What This Country Needs

It is not a good five cent cigar. Those days are long gone.

Nor is it what writer Ambrose Bierce’s suggested: “What this country needs, what every country needs occasionally, is a good hard bloody war to revive the vice of patriotism on which its existence as a nation depends.”

Bierce traveled to Mexico in 1913 to gain first-hand experience of the Mexican Revolution. He was not seen again.

I must admit that Edward Langley’s observation in 1982 nears closer to the truth: “What this country needs is more unemployed politicians.”

The problem is that unemployed politicians are replaced by employed politicians. Eradicating this replicating breed is something that we have not yet figured out.

If you were to ask me what this country needs, my answer would be simple: more business creation. Even if 90 percent of new business startups fail (and they do), I see entrepreneurship as a strong indicator to the health of a local economy and really the long-term future for our country.

Cities with strong entrepreneurial ecosystems are generally wealthier, faster growing, and offer more opportunities for upward mobility.

A Nation of Risk Takers

America has always been a nation of tinkerers, inventors, and entrepreneurs. We have the likes of Benjamin Franklin, George Washington Carver, Henry Ford, Steve Jobs and Elon Musk.

And now we have access to more technologies such as 3D printers, laser cutters, easy-to-use design software, and desktop machine tools.

We have the internet where we can scour for freely available information about how to use, modify, and build upon these technologies. And we have crowd funding platforms.

Despite All That

Despite all this at our disposal, U.S. entrepreneurship has been on a decline for decades.

A study published in December 2015 by the National Bureau of Economic Research (NBER) shows that start-up activity has been slowing down in this country for about three decades, dropping sharply over the past 10 years.

New firms less than a year old accounted for about 13 percent of all companies in the late 1980s, but only about 8 percent two decades later. Commerce Department data show the number of jobs created by establishments less than one year old has decreased from 4.1 million in 1994 to 3 million in 2015, limiting a historical path to the middle class.

And while Millennials may be a creative and independent bunch, they are not particularly entrepreneurial. The number of people under 30 who own a business has fallen by 65 percent since the 1980s and is now at a quarter-century low, according to a Wall Street Journal analysis of Federal Reserve data.

Indeed, the only age group with rising entrepreneurial activity in the last two decades is people between 55 and 65. (Hey, I’m not alone!)

The Biggest Culprit

We can blame “the usual suspects” — big government, high taxes and over-regulation. Maybe. But startups were booming in the 1970s and 1980s, when tax rates were higher, and deregulation for many industries was still in its infancy.

We can blame credit constraints, rising investments in automation that reduce the need for people, offshoring and larger companies acquiring younger firms at an earlier stage of development. All maybes in my book.

I think the biggest reason, the biggest culprit for the decline in new business startups might be student debt. About 41 million Americans carry more than $1.3 trillion in outstanding student debt, with one out of four student loan borrowers struggling to repay their loans or already in default.

In 2016, over 70 percent of the graduating class of 2016 took on an average of about $37,000 in student loans to finance their degree. The total sum of student loan debt for the Class of 2016 comes out to around $60 billion — 12 times the amount that graduating classes from the early ’90s held. Yikes.

According to a Inc.com article last year, more than 40 percent of 25-to-34-year old Americans said a fear of failure kept them from starting a company in 2014; in 2001, just 24 percent said so.

Job Creation as the Be All and End All

Few politicians or economic developers really talk much about the entrepreneurial climate of their communities.

Come to think of it, I cannot recall of a single conversation in which an economic developer has lamented the lack of business creation in his or her community. And I hang out with a lot of economic developers.

While U.S. entrepreneurship has been on a decline, most economic developers see job creation as the be-all and end-all. Certainly, it is how they are typically judged by the boards who hire and fire them. (Never mind that not all new jobs are good jobs.)

So it is understandable that economic developers will concentrate on growing existing businesses, the basis for business retention and expansion, and recruiting new businesses to their communities.

Incubators, Accelerators, Makerspaces, Oh My!

In short, business creation in most communities is still given short shrift, even with the advent of incubators, accelerators and makerspaces.

