The American economy can go either way according to most newspapers and television commentaries. The experts say that we have a 50% chance of going into a recession while some say we have almost no chance. Trying to decipher their confusing messages can be difficult. That leaves most American businesses unsure of what the future holds for them. Are they still going to be able to compete or are they going to suffer a slow and painful decline downwards. The best way to answer that question and determine how to improve the business environment is to look at the American businesses strengths and weaknesses.
Success and failure is all about strengths and weaknesses. When we rationally see the strengths and compare them against the strengths or weaknesses of other countries we can better determine our chances of success. It is almost the same as when you bet on two boxers one of which has endurance and the other one quickness. The one you feel will win depends in part on how you see the situation. If you feel the quickness will take out the opponent in the first few rounds then he is the better bet but if you feel that the two boxers are going the distance then endurance counts.
Looking at the American business world and comparing it to the challengers you can also see better who is going to win in the end. We know that the world is a high-tech place where efficiency and cost matter. The one who produces the cheapest products is likely to win as long as their products have reasonable quality and don’t break down often. With Chinese cheap products and America’s high quality both countries will need to come closer to the middle.
Strengths of American Businesses:
High Technology: Powerful and growing businesses require email, Internet, cell phones, computers, robots and more. The technological advances of the U.S. are difficult to surpass and few countries even come close. American businesses can grow simply because they can manage different international locations as though they were a block away. Few foreign countries can do this. In addition, America also has the ability to develop and implement modern technology like robotic arms and complex systems that increase productivity.
Power Supply: China is attempting to get its hands on as much natural resources and energy as possible. The U.S. is also doing this but is much further in the game. While the U.S. is moving towards alternative energy supply and thinking beyond fossil fuels China is still trying to accumulate basic energy. American businesses have no problem with black outs, rolling power outages or a lack of energy. This is a benefit because their environment becomes predictable.
Strong Law Enforcement: It may seem silly and out of place but a strong law enforcement system helps to keep the business environment fair and equitable. When businesses can be cheated when making partnerships, employees embezzle and politicians bribed there is lots of risks built into the environment. Businesses want to know there is a deterrent and opportunity to regain what is lost through unfair practices. You will find that China as well as most nations outside of Europe or the U.S. has difficulty curbing crime.
Sound Fiscal Policy & Self Adjusting Markets: American policy makers have been generally concerned with how well the economy is doing. The democratic system allows the population to remove senators, presidents and congressmen out of office when they are not producing results. Therefore, a single politician can complete little damage in a single term. When small mistakes happen the markets can adjust themselves by offering something new that makes money. For example, if people demand companies to reduce pollution then these consumers will gravitate towards clean businesses while leaving the rest of the businesses behind.
Weaknesses of the American Business:
Poor Public Education: The American education system is declining and children are falling behind much of the world in terms of science, languages, math, and more. The advancement of these core subjects are important for the improvement of society as the new high-tech world will need scientists and technology workers like never before. However, as we keep allowing skilled workers to immigrate our school systems are falling behind only because there is little direction and lots of politics.
High Labor Costs: Workers are cheaper then they are in other countries. The problem in the U.S. is that companies aren’t getting what they are paying for. The average high school graduate is barely able to grasp the concepts of a manufacturing business let alone work within it while the government raises the minimum wage. A Chinese worker is able to press a button like the American worker but for about 1/10th the cost. Only productivity will make the American worker worth his/her wages.
Taxes: American businesses pay a lot of money in taxes while companies from other countries may pay a lot less. The taxes in American businesses are simply extra overhead that must be pulled from the cost of the product. In a tight economy where people don’t want to pay extra the cheaper products (with less tax burden) will win out. Have you ever wondered what happened to the television and radio producers in the U.S.?
International Policy: America has come to mean, “bully” to many people overseas. To thwart America’s power is a sign of resolve and fashion. As our politicians continue to play favorites with countries that violate international law, demand compliance with American desires and try and finagle other countries its reputation declines. A bad reputation means that both international businesses and whole countries may not only distrust us but prefer to do business with someone else.