Alameda Advisors LLC
Converting Innovation to Sustainable Business
Alameda Advisors LLC
Converting Innovation to Sustainable Business
Economic Development to Improve Life
Alameda assists governments, universities and institutions using global economic development experience enhanced by experience starting, managing and directing small and large companies.
Most economic development projects fail to achieve their targeted results.
- A few fail due to overly ambitious goals.
- The majority fail based on a mismatch of the economic direction with the regional and institutional strengths within the region.
Economic Development vs Status Quo
Governments can encourage or inhibit economic development that improves the quality of life. Decades ago, the United States enjoyed a standard of living that was well above every other nation on earth. A small portion of that living standard can be attributed to higher education in the US that was better than most countries. US higher education offered superior quality at average universities, as well as exceptional quality at top universities.
There was less than 25% of high school graduates that went on to higher education. Fortunately, there were career opportunities in manufacturing that did not require higher education.
During that period of time, there had been a large portion of the US labor force worked in manufacturing. Manufacturing companies provided wages and benefits well above the US median for millions of workers that also produced satisfying careers.
Manufacturing has shifted offshore over the last 5 or so decades. Many blame the competition from low wage countries such as China, India, and Indonesia for the overall exodus of manufacturing from the US. While wages do play a part, it is only a small part. US labor typically has higher productivity at the blue-collar level than emerging countries. US companies also incorporate automation into production along with blue collar labor. That combination of productivity and automation can typically more than compensate for low wages offshore.
A greater issue is the regulatory burden on US companies. That burden is modest for some types of companies such as services and software, but substantial in manufacturing. Regulatory burdens contain both fixed and variable aspects, particularly in manufacturing. Exceptionally large companies can spread those fixed costs of regulatory burdens over a larger business base. The fixed costs dominate for companies that fall into the size category that qualifies as a "small business" as defined by the US Small Business Administration. www.sba.gov
For startup and emerging manufacturing companies, that regulatory burden becomes overwhelming. That burden impacts manufacturing employment. The following 1-page document illustrates the relative impacts of taxes and regulations on manufacturing businesses by company size in a graph, and also lists issues and critical factors.
Impact of Taxes and Regulations on Manufacturing by Company Size
Grow Quality US Employment via Manufacturing Startups
Real economic development is generally viewed as a disruption to the existing hierarchy within a region's power base. That power base is likely to impede any serious economic development in order to maintain the status quo.
To become successful, any economic development must include the extended regional community and bring most of the leaders into the effort.
Richard has led and participated in various economic development projects in several US states and in many countries around the world. Every region of the world wants "economic development" meaning growing regional incomes for businesses and people. Most regional leaders have a general concept of a distant future that provides a sustainable economy. Unfortunately, every region has vested interests that will fight any change.
Small businesses produce most growth in the number of newly created jobs. While many small businesses may fail within a decade of so, some continue as small businesses, and a few become large or are acquired by a large company seeking growth.
There will always be sufficient entrepreneurs that seek to start their own business.
Over time governments increase regulations to keep large companies from undesirable practices and operations.
An unintended consequence is to squelch small business. Many entrepreneurs become overwhelmed when attempting to start a business and give up before opening the doors. Others get started but become frustrated with the escalating costs for legal and accounting costs required to keep current on filing required reports. Companies that manufacture actual products tend be overwhelmed with the extra documentation. Companies that manufacture have higher wages on average than companies that do not manufacture.
Small business in the United States is the main source of new jobs, new technologies, new industries, and the future source of companies that provide satisfying careers to workers in jobs with high pay.
The following paper outlines a plan to provide the environment where entrepreneurs can thrive.
Promote Small Business Manufacturing for Economic Development
Quality of Life for All
Most people have several definitions for "quality of life". A few will suggest that equal income (or as close to equal as practical) for everyone provides the best quality of life. That has been tried in various socialist and communist governments with horrible results. As always, people in power have a much better life than those with lesser power. That has been true since the time of the pharaohs in Egypt and is likely to remain true for centuries to come.