Now, don’t get me wrong, I have seen some great success stories of business startups all over this country, and where economic developers have played important support roles.

Indeed, as a consultant for industry and economic development organizations, I would like to see more incubators, accelerators and makerspaces, as it only strengthens a community’s entrepreneurial climate.

These type of places, where new businesses can essentially be nurtured and grown, show me that a community is at least trying to make a difference. In short, a community is placing a bet, even if a small one, on another gambler.

Not for Timid Souls

I am reminded of a quote attributed to President Theodore Roosevelt. It is long and verbose, and it sounds like it comes a blowhard politician from a bygone era. But there is a lot of truth to what Teddy said.

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

To entrepreneurs and economic developers alike, I would advise that you not be timid souls, knowing full well that you could go broke or get fired in the process. But you knew that.

The Project: Inside Corporate Locations

I seldom mention or plug other consultants in this blog, unless I have worked with them and am therefore confident in their services and abilities.

Andy Levine, president of Development Counsellors International, fills the bill on both of these marks. DCI has launched a podcast called “The Project: Inside Corporate Locations” on iTunes.

Essentially, Andy and company identify recent corporate location decisions, interview both company and economic development officials and produce 12-15 minute segments which follows the “trail of the sale.”

The first three episodes detail projects with iCIMS (“Fast Growth Tech Company Finds New Home in Old Space”), Dana Incorporated (“If You Build It…Dana, Toledo and the Spec Building”) and CAEK (“Go West Young Firm”). Future episodes will explore recent site selection decisions by Charles Schwab, Gerhardi and Alorica.

We can all learn from these podcasts, even consultants.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733. Mr. Barber is available as a keynote speaker.

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Our Next Industrial Revolution and Sojourns in New England

In my travels as a consultant, I have found that even in communities with full employment, there is often an underlying belief that “our town” is not what it could be or should be.

It’s not that people aren’t working in these places. For the most part, they are. It’s just that they are not working in the kind of jobs that they want. Too often, the type of jobs that are readily available do not meet the expectations of young people seeking careers, politicians and economic developers.

Young people will often move as a result, and the politicians, a largely delusional class of limited intelligence, will beg, cajole, threaten, and bully economic developers to devise plans to create higher-paying jobs, on the belief that, quoting Mark Twain, “the lack of money is the root of all evil.”

A Well-Meaning Bunch

These plans, some of which are occasionally rooted in reality, form the working basis for the profession of economic development. Practitioners are generally a likable, well-meaning bunch charged with building wealth and improving quality of life in their respective communities.

Now I know that may sound crazy, but it is true. Indeed, I once was one.

If economic developers were to adopt a motto for what they do, I would advise they consider another astute observation by Samuel Clemens, whose pen name was Mark Twain: “All good things arrive unto them that wait – and don’t die in the meantime.”

From One Bandwagon to Another

About 10 or 15 years ago, the biotech bandwagon was the thing to jump on. Just about every economic developer and his or her brother proffered the notion that their communities were more than suitable for the manipulation of genetic material without killing us all.

It finally dawned on most that biotech companies are born and thrive in only certain type of communities, typically found where there are research universities and research dollars available to create some things you really don’t want to know much about.

Today, there is an understandable excitement about the digital transformation of manufacturing, which is our next industrial revolution. Optimists that they are, many if not most economic developers believe their respective communities are well-equipped for it.

After all, they have the consultants, an all-knowing group well equipped to provide answers on virtually everything known to man, to turn to. And as I am a member of this priesthood, you should consider everything I say in this blog as absolute gospel.

All Encompassing Technologies

From my high perch, I can tell you that digital technologies will touch each and every one of us, in rural and urban communities alike, and that the very nature of work is changing as a result.

It is also true that those communities that offer a goodly dose of STEM education will better equip their young people for a digital future with jobs that you will never fully grasp because of fast-changing technology.

(Mind you, I know the jobs of the future, because I am a consultant. If you pay me and are nice, I will reveal these secrets of unknown to you.)

Because of the technical skills that are and will be needed, more and more companies look for a solid STEM foundation — science, technology, engineering and mathematics — when considering places for future operations.

