Dean Barber

So What Does This All Mean?

In Uncategorized on August 21, 2011 at 9:00 am

That is a very good question, one that I struggle with every day and for which is the very purpose of this blog. I certainly don’t have all the answers (I probably don’t know most of the questions), but I think it is worth trying to assess what is happening around us. In business as in life, it pays to know.

So what does this all mean? My conclusions, based on my very sophisticated computational research and a rattle of the bones (a little voodoo economics), would indicate that we have a tough haul ahead.  The world economy, not just ours, is slowing, characterized by weak demand, anemic growth, burdensome debt and fear.

And it’s fear that keeps us caught in this downward cycle. Fear keeps us from investing in the stock market, from buying or building a new home, from building a new factory or expanding an existing one. It is fear that is prevents business from hiring additional workers.

From corporate board rooms in New York and Tokyo to shotgun houses in poor neighborhoods in Birmingham, fear and loathing runs deep.  People are plumb scared.

Cash is king for those who have it. They are hoarding it, sitting on it and trying to ride out what has been a very long storm.  Meanwhile, a dark cloud of poverty descends on millions in this country and around the world.

Two very unpleasant words come to mind for what is happening – wealth destruction.

Hunkering Down

More than $6 trillion has been erased from the value of global equities this month on signs of a slowing U.S. economy and speculation that European banks lack sufficient capital. Regulators from U.S., Europe and Asia said the market turmoil posed further risks to growth, after reports show that American jobless claims rose and manufacturing is shrinking.

That is not to say that certain businesses or business sectors cannot thrive in a weak economy. Certainly, some will, even if the world does lapse back into another recession. There will always be exceptions to the rule, as some business people learn how to fill a niche in good times and bad.

But for many of us, including the most business savvy, this is a time to hunker down and even count your blessings, as we instinctively know that this too shall pass.

When? Well, the bones tell me that it might be a few years before we see sizeable growth in the economy again. I said might, because I have to read and interpret how my chicken bones and pebbles lie on the blanket after tossing them.  They don’t teach you this at the Wharton School of Business.

But I think we are witnessing historic times, when the gulf between the rich and poor ever widens. If and when you see headlines of man biting dog, lock your doors, as a fury may break across the landscape. I hope I am wrong.

Are Locusts Next?

This sounds all rather apocalyptic, and for that I apologize.  I really am an upbeat fellow, but just not upbeat on business conditions anytime soon.  Keep in mind that my views may be colored by a stark, vast, unmerciful drought that I am witnessing firsthand here in Texas.

The past 10 months have been the driest ever here. Pasture and range conditions were rated “very poor” or“poor” in 96 percent of the state. The Texas drought, the worst in more than a century, has spurred a record $5.2 billion in farm losses, according to a unit of Texas A&M University. Costs to livestock producers may total $2.06 billion partly as ranchers are forced to sell cattle because parched pastures have boosted feed costs.

If there is a silver lining, it is that a rising supply may mean cheaper beef for retailers and restaurant.

Not far from me, the water was shut off for two days in Kemp, Texas, due to pipes breaking in the ground, caused by the soil hardening and shifting. It was yet again 105 in Dallas on Saturday.

Build to Grow

There is an old axiom in business that you have to spend money to make money. Generally, I believe this is true. At a time when governments around the world are taking austerity steps to pay down debt, they are doing little to spur growth and thereby jobs because they are not priming the pump.

Keynesian economics appears to be quite dead, in Europe and here as well. I think the reason is that it was so poorly done, at least here . Very little of the failed stimulus package passed by Congress did much in terms of job creation because so little of it was dedicated to actual infrastructure improvement, you know stuff like building roads, bridges, schools and the like.

This is the stuff of job creation, but it is pretty much off the table right now because of a dysfunctional federal government.

####

And Now a Word from Our Sponsors: Eat at Joes

It is at this point in the blog that I must resort to a crass display of commercialism. Barber Business Advisors, LLC helps companies find optimal locations for future operations. We also help economic development organizations with effective marketing strategies. Please visit us at www.barberadvisors.com

####

And Now Back to Our Program, Already in Progress

Still, I would suggest that our goal should be to grow ourselves out of this economic malaise, that cuts alone will never do it.  Indeed, there are strong indicators that if we don’t invest in ourselves in terms of infrastructure improvement (a message which I regularly inflict upon unwary local economic developers), we will further jeopardize our economic future and fall ever more behind.

This is not the ravings of a liberal Democrat, which I am not. Rather, these are clear warnings of a rather staid and conservative group, the American Society of Civil Engineers.

Can We Afford Not to?

The nation’s deteriorating surface transportation infrastructure will cost the American economy more than 876,000 jobs, and suppress the growth of the country’s Gross Domestic Product by $897 Billion by 2020, according to an Aug. 3 report released by the ASCE.

The report showed that in 2010, deficiencies in America’s roads, bridges, and transit systems cost American households and businesses roughly $130 billion, including approximately $97 billion in vehicle operating costs, $32 billion in delays in travel time, $1.2 billion in safety costs, and $590 million in environmental costs.

If investments in surface transportation infrastructure are not made soon, those costs would grow exponentially. Within 10 years, U.S. businesses would pay an added $430 billion in transportation costs, household incomes would fall by more than $7,000, and U.S. exports will fall by $28 billion per year.

“Clearly, failing to invest in our roads, bridges and transit systems has a dramatic negative impact on America’s economy,” said Kathy J. Caldwell, president of ASCE. “The link between a nation’s infrastructure and its economic competitiveness has always been understood. But today, for the first time, we have data showing how much failing to invest in our surface transportation system can negatively impact job growth and family budgets. This report is a wake-up call for policymakers because it shows that investing in infrastructure contributes to creating jobs, while failing to do so hurts main street America.”

Who Speaks for Us?

Both Republicans and Democrats blather on about jobs, all the while demonizing each other. Question: Who is going to speak for the American worker?  It matters not to me what party they come from. I just want solutions.

Cannot both parties work together in such a way as to invest in our future by rebuilding our nation’s highways, bridges, airports and schools? Again, spend money to make money. Rebuilding America will spur business growth and create jobs, thereby bringing in new tax monies.

In short, we can grow ourselves out of this economic funk by investing in ourselves.

I suspect from his dandy speeches that our faculty-lounge president knows this. He is a very smart man. But I’ve had just about enough of the speeches. Now I want to see action. It’s what the American people want.

Whether you like it or not, it’s your economy now, Mr. President. Lead or get out of the way.

Need a partner in results-oriented site selection? Contact me, Dean Barber, at 972-890-3733 or at barber@barberadvisors.com  Barber Business Advisors, LLC is a site selection and economic development consulting firm in Red Oak, Texas. Please visit our website at www.barberadvisors.com

.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: