A business agenda for the 90's - entrepreneurship - Cover Story

Nation's Business, Sept, 1990 by Mary McElveen

A BUSINESS AGENDA FOR THE 90S

The American economy underwent a sea change in the 1980s. A return to free-market policies that emphasized initiative and minimized government controls brought about an era of record peacetime economic growth.

Encouraged by tax policies that stimulated investments, entrepreneurship came into its own in the form of a record increase in the number of new and expanded small businesses. Many grew out of the technological advances that were themselves results of the American innovation and creativity that flourish best in a competitive environment based on market incentives and rewards for individual success.

Attracted by the health and stability of the U.S. economy, foreign companies substantially increased their presence in U.S. markets.

The impact of those developments went far beyond U.S. boundaries. In an age of instant communications, residents of countries impoverished by socialism became more aware than ever of the rewards of free enterprise. Communist governments collapsed one after the other.

America throughout the '80s therefore not only enjoyed record prosperity at home but also saw its principles prevail in many countries that had tried socialism.

Now, the nation is entering another era of tremendous change. New challenges at home and abroad raise critical questions about whether the country in general and business in particular will be able to respond effectively.

The key question: Can the U.S. maintain its preeminent economic position in the face of the increasingly tough competition it faces in global markets?

The answer, unfortunately, is not as clear-cut as it would have been just a few years ago. Business is asking whether the nation's power centers, principally Congress and the White House, have a proper grasp of the essential policies required to keep the country moving in the right direction.

There is a sense of a lack of leadership, of an inability at the highest levels to come to grips with problems that beset the economy. (One measure of the growing disenchantment is a U.S. Chamber of Commerce poll showing that 74 percent of respondents want to reinvigorate Congress by limiting the number of terms that members may serve.)

Business leaders warn that the U.S. will either move forward with public policies that enhance the ability of American companies to out-innovate, out-market, and out-maneuver their competitors abroad or it will be bowled over by them.

That warning results from what business sees as a resurgence of the policies that led to the economic slugishness of the 1970s - tax increases, excessive spending, high interest rates, increased regulation, and proposals for government-directed industrial policies supporting selected industries.

That trend is a matter of major concern to top business leaders.

"If the policy makers think all these elements are not going to impact the American people, our economy, and out international competitiveness in the decade ahead, they'd better think again," says James K. Baker, chairman of the U.S. Chamber of Commerce.

"One of the biggest decisions for a CEO is how to invest for the future," says Baker. "It's the culmination of these investment decisions that is at the very heart of the future of American business.

"What lawmakers need to understand is that CEOs can really be spooked by what's going on in Washington," says the Chamber leader, who is also chairman and chief executive officer of Arvin Industries Inc., of Columbus, Ind., whose principal products include auto parts.

With the economy slowing and the U.S. deficit ballooning as a result, Baker says, "the overall objective of Congress - for the benefit of all Americans - should be to provide a good industrial environment to encourage investments here and increase economic growth."

To assist Congress in reaching that objective, the U.S. Chamber of Commerce has developed the "Business Agenda for the '90s."

Its major components are:

* Fiscal policies that encourage job-creating savings and investment, provide incentives for work, and prevent the waste of resources.

* Ongoing regulatory reform to eliminate excessive government restraints that stifle the free-market system.

* Policies that permit development of productive work forces and avoid actions that lead to the elimination of jobs in the name of social progress.

* International-trade positions that foster open boundaries and reject protectionism.

* Support for improvements to roads, air-travel facilities, water-treatment facilities, and other public works that make up the nation's infrastructure.

Details of the background and recommendations to implement the components of the business agenda appear on the following pages.

"The issue is not whether the U.S. will dominate, for no country will dominate in the '90s," says the U.S. Chamber's Baker. "The question is whether the U.S. will seize the opportunities presented by a continuing globalization of commerce."

The answer will depend considerably on the business environment that Congress and the administration create, he says.