Strengthening Constitutional Self-Government

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Small Business Friendliness

Sander Daniels at provided me with a preview of a survey of small businesses (to be released on Tuesday) which ranks the friendliness of states and cities towards small business. The data is intended to shine "a new light on the United States' business regulatory climate and the nation's economic health."

The survey's most interesting findings include:

  • Small businesses care almost twice as much about licensing regulations as they do about tax rates when rating the business-friendliness of their state or local government.
  • An important predictor of small business friendliness was whether small business owners are aware of their state or local government offering training programs for small businesses.
  • Small business owners ranked Idaho and Texas as the most business-friendly states, with Oklahoma City and Dallas-Ft. Worth taking top honors among cities across the nation. Vermont and Rhode Island found themselves on the opposite end of the spectrum, joined in the bottom-five by New York and California. (Ohio finishes with a lousy D+ rating.) Every city and state has its own page with a visualization of the location's full results.
The survey relates relevant information on the principal issue of the day: America's struggling economy. Small business owners' concerns about regulation (and taxation) should translate into preferences for Romney's "small government" approach to the business community (as opposed to Obama's penchant for ever-greater regulation). The fact that red states top the bill and blue states bring up the rear cannot bode well for Democrats, who are presently faced with a severely unmotivated constituency.

UPDATE: Daniels' survey parallels Chief Executive's eighth annual survey of CEO opinion of Best and Worst States in which to do business. As expected:

Texas easily clinched the No. 1 rank, the eighth successive time it has done so. California earns the dubious honor of being ranked dead last for the eighth consecutive year.

Importantly, the report notes the link between success and "right-to-work" - and the challenges "pro-growth" policies must overcome due to Democrats and unions.

It may be no accident that most of the states in the top 20 are also right-to-work states, as labor force flexibility is highly sought after when a business seeks a location. Several economists, most notably Ohio State's Richard Vedder and Harvard's Robert Barro, have found that the economies in R-to-W areas grow faster than other states, have higher employment and attract more inward migration. Governor Scott Walker's battle with the unions in Wisconsin (See "Will Wisconsin Rise Again?"), a state that edged into the top 20 this year for this first time, demonstrates that the struggle for a pro-growth agenda can be contentious. As one Badger State business leader remarked, "Finally, Wisconsin is headed in the right direction."

Also, the comparison between #1 Texas and #50 California bears repeating. Regarding conservative Texas:

The Lone Star State was given high marks foremost for its business-friendly tax and regulatory environment. But its workforce quality, second only to Utah's, is also highly regarded.

And regarding liberal California:

California's enduring place of perpetual decline continues in this year's ranking. Once the most attractive business environment, the Golden State appears to slip deeper into the ninth circle of business hell. The economy, which used to outperform the rest of the country, now substantially underperforms. And its status as the most ruinously contentious place to operate remains undisturbed in eight years. Its unemployment rate, at 10.9 percent, is higher than every other state except Nevada and Rhode Island. With 12 percent of America's population, California has one-third of the nation's welfare recipients. Each year, the evidence that businesses are leaving California or avoid locating there because of the high cost of doing business due to excessive state taxes and stringent regulations, grows. (See "Eastward Ho!") According to Spectrum Locations Consultants, 254 California companies moved some or all of their work and jobs out of state in 2011, an increase of 26 percent over the previous year and five times as many as in 2009.

The following is a representative sample of comments from participating CEOs:

  • California is the worst! They are doing everything possible to drive a business out of their state. If it were not for the climate, they would have lost half their population
  • California regulations, taxes and costs will leave only tech, life sciences and entertainment as viable. If you aren't an elitist, no room here for the middle or working classes.
  • California treats business owners like criminals. California has different overtime policies for its own employees vs. private sector.
  • California's labor regulation is a job killer. We will be moving our business out of the state, which will lose hundreds of jobs simply due to the poor regulatory environment.
  • California should secede from the union--it is like doing business in a foreign country, it has its own exchange rate, and its regulation is crazy.
Conservatives couldn't make up such favorable talking points.

If voters are paying attention, the Democrats are doomed.
Categories > Economy

Discussions - 3 Comments

Shocker - The Stupid State ranks 9th and falling in the survey. The mental illness liberals who run the Stupid State won't be happy until it is in last place..

Go Stupid State!!

A small business owner in my small California community knows how bad the business climate is in the state, but refuses to acknowledge that Democrats are the cause. A liberal college experience and many wrong choices cloud this person's judgment, I fear.

(The Captcha "thing" below is undeciperable! Why is that necessary?)

There has been less spam since the Captcha thing -- manifestly, as my Captcha notes. There also seems to be less comments. Captcha is a regulation. It is a barrier to participation in the blog. Using it, NLT treats us all like criminals. (I am laughing as I write this.) Probably, people who used to blog here now blog somewhere else where there are fewer barriers to participation.

If there were any profit in blog commenting, profits would be down.

To the point of the post -- Ohio is doing better, but it will take time to unwind and untangle the regulatory mess, assuming bureaucrats in state government (and public service and other unions?) let go of their reins of power. If everyone is clinging tightly to the status quo, nothing much can be done, can it?

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