The Tribune Democrat, Johnstown, PA

February 6, 2011

Small businesses fuel economy

Investing tax dollars in local entrepreneurs will pay huge dividends for entire nation

David A. Knepper

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” 

– President Ronald Reagan

 


Like so many Americans these days, I am not so much upset about paying my “fair share” of taxes so long as I see my money being used to operate our local, state and the federal governments.

 More especially, when state and federal funding supports projects which are not held to rigorous scrutiny and standards, especially in creating jobs, helping to retain existing jobs, and stimulating industrial and commercial growth.   

Calvin Coolidge was a bit more blunt when he stated in his presidency that “collecting more taxes than is absolutely necessary is legalized robbery.” 

Moreover, noted columnist Thomas Sowell may have struck another raw nerve with his stinging rebuke of government for pouring taxpayers’ money down a thousand bottomless pits of public and private boondoggles that cost a lot more than “keeping the poor from starving in the streets.”  

Cal Thomas, nationally syndicated columnist, wrote that “Every government agency and program should be required to justify its existence consistent with its cost and benefit to the greatest number of Americans. If they can’t, they should be eliminated.” 

Turning down and tuning out the political rhetoric is the first step to achieving a more tenable and pragmatic approach to rev up our economy. As Americans have always done when faced with what may seem insurmountable adversity, they roll up their sleeves and get to work tackling the challenges that lie before them.

Taking a line from the president’s State of the Union speech, “The future is ours to win. But to get there, we can’t just stand still. As Robert Kennedy told us, ‘The future is not a gift. It is an achievement.’

“Sustaining the American dream has never been about standing pat. It has required each generation to sacrifice, and struggle, and meet the demands of a new age.” 

In the light of a new day for this nation, I would strongly suggest an economic development strategy that would foster entrepreneurship that can lead to greater small-business development as that “one step for man and one giant leap for mankind.”

“According to the U.S. Small Business Administration, since the mid-1990s, small businesses generally have created   60 to 80 percent of the net new employment in the United States. Further, they found that net job creation in the immediate years following the 1990-91 and 2001 recessions stemmed from employment generated by small firms with fewer than 500 employees.

“Therefore, it would seem that one good way to boost economic recovery is to encourage more business creation. To do this, policymakers need to understand the backgrounds and motivations of the founders of such businesses. They also need to understand what inhibits others from starting businesses and becoming entrepreneurs.” (Kauffman, The Foundation of Entrepreneurship, November 2009.)

 “Significantly, the source of funding for all businesses was company founders’ personal savings: 70 percent said they had used personal savings as a main source of funding for their first business, more than four times the number chiefly financed by any other type of funding. Even in subsequent startups, more than half of the entrepreneurs relied on their personal savings. This is where government can step in with economic stimulus funds to assist qualified entrepreneurs who can meet minimum standards without enormous mountains of red-tape. Surely, if government can bail out wall street why then can’t it help main street small business owners.” (Kauffman.)

For example, in a 2.5-mile corridor from Sidman to St. Michael, along  Route 869, there are some 37 small businesses that employ hundreds of workers. Think what economic impact could result if these business owners, not to mention new business investors, in the Forest Hills region had an influx of state/federal stimulus money, coupled with a reduction in their business taxes, to stimulate and to improve the business climate. Expand that to other communities all across Pennsylvania.

This new, bold venture in economic development is not a gamble, but an investment in our future, when business and governments work together for prosperity for current and future generations.

The availabile land tracts in local municipalities, county governments and the commonwealth might be set aside as small-business development areas. The percentage of federal and state land in Pennsylvania alone is estimated by the National Wilderness Institute to be more than 16 percent of the total land coverage. 

Local municipalities hold large land reserves that need to be cataloged for potential business development, especially those tracts that have been largely abandoned or underutilized.

With Pennsylvania facing an estimated $5 billion deficit, tough budget cuts undoubtedly will begin to trickle down to  county and municipal governments. What impact this will have on programs and services remains to be seen. But come they will. 

Yet, the fix does not lie in more borrowing – deficit spending – but rather giving new entrepreneurs state and federal financial incentives and professional assistance through local small-business development centers, such as the one located on the St. Francis University campus. The center is just one key asset that this region has in fixing our economy. 

Let’s roll!

     

David A. Knepper is president of Allegheny Development Group LLC and is currently the executive director of the Forest Hills Regional Alliance. He holds a doctorate in educational administration from Penn State. His column appears the first Sunday of each month.