How to Build Economy

10 March 2011

Not since Teddy Roosevelt’s presidency has America had to look at itself as a business collective. The entire country has to find its role in the economic recovery process. Individuals, towns, cities, and states need to create enterprise programs that will lead to new economy and job creation. The results have to be long lasting, forward thinking and innovative – no looking back. It is not just America of course, the UK, China, Japan, Brazil, and India are all fighting to create better and stronger economies.

Every single entrepreneur has the responsibility to at least weigh the economic value and strength of their company. Will it create jobs? Will it help their community? Is the company testing out a new market or industry? Is it supporting other entrepreneurs? Is it original and do we need it now? The argument has been posed by Intel’s CEO, Andy Grove that we need manufacturing not enterprise. This statement comes from his growing frustration with the unemployment figures of Silicon Valley (it is higher than the national 9.7% average). The statement has been received with a ravenous rapture from people desperately clinging on to the past and afraid to embrace something new and unknown. Sure, China and India are now leading in manufacturing and it is doing wonders for their middle class, but they are where America was 60 years ago, therefore we need to be looking at the next thing. There is also the question of who will buy what they are manufacturing if leading western economies continue to dwindle. Andy Grove thinks enterprise will not sustain economy, but was is not enterprise that gave us manufacturing in the first place? If we all continue to support innovation and enterprise it will lead to new sectors and industries, ones that will then lead to more employment and economy.

We are not totally discrediting manufacturing, it is true that manufacturing leads to a lot of job creation, however it needs to be a new type of manufacturing one that is sustainable, intelligent, ecologically friendly, and immediate. What Andy Grove suggests will take at least 20 years to implement we cannot expect for a whole new manufacturing sector to rise in a flash, so what do we do now? How do we create jobs now? Below are our possible solutions and observations;

  • Funded training programs for jobs that require a skill which cannot be duplicated by technology and are needed right now, such as nursing, mechanics, book-keeping, and technicians.
  • Scholarships for students wanting to study engineering, science, and green technology. We have a huge deficit of people with these skills, as most are retiring and we need them to create lasting innovation.
  • Change school system education to inculcate engineering, problem solving, and innovation skills. Our entire psychology needs to change. We need schools to teach people how to be better thinkers in order create leaders.
  • Increase incentives for enterprise. There are cities like Detroit and Glasgow desperately needing new thinkers and creators of grass-roots businesses. These type of cities will give rise to new fruitful industries, because they have no other choice but to create opportunities for themselves. Of course the next layer of enterprise is that it will then create jobs.
  • Stop outsourcing everything and create less expensive alternatives in our own respective country. For example, if a local fashion designer wants to produce a collection lets engineer ways to make factories run more efficiently and cheaper, so he doesn’t have to go abroad. A local wants to distribute their own brand of juice, lets find ways to cut on distribution or create a small, efficient, and flexible factories.
  • Change in the psychology of the ‘American Dream’, our priorities need to change. It is not about owning the the latest products, but putting in hard work at every level to create and support businesses growth.
  • Change the psychology of economy. We all presume that we need employment, but that is technically quite archaic thinking. We need to give graduates and the unemployed skills that will create autonomy, push them to start their business where possible. If you give people skills that provide them with a business that will sustain a family that is better than employment. Employment causes dependency and a lazy psychology that someone else will or should give you an opportunity. There are programs being sponsored for graduates to prepare them for innovation and business, such as INCUBATE8 at THECUBE coworking space in London. In the long run all these new enterprises will create jobs, but right now we need to focus on creating enterprise not employment.
  • Creating new sectors, for example Brazil is trying to turn the traditional economic structure upside down. They want to create an economy that does not destroy the country or its resources. They want to use their own knowledge, technology and resources to create an economy that is sustainable. The Brazilian government has coined their economic goal to be a “environmental superpower”. They currently lead the world in the use of alternative energy. About 50% of the cars in Brazil run on ethanol fuel.
  • In the West we do not need more product, therefore to just create manufacturing for the sake of its not going to help. Who will buy what is being produced? What we need is to create sustainable and intelligent manufacturing that is centred on green technology. There are many emerging sectors within this industry, which will need manufacturing for example, in construction the use of bamboo is becoming more popular in the United States, turning unused farmland into ethanol farms, which is much better for the environment, or solar panel manufacturing. Not only will the manufacturing in these sectors create jobs, but they will be providing products that will be essential to our way of life. If we produce products that people need, there will automatically be a market and thus create lasting economy. We have become used to products satisfying ‘wants’, but ‘wants’ are too fickle and unreliable to create a lasting economic impact.
  • Creating strong start-ups will also ensure that we create a better economy. Vulnerable startups that do not last are not good for the entrepreneur, potential employees, or for local businesses as they take away economy instead of creating it. For this reason Idea Engineering was created to act as a metric for which to measure the strength and in consequence the success of an enterprise. More people would feel confident to choose enterprise if risk was reduced.
  • The psychology of pricing must also change. The population must change the way they think about the pricing of products, as western manufacturing will be more expensive due to labour regulations. The solution of course is not to outsource, but create a population that can afford the products that are being made nationally. Henry Ford was credited for creating a car that was affordable but he also created a wage that would allow his employees to afford the car.

In the Autumn THECUBE will be starting a THINKTANK to discuss and open up conversations around this topic.