Another concept to provide a good quality of life for most people is to have "equality of opportunity for all". Equality of opportunity should provide the best quality of life for nearly everyone. In today's world, equality of opportunity involves learning of a complex array of skills far beyond levels of bygone centuries. That learning must start at an incredibly young age and continue for about two decades of formal education, development of social skills and building work ethics and skills. Hopefully over the next century or two, most people on earth will have those same opportunities to learn those skills.
Meanwhile, it is important to include as many residents of a country as practical in the overall economy. Socialist countries have tried to use "guaranteed incomes" as their tool, but that has had less than stellar results. People receiving that subsidy are looked down upon by others. Subsidy recipients never develop the self-worth to enable rising up the economic ladder.
One approach that can achieve similar goals to a direct-to-people subsidy along with providing dignity to that group of recipients is a refundable tax credit for workers. The United States has a modest program in place today. A major expansion of that program can achieve a much better outcome.
This refundable tax credit program will also help entrepreneurs get new businesses started when they cannot afford to pay a "living wage". This can be extremely helpful to entrepreneurs starting a local service business or restaurant. This program can be especially valuable to get the United States back to normal much faster than otherwise during this 2020 economic disruption and provide a tool for inevitable future economic dislocations.
Growing Employment and Quality of Life
The following 1-page document outlines some issues.
Returning to Full Employment and Improving Incomes of Lower-Wage Workers
Intellectual Property is Critical for Everyone
Intellectual property has growth in value to drive the "wealth of a nation" and the "quality of life" for all of its residents.
Most companies create and develop intellectual property covering trade names, service marks, trade secrets or patents. Establishing that intellectual property requires the investment of time, energy, and intellectual capital. These intellectual property assets become the building blocks of business.
Intellectual property is important for governments, citizens, and businesses.
Intellectual property is important for business to maintain their competitive position in the world. Large companies expend extensive resources to protect their intellectual property. In many cases large companies have other defenses such as private distribution chains and supply chains. Small companies need their intellectual property more than larger companies due to their lack of other protection in supply and distribution.
Competition has become global for most companies, regardless of size. Intellectual property requires protection from entities that in many cases are outside the United States. Government must ensure the protection of intellectual property from international predators in order to maintain and grow its standard of living for all citizens.
The following paper covers critical issues for intellectual property.
Intellectual Property is a Critical Asset
2020 Economic Development for Nevada
Nevada was mostly empty until the discovery of gold deposits produced a boom in the population of Northen Nevada in the 1850s. Southern Nevada remained nearly empty except for small-scale mining of materiasl such as gypsum along with small ranches. Water was scarce except for the Colorado River basin. The river basin is at a much lower altitude than surrounding land and there was limited ability to transport that water up thousands of feet.
What is now the Las Vegas metropolitan area had fresh water spings that supported a modest population and ranching. That all changed starting with the building of Hoover Dam in the 1930s.
Las Vegas has grown from a very small base to a town of about 50,000 people in the late 1950s to a major metropolitan area with a population approaching 2.5 million.
Now that Richard lives in Nevada, he has used his decades of experience around the world to evaluate Nevada.
Nevada's Must Grow Beyond Hospitality-Tourism
Nevada has achieved global leadership in the overall hospitality industry, which includes hotels, conferences, entertainment, gaming, dining, and sports. The greater Hospitality-Tourism and its trickle down into most other fields dominates the state and especially Clark County. Activities not normally considered Hospitality-Tourism become totally depending on Hospitality-Tourism including diverse businesses in construction, law, and accounting.
Unfortunately, hospitality-tourism rises and falls with the global economy and in fact amplifies the peaks and valleys of global GDP trends. National economic downturns such as those in 2008-10 and 2020-21 impact Clark County especially hard.
Nevada must forge a second path to avoid the pain of national and global downturns. That path must be completely outside of tourism and have a business economic cycle that is uncorrelated to tourism.
The following paper provides the basis of a bold plan.
Nevada 2020 Recovery and Diversification Plan
10620 Southern Highlands Parkway
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Las Vegas, NV 89141