Sunday, Nov. 2, 2008 | 2 a.m.
The following commentary was written by Ropchai Premsrirut, a local businessman and former assistant professor of economics at UNLV. His words describe what I believe is the best part of the American capitalist system, and that message needs to be shared before Election Day.
By Ropchai Premsrirut
In response to Sarah Palin and the Republican Party’s campaign message and solution to the economic crisis of “Drill, baby, drill,” Democratic vice presidential candidate Joe Biden has used this message over and over again on the campaign trail: “Jobs, jobs, jobs.”
Biden believes that creating jobs at home is the most important government action to solve the current economic crisis. At first, I did not really pay attention to his message.
I always believed that, under the so-called capitalistic society we live in, the individual entrepreneur is motivated by self-interest. He will choose the economic policy or tools that help him maximize his profit.
I saw nothing wrong when American entrepreneurs chose to invest abroad, where labor and material costs are much lower. These entrepreneurs can bring finished products back home to sell.
American consumers can enjoy the products at lower costs. However, in the current economic crisis, my basic way of thinking has changed.
The national unemployment rate has gone up to 6.1 percent (as reported in September) and is climbing. This means that close to 10 million workers are out of work and the gross domestic product is expected to decline by as much as 4 percent in the fourth quarter.
I am frightened because our economy is in a recession and shows signs of moving toward depression. You can imagine the consequences of being an unemployed worker: sadness, loss of confidence, family breakdown and, in some cases, even suicide.
What would happen to the community as a whole if a lot of people were unemployed? Crime and juvenile delinquency would skyrocket. I would rather see put into action “stop, stop, stop unemployment now” before it is too late and we spiral down further into a depression.
In 1929, the first year of Herbert Hoover’s administration, unemployment was at about 3.2 percent. After the stock market crashed in 1929, unemployment climbed to 8.7 percent in 1930, then to 15.9 percent in 1931. It was 23.6 percent in 1932, and as high as 24.9 percent in 1933, before Franklin D. Roosevelt enacted the “New Deal.”
Can you imagine if we hit an unemployment rate of 25 percent? That would be almost 40 million workers without jobs. The Obama-Biden plan is nowhere near as drastic as the New Deal, but some government intervention is needed to spur economic growth and job creation.
Rather than just creating more government agencies, the Obama-Biden plan would make government a partner with entrepreneurs by offering tax incentives to small businesses to create jobs and more initiatives into the renewable energy industry that could help create as many as 5 million jobs over the next 10 years.
As far as private business, American entrepreneurs should try to change their philosophy, replacing their self-interest economic approach with a more public or social economic approach. I do not mean that we have to practice socialism, but just sacrifice temporarily our profit-maximizing approach to solve the current economic crisis. They can start right now by creating jobs at home.
At the beginning of August, I took over control of Makino, a Japanese seafood buffet restaurant in Henderson. Sales per month have declined more than 50 percent. Revenues fell from more than $300,000 to now $140,000 per month, yielding me a current operating loss of more than $20,000 a month.
A lot of my friends have recommended that I close the restaurant. This would mean I would lose all our capital investment of more than $1.5 million and have to lay off 30 employees. However, when I thought of the country’s current economic conditions and the 30 employees — waitresses, janitors, chefs and cashiers — who depend on their jobs (some have children to take care of) and live paycheck to paycheck, I did not follow my friends’ advice.
I saw it as an opportunity for me to do something to help the community. Though it is a small contribution, if a lot of entrepreneurs were to take similar action, our economy would recover in the near future.
When I took over the management of Makino, my economic impact in the community was about $150,000 per month. This included payroll, rent, utilities, vendors, sales tax, legal help and accounting. Actually my community and national GDP contribution comes to about $10 million or more using a spending multiplier of 5. (The multiplier is the number of times money changes hands from one party to another per year.)
I have to carry a loss every month, and I believe I need six to 12 months to bring the business back to profitability. I do not want to lose that much, but when I think that I have done something to help the process of economic recovery, I feel that it is worthwhile for me to do so.
If a lot of people do something similar, it will support our community and country, and help Barack Obama and Joe Biden to achieve their goals of creating “jobs, jobs, jobs.”
Thank you. My friends and I will see you at Makino.
Brian Greenspun is editor of the Las Vegas Sun.