There are No Shortcuts to Strengthening the Economy. It's a Long Game. Boosting the economy by lowering tax is like a magic weight loss pill. It might work in the short-term, but it's a terrible long-term strategy.
By Todd Hirsch
Opinions expressed by Entrepreneur contributors are their own.
We've all seen the ads on TV, in print and on social media; the miracle cure to weight loss, the pill to give us more energy, the powder that will add muscle overnight. These instant-success promises all have one thing in common — none of them work. If they really did work, the planet would be full of perfectly fit, trim and energetic people.
A healthy, active body isn't attained overnight with a magic pill. Any physician or fitness expert would tell you that overall health and vitality is achieved over time. It's more about lifestyle than an instant miracle cure.
The economy is the same way. Our impulse is to demand a program or policy that will deliver instant results, something that will create thousands of jobs and quickly attract billions of dollars of investment. This impulse is particularly strong among our politicians, who desperately want to take credit for immediate economic success.
But like the human body, building a strong, resilient economy takes time. It's a long game. Cutting taxes or chopping regulations (aka red tape) are the usual policy prescriptions for those seeking immediate results. And often these measures do produce immediate results. But they're not the kind of results that will lead to long-term economic prosperity.
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Tax cuts are a particular favorite of politicians seeking instant gratification, and it's true that sometimes taxes are too high and need to be reduced. But as a long-term economic strategy, cutting tax alone isn't sufficient — in fact, it may do more harm than good if it leaves governments with fewer dollars to invest in education and infrastructure.
The same goes for cutting red tape. Certainly, governments should always be re-examining current regulations, and of course some regulations need to be updated or changed. But simply eliminating regulations for the sake of it may leave the economy unbalanced, resulting in unintended consequences, environmental damage or even loss of life.
Both cutting tax and regulation are like a magic weight loss pill full of caffeine or something to hyper-stimulate the body's nervous system. They'll both produce a result in the short-term, but it's not a sensible or healthy long-term strategy.
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Four long-term investments will pay off — both for your body's health and for the economy.
1.You strengthen the body by eating properly. In the same way, you strengthen the economy by investing in education. From early childhood education, to primary and secondary, on to post-secondary and finally continual skills development and lifelong learning — a strong economy needs all of it. We're only as good as we are educated and skilled.
2. You strengthen the body by exercising regularly and appropriately. Similarly, you strengthen the economy by building the transportation, technology and digital sectors. Physical infrastructure such as roads, airports, water ports and rail continue to be the backbone of our economy. And digital infrastructure such as broad-band wireless networks is increasingly essential to growing a vibrant economy.
3. You strengthen the body by getting plenty of sleep. You strengthen the economy by reducing carbon and other greenhouse gases, and committing to net-zero carbon targets. This is sometimes controversial, especially in oil and gas producing regions. But we need to focus on the long-term, not the short-term. Ignoring the scientific warnings and plowing ahead with the status quo may help us preserve some short-term growth. Yet the savings of doing nothing today are far outweighed by the economic and environmental catastrophes that await our inaction.
4. You strengthen the body by understanding the connections between body, mind, spirit and soul. You strengthen the economy by protecting the vulnerable, emphasizing inclusion, embracing diversity, denouncing racism and fighting hate. You foster creativity by investing in arts and culture. And you seek to broaden the scope of opportunities for the underprivileged. An economy isn't great until it's great for everyone.
There's no magic pill for perfect health. And there's no short-cut to long-term economic prosperity. Both take time, commitment and patience. The good news is that if we focus on what's important — education, infrastructure, environmental stewardship and social inclusion — we will build a strong, dynamic and resilient economy for the long-term.
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