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Commentary

What Can Rockford Learn from China?

By Michael Kleen ~ Published June 12, 2012 at the Rock River Times

Li and Larry

Recently, China’s new premier, Li Keqiang, signaled a major policy shift when he announced that his communist government will reduce state intervention in the marketplace and give competition among private businesses a larger role in the economy.

“The market is the creator of social wealth and the wellspring of self-sustaining economic development,” Li said. He argued that reducing government’s role in the economy would unleash his country’s creative energies after a period of slowing economic growth.

It is an encouraging sign that a new generation of Chinese leadership is embracing private enterprise and entrepreneurship as engines of economic growth and prosperity. According to the 2013 Index of Economic Freedom, government spending in China currently accounts for 23.6 percent of their Gross Domestic Product (GDP), as opposed to 41.7 percent in the United States.

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Commentary

Public-Private Partnerships or Just Crony Capitalism?

Published September 19, 2012 at Rock River Times

“Public-private partnership” has become the latest buzzword among the political class and its supporters. Often used in combination with “economic development” (another favorite campaign slogan), it conjures the rosy image of government and the private sector walking hand-in-hand toward a more prosperous future. More careful observers, however, see nothing more than a mask for cronyism and corruption. In truth, these partnerships may enrich a few, but they hardly ever yield the promised benefits for the public.

The “public-private” concept works in several ways: either government partners with private business to build and maintain public projects, or government invests in private business in order to foster the growth of certain industries, supposedly for the public good. Rather than stay out of the marketplace, government officials use their influence and authority to grant special favors to their friends and colleagues in the business world.

When government officials and business leaders maintain a close relationship for their own financial benefit, as is often the case with public-private partnerships, it is sometimes called “crony capitalism.” Crony capitalism is marked by favoritism when it comes to handing out legal permits, government grants, business contracts, and special tax breaks. Self-serving friendships or familial ties between businessmen and government officials mean that anyone not on the “inside” of these relationships is excluded from the process.

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Commentary

In Praise of the Wage

Published August 22, 2012 at Rock River Times

It is not easy to start, own, and run a business, but it is easy to overlook this fact. Most people, after all, have never owned a business. While clocking in and out every day, it is easy to imagine that your employers are living the high life while you and the other employees toil around them. Reality is much more complicated, however, and it may just be the simple wage earner who has the last laugh.

For every successful business owner, there are many more whose businesses failed, or who have struggled for years just to stay above water. Whether it is a mom and pop store or multimillion dollar operation, the fate of every business is ultimately determined by the whims of the marketplace. Circuit City, Frontier Airlines, Hollywood Video, and Borders Books are just a few of the hundreds of companies that have gone under in recent years. Each one represented the dreams and desires of an entrepreneur or group of entrepreneurs. Each took years to build and seemed, at one time, to be unstoppable.

Those are just some of the most prominent examples. According to a special tabulation by the Census Bureau, 25 percent of businesses founded in 1992 did not make it past their first year. By 1997, less than 50 percent of those businesses were still in operation, and by 2002, only 29 percent were still operating. Of course, those numbers vary according to industry, but overall, they paint a very grim picture. For every business that survives to its one year anniversary, there are many more that never even make it to opening day.

Read the entire column at the Rock River Times!