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Intensifying U.S. Economic Growth, Job Creation, and Improvements in Public Trust

Submitted by on 18 Jul 2012 – 10:13

By Don-Terry Veal, Ph.D., Director, Auburn University Center for Governmental Services

The fight for the American Presidency is now before us and the pundits predict that it will not be a match for the faint-hearted. In this challenged economy, theories to explain American politics are deeply intertwined with ideals from Niccolo Machiavelli to Thomas Hobbs, wherein Machiavelli promotes the importance of fear over love; and Hobbs postulates a condition that he calls the “state of nature without government.”  In either case, the arguments focus attention on and intensify the need for improvements in the economy as they sharpen our best practices in fiscal affairs.

The stage is set for the American presidential candidate who can deliver the best economic strategy for the United States and to the world. American citizens will chose either President Barack Obama or Mitt Romney to be elected as the next President in November 2012.  Until then, most are focusing on a series of issues that are imperious to their finances and forcing critical evaluations about their future. At the center of America are problems and anxieties associated with economic growth, job creation, and improving public trust. When solutions are identified in these critical areas, communities will slowly hear the excitement of celebration and quickly turn the page on this period of decelerated resources.

Economic Growth

The economic challenges faced by United State are globally impacted by fiscal activities abroad. The current problem with economic growth is primarily a result of the 2007-2010 financial crisis, which is widely viewed as the worst fiscal crisis since the Great Depression of the 1930s. According to Kiplinger report, the current U.S economy is remaining flat at a 2% increase in GDP and marks 2012 as the third straight year that a solid rebound from the Great Recession has run out of steam (Kiplinger.com, June 1, 2012).

Europe is currently embracing sweeping reforms to avert a financial crisis (due to challenges with Greece and Spain, to name a few). Europe’s problems, however, weigh down U.S. exports and the global economy. China, India and Brazil are also experiencing decelerating economies which can potentially impact economies everywhere.

Kiplinger also reports that there’s no serious risk of falling into another recession, at this time. Absent a major financial crisis or a new war in the Middle East that drives gasoline prices over $5 a gallon, the U.S. economy should continue growing slowly this year and a bit faster in 2013.

The challenges resulting from the 2007 financial crisis were unexpected and continue to require global resolute strategies in order to turn the fiscal challenges in a positive direction. Small businesses have experienced many problems in this economy, but should be included in whatever strategies are used to provide solutions. Small businesses are most promising for putting people back to work when they hire people to assist with developing goods and services.

Small Businesses as a Resource

In the United States, small businesses are viewed as a key to job creation by many policy makers. Governors from most states understand the importance of small business growth. Many promote the idea of encouraging this sector to invent and churn-out more cutting-edge entrepreneurship than ever before.

The Midwestern State of Nebraska has an exceptional small business sector and is consistently ranked within the top 10 strong business sectors within the United States. Nebraska is unique in a challenged global economy and can lend ready constructive advice to others by highlighting the critical necessary factors that lead to job creation. On the other hand, the economy has caused a reduction of growth in the small business sector, mostly through their experiences with declining bank loans and credit.

A significant growth strategy for small businesses is to partner with universities and other institutions as a means to structure financial advantages. Partnering with universities, non-profits, big businesses, and other institutions as a means of leveraging resources and having more attractive portfolios is a step in the right direction. Through partnering opportunities, small businesses are more likely to become more empowered to expand into new territories as well as become more attractive for bank loans and increased credit.  Big businesses are well positioned to serve as incubators to small businesses in this environment of scarce resources.

University partnerships are able to impact businesses and state and local governments through research shaped by real-world needs. Universities have the resources to help translate serious research into action-oriented analysis, recommendations, and tools for business and policy leaders, practitioners, and the public. Finally, universities also have strong outreach agendas and can be significant catalysts for identifying and building collaborations for small businesses in regions around the globe.

Job Creation,  “Two Nations, One Idea”

Over the years, arguments have been made that economic growth doesn’t always mean job creation. A 2011 study released by the Political Economy Research Institute at the University of Massachusetts Amherst argues “the close relationship between [growth and jobs] that characterized the U.S. economy over the two decades after World War II has been weakening since the mid-1980s.” The result has been “jobless recoveries,” and employment lagging behind growth during both good times and bad. One reason for this is that globalization; shipping U.S. jobs abroad, naturally let companies increase their output while creating fewer domestic jobs.

The “Two Nations, One Idea,” strategy can change the dynamic of bringing fewer jobs by leveraging global relationships for small businesses abroad and in the U.S. (Don-Terry Veal, Entrepreneurship Policy Journal, 2005).  This approach should benefit business alliances in nations where there exists a common challenge with common regions in two countries. A goal of a common region strategy must be to incorporate priorities that will benefit job growth for both regions.  Universities are able to engage research in these areas and identify regions that make for strong partners for small businesses.

The strategy for growing two economically compatible national regions isn’t new in business literature, but can be relied on more in the current economy as a means to jump-start small businesses into the global community. In this, “two nations, one idea,” model, a more immediate growth impact can be the result when (1) regions have been identified for growth and trade, and (2) when entrepreneurs are working closely with governments in building these alliances. The goal of these collaborations with small businesses is to generate wealth into local regions through trading goods and services back and forth across borders.  Working with universities for purposes of research can lead to positive outcomes. In an environment where shipping U.S. jobs abroad has become the norm, a strategy to work with targeted regions also increases jobs and a lead to an increase in public trust.

Improving Public Trust

The crisis of public trust in governments is global as well. In the case of the United States, partisan politics have remained constant and are viewed as systems needing repair. Republicans and Democrats have agreed on very little since the election of President Barack Obama with both parties insisting that they are right and are working for the greater good of the economy and their constituents. As the struggle continues in Washington, public trust suffers, as citizens only want improvements in the economy so that they can better get on with their lives.

A 2012 Auburn University Center for Governmental Services survey shows that regardless of income, age, race, and gender, people who perceive that they are doing better have more trust in government. The worse they are doing, the less trust they have in government.

When citizens hear that police officers, teaches, firefighters, and other local employees are losing jobs, their concerns transform into fears. It is this workforce that’s closely connected to working with families, protecting communities, and preserving the American dream.

For public trust to increase in the current environment, the practice of partisan politics has to be dominated by bipartisan coalitions. To overcome the current economic down turn, Washington priorities should fundamentally target the economy and jobs rather than partisan interest.  Americans are no different than others around the globe. Security for their families, better wages, and a future that can be depended upon are all a part of the American dream.

The fight for the American Presidency is in full swing. Based on the millions of dollars raised by both the Republican and Democratic candidate in the majority political parties, a victory is a prize worth having. Regardless of the outcome, a celebration will take place when governments in America and around the world can turn the economy in a positive direction, create more jobs, and improve public trust. In the mean time, we will continue to intensify the need for improvements in the economy, as they sharpen our best practices in fiscal affairs.