PUBLISHER'S MESSAGE - June '98
by Ed G. Lane

Less Will Create More 
How long will the U.S. and Kentucky economies flourish?

Conduct a survey of business owners and the CEOs of Kentucky’s top 50 publicly-held corporations and most will say that business is as good as it gets. At this time, a good business environment is a given.

Now, the big question is: how long will the boom economy last? Excluding asteroid hits, war, nuclear proliferation, plague, weather, disasters and events out of our control, to this writer, the future looks encouraging.

Here are the primary reasons an extended period of prosperity is likely:

• A balanced U.S. budget has worked effectively to lower interest rates and reduce inflationary pressures.

• The Tax Reform Act of 1986 caused a major economic downturn in the early ‘90s when the code eliminated tax shelters and passive losses. On the positive side, the Tax Reform ‘86 creates incentives for profitability. Today capital is invested to create wealth and productivity instead of tax shelters.

• Lower personal and corporate tax rates, a la Ronald Reagan, are motivating individuals to work harder, longer, and more enthusiastically.

• Welfare reforms are creating incentives for long-term unemployed -- yet able-bodied -- persons to get a job.

• Computer hard and software, robotization in manufacturing, office automation, and accelerated communications (fax, e-mail, and digital phones) are all increasing productivity in manufacturing, service, and white-collar business segments.

• Globalization of business is expanding capitalism and the free market economy. Worldwide competitive forces are increasing productivity gains and lowering the costs of goods and services.

• The end of the cold war permits more capital to be invested into education, wellness, healthcare, environment, entreprenuerism, and research, all areas that increase economic vitality.

• High levels of consumer confidence are motivating a more positive and self-confident consumer outlook for the future.

• How can government use monetary policy to maintain this excellent business environment? Federal, state and local governments need to use surplus funds to reduce government debt and cut taxes.

• Paying down government debts will lower interest rates, reduce inflationary pressures and make additional investment capital available for the private sector. Lower tax rates will incentivize workers and investors to commit more of their energy and capital into profitable business opportunities.

In other words, less government bureaucracy, taxes, and debt creates greater prosperity for America and Kentucky.

Ed G. Lane is chief executive of Lane Consultants, Inc., and publisher of The Lane Report.

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