PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

States of the Week: Texas and Florida – Recovering from the Devastation

By at 13 September, 2017, 10:07 pm

  

by Raymond J. Keating-

Small Business Policy Index 2017: Texas ranked second best among the 50 states. Florida ranked fifth best among the 50 states.

SBE Council’s “Small Business Policy Index 2017” ranks the 50 states according to 55 different policy measures, including a wide array of tax, regulatory and government spending and performance measurements.

Small Business Tax Index 2017: Texas ranked third best among the 50 states. Florida ranked sixth best among the 50 states.

SBE Council’s “Small Business Tax Index 2017” ranks the states according to 26 different tax measures. Among the taxes included are income, capital gains, property, death, unemployment, and various consumption-based taxes, including state gas and diesel levies.

Hurricanes Harvey and Irma

Parts of Texas, of course, were devastated by Hurricane Harvey, and most of Florida was hit hard by Hurricane Irma. Prayers and aid continue to flow forth from across the nation.

In terms of the economics, a wide range of estimates exists in terms of the total costs of these destructive and deadly storms, with one ABC News report pointing to anywhere from $150 billion to $290 billion, based on an early projection by Moody’s Analytics and another from AccuWeather.

Make no mistake, these dollars reflect vast material losses for individuals, families, small businesses and large firms. As noted, for example, in a SmallBusinessTrends.com report:

“In Houston specifically, wind and serious flooding has left businesses with damage to their buildings, loss of inventory, mold issues and more. And with airports and major roads just starting to reopen, businesses may also struggle with reaching their employees and potential customers even if they’re able to get the damage cleared up quickly.”

A Reuters story relayed the challenges for one small business in Houston:

“Josh Beasley and his fiancé bought Houston’s Body3 Personal Fitness on July 1, less than two months before Tropical Storm Harvey swamped the gym with a foot of water and left behind the dank stench of fetid mildew.

“Wading into the Stygian dark of the powerless gym on Sunday, the day after the storm hit, Beasley said he was overwhelmed by the looming cleanup and repair. He estimated it could cost up to $35,000.

“‘To walk in and see all that water was just devastating,’ said Beasley, 38, as industrial fans dried the 6,700-square-foot (622 square-meter) complex in the city’s Oak Forest neighborhood. ‘But as small business owners who depend on this place for our livelihood, we have to rebuild.’”

It must be understood that disasters such as these two hurricanes are in no way positives for the economy. ABC News reported, “But Mark Zandi, chief economist at Moody’s Analytics, said rebuilding from the back-to-back storms will boost the U.S. economy in the fourth quarter of this year and into 2018.” But any such effect in GDP numbers must be understood within the context of the massive destruction of residential and business assets. As much as Keynesian economic thinking might tempt people to think that destroying assets and then rebuilding is good for the economy – along the lines of the absurd notion that World War II ended the Great Depression – the real world is quite different. The dollars spent in Texas and Florida are desperately needed, but the entire effort is about recovering from great losses, not about economic growth.

Fortunately, as noted above, both Texas and Florida offer policy climates that are friendly toward entrepreneurship, business and investment, which will make it easier to attract the necessary investment and labor needed to rebuild, as well as then subsequently being well positioned for future economic growth.

The entrepreneurs, small businesses, investors and workers in Texas and Florida are a resilient bunch, and I have no doubt that each state will recover and eventually be stronger to drive economic, income and employment growth forward.

Hurricane disaster assitance is being spearheaded by the SBA – visit here for more information or support.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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