15 Sep RedPrairie exec calls for 50 percent tax cut
Milwaukee, Wis. – Wisconsin can create a dynamic, creative economy in its largest city by dramatically cutting taxes and shedding its “welfare state” mentality, the leader of RedPrairie Corp. told a gathering of business executives.
John Jazwiec, who earlier this year made headlines when he criticized the state’s business climate, outlined what he acknowledged were radical thoughts before an Economic Trends Breakfast of the Independent Business Association of Wisconsin. Chief among his policy recommendations was a 50 percent cut in taxes, with the eventual goal of eliminating taxes.
Jazwiec laments the difficulty RedPrairie, a software developer for supply chain logistics, has had in finding and recruiting executive talent. He said RedPrairie has plans to grow into a $1 billion company within 18 months, at which point it would go public, but also said it still is considering a move out of its Waukesha County headquarters to a metropolitan area where it can find the creative class of workers it needs.
“Access to creative people is to modern business what access to coal and iron was to steel making,” he said. “In the changing paradigm, creative people don’t cluster where jobs are, but in fact in cities where there is creativity.”
Preaching the tax cut gospel of Ronald Reagan, he noted that the late president’s tax-cutting ideas once were dismissed as “voodoo economics” by his 1980 Republican primary opponent, George Bush, Sr.
“Most economists at the time were from the ‘Keynesian School,'” he said, referring to British economist John Maynard Keynes, “which basically said that raising taxes and spending more money for federal jobs was the way to stimulate the economy and create more demand.
“At the time of the Reagan election, more radical economists like Arthur Laffer believed that lower taxes and less federal spending would stimulate the economy by creating more supply. Reagan was elected, the rest is history. He went on to implement supply-side economics and henceforth we have enjoyed tremendous growth over the last 25 years in this economy.”
In an ironic twist of fate, he said other nations – Canada, most Eastern European countries, Ireland, and Russia – have taken these ideas father than America has, and the results have been nothing less than remarkable. He said Moscow now is the most expensive place in the world to live, and the construction crane now is its most prominent feature, but the most stunning transformation has taken place in Ireland. Thanks to low taxes, he said Ireland has gone from nowhere to creating more wealth than the United Kingdom.
By lowering tax rates, Jazwiec said President George W. Bush stimulated the economy to the point where growing federal revenues now are shrinking the federal deficit. He said Wisconsin needs to use the preceding lessons to create a new paradigm that includes an end to corporate welfare and hand outs that would represent more reckless spending. He also wants whoever is elected governor to pursue an immediate 50 percent cut in state income taxes and have a plan to eliminate taxes over time, and develop a plan to phase out the welfare system “by clearly giving its recipients a past-due notice.”
Jazwiec, who thus far has rebuffed Milwaukee’s attempts to lure RedPrairie to the city, also called on Milwaukee to become more committed to developing a creative culture. “I want Milwaukee to focus less on baseball teams that play in empty ballparks, and stop building fake creative places like the Third Ward that are greased by local politicians and developers, only to see people want to leave in a year,” he stated.
“Instead, I want Milwaukee to do the following: Start with the most creative areas in Milwaukee like the Brady Street area, and develop technology centers adjacent to them.
“I want Milwaukee and the state to be committed to transforming UWM into one of the nation’s elite schools. This will require attracting a dynamic world leader to lead the university, and attracting faculty through unprecedented levels of R&D money and facilities.
“This will also require the governor-elect to focus less money on what is good for small towns like Madison, and what is good for its largest single tax base – Milwaukee.”
Jazwiec believes the results of these moves would be dramatic. The creative would be attracted to the state’s largest city, capital would be deployed to new companies, and lower taxes would establish creative businesses and spur regional growth, he said.
Improving the business climate will require leadership, in part because many people fear the “world economy” and its implications for outsourcing and Chinese and Indian economic power. In reality, he said the development of the world economy is nothing new, and the facts don’t support people’s fears.
Quite the opposite, he said the U.S. continues to dominate the bulk of the world, and the reasons go back to the beginning of time. The reason America still is dominant, he added, is that it always has been “the most creative place on Earth.”
“I would further argue that this trait will continue to keep us dominant in the future,” he said. “Folks, the new driving force in the world, in my opinion, is creativity, and through technology it gets rewarded faster than ever.”
Taking issue with Thomas Friedman’s “The World is Flat” thesis, where geographic boundaries no longer matter, he said geography will continue to be a factor in where creative people congregate.
Approximately 38 million Americans, or 30 percent of the workforce, is employed in what he called the business of creation. They include people not only in science and technology, but people who add value – those in architecture, education, and the performing arts. Today, he said America’s creative economy is estimated to be $4 trillion, and represents 40 percent of the world’s creative output.
“Creative people go where there is creativity, and geography is irrelevant,” he said. “Shouldn’t we figure out where they go and what they value?”
As the chief executive of a software company, Jazwiec is in a position to know “the creative” are a different breed. First of all, he said, they are young, they don’t have families, and they front-load their careers. To the baby boom generation, they look like freaks, he added, but they value individuality and they don’t want to conform. They also value outdoor recreation, and finally and provocatively, they value their bodies as a canvas of creative expression – body building, tattoos, and piercing.
Interestingly, they also value wealth, which is in keeping with the recognition system of America. “They also are drawn to more organic, street-level culture, including coffee shops, art galleries, and book stores where creative people are found when they are working and when they are relaxing,” he said.
While most cities market themselves as great places to raise a family, that logic is lost on young creative workers due to their philosophy of career front-loading, he said.
“Perhaps the most important way to explain the difference between the young and creative is cities bragging about having professional sports teams,” Jazwiec stated. “The Pew Institute just issued a study that said young, creative people, when asked if they would rather watch [basketball star] Kobe Bryant play, or play Kobe Bryant in a video game, dominantly said the latter.”
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