CEOs of major New England-based companies are worried this year about a reasonably predictable list of immediate problems which impact the local and world economies: Chinese slowdown, the European refugee crisis, lack of domestic liquidity driven by requiring concentration of big bank capital, the problematical Middle East, increased volatility in the capital markets.
But the Tuesday panel convened by the National Association of Corporate Directors-New England, consisting of Putnam Funds President Bob Reynolds, Mass Mutual Life’s CEO Roger Crandall and Bain Capital’s Managing Director Steve Pagliuca, also hit upon several systemic issues which theoretically may be within our own reasonable control if we could only find common political ground.
The Retirement Gap. People are living longer. Individuals with a work-place savings plan (such as a 401k) are far more successful in saving for long retirement. Increasing medical costs, likely to fall in larger measure on individuals, further drive the need for robust retirement funding. In the new economy, many workers are now without direct access to a work place savings plan. State or national programs are needed to drive robust retirement investment.
Making Greater Boston Competitive. The three fastest growing cities are all in Texas. Texas, Florida, Arizona and other jurisdictions are growing much faster than Massachusetts. Many high growth jurisdictions are without local tax. Excessive and over-lapping government (including town and city) regulation make greater Boston unaffordable both for business and for home buyers. We need new approaches to taxation and infrastructure, lest in the long run greater Boston/Cambridge prove non-competitive for our increasingly mobile technology economy.
United States Policies Don’t Help. Our visa policy drives the very best students from overseas, educated here, to export their expertise and energy offshore. Giving every offshore graduate a visa would be better for the United States economy. Further, domestically based businesses which repatriate to the United States the profits they accumulated offshore incur a 35% federal corporate income tax; this drives United States-based companies to open new facilities overseas rather than repatriating the money and creating jobs here in the United States. With the 35% savings, one panelist noted, “I can build an entire factory in India. That factory is free.”
Education Education Education. We need better education at every level. Outside of Eastern Massachusetts, secondary and high school education is grossly deficient. Below the very highest levels, we are also not training people to support industry here; a greater role for community colleges was urged. Non-elite private colleges are overpriced and will be shaken out. Companies themselves should be incentivized, perhaps tax wise, to pick up some of the training effort. There was very robust panel support for comprehensive societal focus on improving education at every level.
Emerging Markets. They are volatile. Today China is best positioned, with banks and infrastructure, to ride out the volatility. However, India and other emerging markets have huge potential. “Demographics don’t lie.” “Our biggest trend in our lifetimes is globalization.” One needs a long-term strategy: any business planning for the next fifty years absolutely requires an Asian and an African strategy be successful and competitive.