From a company’s point of view, this only makes sense because it is looking for a future pipeline of talent, which is smart if they have listened to me, the consultant.

As an adviser to both industry and economic development organizations, I’m casting a critical eye at education on a local level, and I am also looking for a tradition of certain kind of work within a community, knowing full well those traditions can and do die over time.

If I am working with a manufacturer on a site selection project, a place that has a deep manufacturing tradition and where schools provide for a robust STEM and vocational training will likely catch my eye.

To the company, I might say, “the people that you want are here in sufficient numbers” or “the people that you want are not here in sufficient numbers.”

Tradition, STEM, vocational training, these are all good things, even in a digital future in which artificial intelligence will reign.

A Touring Texan in New England

I am writing this blog from a hotel room in New England, the birthplace for manufacturing in America. Textiles, machinery, shoes, and guns were all made here and were once thriving industries.

In 1850, New England was the most industrialized part of the United States, accounting for well over a quarter of all manufacturing value in the country and over a third of its industrial workforce. Not surprisingly, it was (and still largely is) the most literate and most educated region in the country.

My wife and I have been touring New England as tourists for the past week and will continue our sojourns for another week. By the time we head home to Dallas, we will have spent time in all six states – Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

I was least impressed with the city of my birth, which sits in the Connecticut River Valley, the crucible for industrial innovation, pioneering such advances as interchangeable parts and the assembly line, things which influenced manufacturing the world over.

And while I came into this world in this old factory town, which I have absolutely no memories of as an infant member of a vagabond family, I hope to go out in a more scenic place, devoid of urban blight.

A Place of Beauty and History

As I am easily impressed by the visual and history, I found New England a fascinating region. The rocky coast of Maine, the White Mountains in New Hampshire, the Green Mountains in Vermont, simply gorgeous.

Certainly there is a certain allure to the seaports, villages, towns and cities of New England, where it is not uncommon to see a church dating back to 1811 or a general store that dates back to 1831.

Yesterday, I saw a house in Connecticut dating back to 1654. Now how cool is that?

The factory economy, which created great wealth in communities (just look at the houses), is mosty gone now, starting with the loss of textiles in the 1930s.

Still Wealthy After All These Years

But New England remains a very vibrant region, with high technology manufacturers making jet engines, nuclear submarines, pharmaceuticals, robotics, scientific instruments, and medical devices.

I believe this is so because public education remains revered here. Consequently, they grow them up smart, and many of this educated lot get wealthy, too, as Connecticut, Massachusetts, New Hampshire, have among the highest household income levels in the country.

In Manchester, Vermont, a beautiful small town in Vermont and a tourist destination for the upper crust from New York and Connecticut, I walked into a shop, which billed itself as “purveyors of fine guns,” and saw ornate over-and-under shotguns for sale for $85,000. One was being sold for $99,000.

But certainly some people and some communities in the region have found themselves trailing behind. Western Massachusetts is a very different place from the greater Boston area, where 80 percent of Massachusetts’s citizens live.

Boston and its surrounding area truly is the big dog of New England, accounting for nearly a third of the region’s population and a half of its gross domestic product.

Maine, comprising almost half of the land mass in New England, has less than 10 percent of the population and in some Maine counties where I drove, the poverty was evident.

A Rough Cob Refined

I have been quoting Clemens in this blog partly because he was so spot on in pointing out the absurdities of life and partly because I toured his home in Hartford, Conn., a few days ago.

One of his quips has stuck with me on this particular trip, that “travel is fatal to prejudice.”

I know this to be absolutely true, because in the South, where I have spent most of my life, a “Yankee” is typically viewed as an inferior person from a northern state. Certainly not one to be trusted.

But I do not subscribe to such malignant thoughts, because travel has enlightened me. I know firsthand of “Yankee ingenuity,” kindness, generosity, intelligence and humor.

Good people, even if none of their universities will ever hold a candle to University of Alabama football.

Indeed, if I were a better and more refined person, I might even consider living among them if they would only have me.

But I will not try the patience of anyone in attempting to be something that I am not, which is why Texas suits the rough cob in me just fine.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-890-3733. Mr. Barber is available as a keynote speaker.