When governments compete, you win

Part of what’s so frustrating about doing business in much of the west is that you feel like the government doesn’t care about you. Sure, I doubt running a hot dog cart in Sudan is much fun, but the big western governments really take the cake for using and abusing the productive class. And unlike in poor, highly corrupt countries, they tell you it’s for your own good.

Plenty of American businesses and capitalist advocates have long decried California as a black hole of endless taxation and regulation not conducive to business. If it weren’t for the state’s scenic coastline, it’s proximity to high-skilled emigrant nations, or Katy Perry’s bikini-clad California Gurls, more high earners and entrepreneurs would have left a long time ago.

In reality, California is a microcosm of the United States’ economic attitude. Both figure they can harass their citizens with endless taxes, paperwork, regulation, and overall grief, free from the fear that anyone will pack up and ship out because their place is the best on earth.

That’s why I always love to see an in-your-face fight for economic competitiveness. Texas Governor Rick Perry is in California this week meeting with CEOs at major firms in four major cities, wooing them to box their stuff up and into a U-Haul heading his state’s way. The brouha began when Perry voiced a radio ad to air in California and tell everyone how their state was an economic death trap. Or something like that.

California Governor Jerry Brown responded in diplomatic fashion, saying coverage of the attempted poaching tour is “not a burp… barely a fart”. Stay classy, Sacramento.

Beyond the provincial level in the United States, I believe you’ll begin to see an increased movement by world governments to woo businesses to their countries on the retail level, as recently independent or developing countries vie to increase their position. There will be more of a movement to attract small-scale business and entrepreneurs, just like we’ve seen with Startup Chile and similar programs.

The Republic of Georgia, for instance, has run aggressive ad schedules in the US and overseas. They were recently ranked the 21st most competitive economy by the Heritage Foundation, placing ahead of Japan and substantially above Spain, France, Portugal, and Italy. Yet you probably wouldn’t know it. These countries need talent and getting in now will make you a pioneer.

For many large businesses, it’s just not possible or competitively feasible to move from their current country to another. Yet that’s just what insurance firm Aon did when they moved from Chicago to London last year.

That kind of move wasn’t easy what with western countries’ tendency to make tax policy designed to forever trap your capital within their borders so it’s more easily accessible to them. Of course, many companies see benefits far beyond tax savings, with overall friendlier business climates beyond their own shores.

While it won’t develop overnight, the race is on for the world’s increasing number of competitive economies to grab their share of the pie. That can’t be good for today’s big players, but I don’t suspect they see it coming yet. History says their kind never does.