance yet rank well in most policy measures, an indication that the economies of those states may be due for a turnaround. Maryland ranks in the bottom 10 for exports and business climate, but its highly competitive innovation economy and talent pipeline help it place 9th for economic performance.

How does your state compare? See the Enterprising States Dashboard.

What is the Greatest Story of American Innovation?

abitely — Wed, 08 May 2013 14:46:07 +0000

Voices:

Michael Hendrix

Director, Research & Emerging Issues

What does the future look like to you? If it’s anything like former President Bill Clinton’s vision, we may soon live in a world dominated by the creative class. In his mind, that’s a future we should welcome with open arms. And the best way he thought to tell the story of tomorrow was to reach back to our very recent past, to a project of vast human ambition.

Over the course of 40 minutes, I listened recently as Clinton regaled an audience at DC's Corcoran Gallery with thoughts on everything from human genetics and string theory to TV watching and ant colonies. While these were fascinating glimpses into the mind of an ex-president, what tied it all together was his notion of creativity—imagination teased out by collaboration and turned into innovation. “The future will reward most richly those who are creative and cooperative,” said Clinton, adding “we’ve got a lot to learn, and the creators have to lead us there.”

According to Clinton, perhaps the greatest illustration of the creative class at work is the Human Genome Project. Truthfully, that example seemed funny to me at first. I hear “creative class” and think of bohemians and bon vivants. Yet when Richard Florida first set out to define this group, he came up with a far more nuanced picture.

Florida broke the creative class into a handful of core groups, the first being the “super-creative core.” These workers are found in the 12% of American jobs that are “fully engaged in the creative process,” such as many of those in the STEM fields (science, technology, math, and engineering) as well as artists, professors, designers, and entertainment workers. “Creative professionals,” Florida’s second type, are the knowledge-based workers in the financial services, business management, healthcare, legal, and education fields that use their college education to “draw on complex bodies of knowledge to solve specifics problems.” In short, the creative class is far bigger and diverse than we may think.

With these categories in mind, we can now consider the Human Genome Project as evidence of the crucial marriage between creativity and cooperation in one of the great stories of American-led innovation.

With an investment of $3 billion in 1990, the U.S. Department of Energy and the National Institutes of Health joined forces with an international consortium of geneticists to map and understand every gene in the human body over a span of 15 years. Ten years later, the project’s scientists announced that they had sequenced the majority of the human genome (the entire collection of human genes). Three years after that, the blueprint of humanity was published in full—ahead of schedule and under budget. Today, sequencing a human genome takes $4,000 and a couple of days.

The scientists behind the project realized a few key things early on. First, there was no way that the 20,000–25,000 genes and 3 billion base pairs that make up the human genome could be mapped without the involvement of many smart people from around the world. A wide range of minds from across the disciplines were including, stretching outward from the sciences to include lawyers, ethicists, and writers, among others. And with work already begun in research centers throughout Europe and Asia, the project got a running start that soon morphed into a global sequencing chain running throughout the United States, United Kingdom, France, Germany, Japan, and China. This cooperation not only made the project more effective, but ultimately allowed it to show that its work was on behalf of all humanity.

Second, sequencing the genome through brute force wasn’t going to work—these scientists were going to have to get creative. As The Economist explained, the project’s researchers “adopted a step-by-step method that started with relatively large chunks of DNA and broke them gradually into smaller pieces.” Rapid experimentation and some “creative laboratory innovations” soon allowed scientists to automate the sequencing process. Moreover, the project employed open source methods, such as placing sequences in public databases that allowed for other scientists to verify the project’s work and even create other, similar sequencing projects.

This leads to the third point that cooperation can enable and even be spurred on by competition. A private project, started some 8 years after the public program, used an alternative “shotgun sequencing” approach—involving smashed genomes being reassembled by computer—that enabled this team to publish its own sequences at roughly the same time as the publicly-led program and at a tenth of the cost. When the private project, led by Craig Venter and a company called Celera, first announced that they were jumping into the race for the genome, the public project substantially sped up its work.

Why should any of this matter? “Genome sequencing,” as Yang Huanming, president of the Beijing Genomics Institute, said, “is the digital foundation upon which we can build a system for understanding both health and disease in people and in our environment.”

President Clinton believes that we must find a “balance between creativity—widely and broadly shared—while making it profitable to pursue.” Ultimately, that requires “a more explicit framework to reward creativity.” With the Human Genome Project and competition, we find a powerful example of these forces at play—creativity and cooperation, competition and reward. This is the creative class at its finest hour.

President Bill Clinton: American Creativity and the World from Motion Picture Association of America on FORA.tv

Stepping Up Our Game: America in a New World

abitely — Tue, 07 May 2013 13:37:09 +0000

Voices:

John Raidt

Foundation Scholar

Senior Fellow, Atlantic Council

America faces many serious challenges in this still-young century. Among the most strategically demanding of them is maintaining our vital global leadership in a world where the balance of economic power is relentlessly shifting and where international economic competition to serve the markets of the future intensifies by the day.

According to the former head of the World Bank, over the next four decades “developed countries will drop from having 80% of the world’s income to 35%.” Within the next 10 years, India and China are expected to have over 800 million people with enough means to cumulatively boast over $3 trillion in purchasing power. Trading internationally and competing for markets abroad isn’t a decision for America to make—it’s an economic and geo-strategic necessity.

A new multi-polar world shaped by powerful demographic and economic change poses a spectrum of competitive and geo-strategic challenges for the United States. Above all, however, it offers us enormous opportunity for greater security and prosperity in the years ahead. To seize this opportunity, however, we must modernize our approach to global engagement in four areas.

One, we must understand that 95% of the world’s customers live outside our borders and winning them requires policy that generously expands U.S. market access abroad. The rest of the world is racing to enter into international and inter-regional trading agreements to beat us to the punch in the markets of tomorrow. We must step up our game or lose.

Two, we must foster greater public/private sector partnership in our global outreach. American companies seeking sales and contracts abroad require the advocacy and support of the U.S. government or we will abdicate valuable market position and precious influence.

Three, we must modernize our global engagement. Though not always perfect, America has the best governance, the best companies, and the best NGOs in the world. No other country can do what we can. We must harness this trifecta to promote security, development, and good governance/rule of law in emerging markets, so that they can develop to be stable, safe, and prosperous societies—much better places to do business for the long run. Success in this defining challenge of the 21^st century will improve both our security and our economy.

Four, we must exercise our global leadership to set and enforce responsible rules and codes of contact for international commerce. The practice of state capitalism, corruption, and bribery by our competitors will skew global competition against us, damage the integrity and progress of emerging markets, and spur conflict that would undermine the promise of peace and prosperity offered by the global trading system.

It’s a new world. If the United States is to continue to lead and prosper we must strategically adjust to inevitable change, shape a better future, and maximize the tremendous opportunities it offers.