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Here's an axiom that applies to almost all behavior: It won't change until there is enough pain.
It's amusing, to a degree, and it's also sad, to a greater degree, that here it is mid-2011, two years after the recession wrought so much economic devastation, and only recently have more and more policymakers felt enough pain to change their and their governments' behavior. Surely you've noticed: Creating a favorable climate for business is now all the rage.
Three examples, two of which our editors chronicled recently in the Business Review:
• Robert Buckhorn, newly elected mayor of Tampa, told Government Editor Jay Brady: “My job is to set the table for the private sector to be successful.” Buckhorn said his first goal is permitting and regulatory reform, likening that process in Tampa to “getting your teeth pulled without anesthesia.”
Last week, our Orlando editor, Dan Ping, wrote of the mayor of Orange County, Teresa Jacobs, and her creating the Regulatory Streamlining Task Force. Its job: eliminate duplicative regulations, reduce processing times and improve customer service. Said Jacobs: “Looking at the flow chart (on how developers navigate the regulatory process) will blow your mind.”
And even in business unfriendly Sarasota (the city portion), newly elected Mayor Suzanne Atwell told our sister newspaper, Sarasota Observer: “We're not going to keep throwing up impediments in developing the city ... The more development we bring in, it's only going to help the bottom line when budget time comes.”
On top of that, the Sarasota County Commission, in spite of its budget shortfalls, has awarded more cash subsidies to expanding businesses in the past two years than in the past decade.
No doubt Florida Gov. Rick Scott since his election campaign last summer has aided these economic epiphanies with his relentless emphasis on jobs and determination to make Florida the nation's best state for business.
Nonetheless, even though we know human nature is to procrastinate, you have to wonder why it took a crisis for policymakers to realize what has always been thus — that low taxes and low regulation are two of the essential ingredients to creating an attractive business climate. That message was emphasized yet again in CEO magazine's rankings last week of its best states for business, as judged by its CEO readers. Florida finished third best in that ranking, up from sixth in 2010.
When you analyze those rankings, it is not at all surprising which states rank at the top and which ones rank at the bottom. There are correlations. As noted many times in these columns, economist/authors Arthur Laffer and Stephen Moore have produced repeated studies showing how states with falling tax burdens always outperform states with rising tax burdens.
Likewise, take the tables above. It's stating the obvious that states ranked among the worst places for business tend to be states with high taxes, high regulation and high debt levels. Just look at the lists. You probably would have named half or more of those states that are awful in taxation and regulation just from your own perceptions and knowledge.
Those characteristics spill over, too. They affect a state's quality of life. To wit: Six of the 10 worst states in taxes and regulation are also among the 10 states with the highest rates of out-migration: New York, Massachusetts, Illinois, New Jersey, California and Michigan. People move away from taxation.
Conversely, five of the 10 best states for business rank among the top 10 for population in-migration. People move to states with low taxation. Duh.
Somewhat puzzling when you look at the tables above is how Florida managed to rank third overall. The only rankings in which Florida was among the top five were in the categories of the fewest number of state and local government employees per 1,000 residents (fourth) and in-migration (third).
Florida's lowest ranking came in the category of quality of workforce. This always has been one of the state's economic bugaboos. It's a perception that is hard to dispel — that Florida's work force generally is unreliable and has a questionable work ethic; that the state has a low wage scale; and that our public education system stinks. Surely you could apply those labels to a many other states as well.
In the bigger picture, if Florida is indeed going to knock Texas from its seven consecutive years as the best state for business, Florida will need more Robert Buckhorns, Teresa Jacobs and Suzanne Atwells in the local, county and state political arenas fighting to create the right tax and regulatory frameworks throughout the state.
Surely all elected officials have seen and felt the difficult tolls exacted on communities when they live with no economic growth. They should remember this pain. Don't wait for it to recur to change behavior. Creating the right business climate should be part of every elected official's DNA.
Take our survey: How would you rate the business climate in your county?
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