Scott S. Yu
First Place Winner
Montgomery Blair High School
Silver Spring, MD
Facing the Economic Challenge with “Greatness”
When the young, enthusiastic Alexis de Tocqueville embarked on his tour of America in the early 19th century, he surely did not foresee the profound, indelible impression America would leave on his mind and soul. Through his travels, the youthful French historian was delighted and at the same time surprised by the integrity of this fledgling democracy and its robust market economy that seemed to promise prosperity for all. Though Tocqueville would later expound much upon his observations of these wondrous institutions and practices, what astounded him most was not America’s versatile constitution, nor her mannerisms and idiosyncrasies, but the striking resilience of her people. “The greatness of America,” Tocqueville writes in his renowned Democracy in America, “lies not in being more enlightened than any other nation, but rather in her ability to repair her faults.”1
This resilience – this indefatigable spirit so distinctly American – has since been challenged. Wars hot and cold, political scandals, and unsurpassed economic plunges have already tested our hardiness, and a new financial crisis of magnitude unprecedented once again calls upon our strength. As recent headlines freely speak of such unsettling topics as rising unemployment, the closing of American factories, and the freezing of credit, we of the Greater Washington area understandably might feel confused, betrayed, or helpless, and begin to lose confidence in the same industries and institutions that were once the pride of the nation.
But hope is not lost – far from it. In spite of the deplorable figures and the cynicism of detached pundits, Greater Washington still boasts of one of the most economically successful and sustainable regions in the country. Through proper coordination and local effort by businesses both large and small, Greater Washington will not only rebound but soar higher than ever before, elevating the rest of the country with it.
Upon experiencing America, Tocqueville was at once inspired by the aspirations and energy of the individual. Perhaps surprised, he remarks, “What most astonishes me in the United States is not so much the marvelous grandeur of some undertakings, as the innumerable multitude of small ones.” Indeed, the expansive spectrum of socioeconomic levels and the diverse culture of Greater Washington establish local communities that have their own cultures, histories, and demographics. Consequently, as small business is a critical component of the Greater Washington economy, that these unassuming enterprises successfully overcome the daunting economic challenges facing them is essential.
First, small businesses should realize and take advantage of the benefits of their location. Situated next to the nation’s capital, these businesses should realize that the federal government is an essential resource not to be overlooked. The government is “the largest single technology consumer in the world” and has growing purchasing power that has surpassed $50 billion2, but its influence far surpasses that of a major customer. As proven by Congress’s substantial bailout plan, political policy easily causes ripples in the business world. In these trying economic times, small businesses should utilize resources provided by the government, seek governmental support, and articulate their own interests. Three Small Business Development Centers managed by the federal government, in addition to numerous privately-owned firms, promise to provide entrepreneurs with steadfast support and disinterested guidance. The small business community should also cooperate synergistically by forming chambers of commerce. Though the voice of one lone business is drowned out by the din of big corporations, by working together, small businesses can amplify the representation of their interests and coordinate their agendas and lobbying efforts.
Though the federal government is a valuable resource, the most immediate and effective solutions to recent economic challenges start from within. Small businesses should aim to restructure without cutting jobs and to maximize efficiency. Cutting out middlemen and consolidating vertically is a strategy that allows these businesses to save money and invest in improving the quality of goods and services or lowering prices to attract vaster customer bases. For example, money saved on accounting or cleaning services could go towards the purchase of better ingredients, which could make the difference between a competitive local Takoma Park pizza parlor and a compelling one. The goal is to ensure that businesses operate on the production possibilities curve and allocate resources at maximum efficiency.
Another strategy for small business is to improve customer relations. Doing business more efficiently is meaningless without steady customer flow. In other words, now is not a time to expand but a time to fortify and to diversify. Active commitment and catering to the needs of the immediate residents is the secret to discovering an economic niche. Additionally, businesses without a customer base ought to find one. A tourist shop on Connecticut Avenue, for instance, might consider diversifying its merchandise stock to appeal to locals when tourism slows down.
The responsibilities and strategies for small businesses are many, but so are those for large companies. Like small businesses, large companies must also restructure effectively to maximize productivity. Money is scarce, but by decentralizing organization, reducing unnecessary expenses, and increasing stockholder equity, large companies can still maintain or even increase their capital. Insurance diversification is another strategy companies can pursue. The collapse of major banks and businesses lately have demonstrated the necessity of insurance. By purchasing insurance from different providers, companies not only ensure a better safety net for their employees but also invigorate the insurance industry of Greater Washington. Larger companies can also take measures to redefine their public image to attain a wider customer base. By cutting back on profit margins and slashing prices (even a little), businesses appeal to a greater proportion of the public and build a foundation for consumer trust and loyalty that will benefit the business when the economy improves.
Greater Washington offers to large businesses the same advantage of proximity to the federal government. While small businesses face the difficulty of having their voices heard, the eminence of large corporations draws greater attention. But a loud voice is not necessarily heeded. In fact, because large companies do not enjoy the same local connections as their tinier counterparts, they are not as close with local legislators or even with representatives in Congress. Consequently, to cooperate with chambers of commerce and become rooted in local communities is a prudent and even necessary decision for large companies to increase their influence. These partnerships would provide a valuable opportunity for a large company to strengthen its presence in individual communities, reach out and become closer to more customers. On the other hand, small businesses can enjoy increased prominence, and their agendas will be given greater weight by the government.
Cooperating to articulate interests to government is only a starting point. Currently, banks are still hesitant with loans, despite historically low interest rates. Thus, an attractive solution would be for large companies to lend to small businesses. This would both provide faltering large businesses a new, valuable opportunity for generating revenue and small businesses capital for growth. Such a venture into a new business area exemplifies the need and advantage of exploring new markets. The story of Silver Spring, Maryland testifies to the importance of new visions and flexible business plans: Twenty years after decline in the 1980s, Silver Spring underwent dramatic revitalization. The city renovated its downtown, and major franchise companies vied for spots at budding commercial cynosure, accelerating Silver Spring’s rejuvenation as a major business hub. Similarly, large companies should scout for similar opportunities in Greater Washington. With so many interstates, highways, and a pervasive, well-maintained public transportation system, more expansive commerce is the only thread missing from completing the Greater Washington network and spreading prosperity everywhere from Richmond to Damascus.
Nor is the search for new markets is limited to the Greater Washington region. A preponderance of national and international airports makes Washington a nexus for global commerce. Following the example of VA Governor Gilmore years ago3, in which he traveled to East Asia to promote Virginia as a business location and exporter, businesses can look beyond Greater Washington for opportunities abroad.
Finally, investment in education (such as the programs sponsored by Junior Achievement) is a smart choice that will only brighten Greater Washington’s economic future. Better schools reduce structural unemployment by producing more qualified students and attract more employers; better schools raise property taxes and home values; and better schools will teach the future businesspeople of tomorrow to be wiser and to avoid the mistakes of yesterday. In the words of Franklin D. Roosevelt, even during economic turmoil, “The school is the last expenditure upon which America should be willing to economize.”
Without question, the economic path that faces us is not easy, but Greater Washington’s incredible diversity, talented human resources, and strategic location are tools that will help us navigate the rocky road ahead. These resources and our willingness to use them, without a doubt, epitomize what Tocqueville called “the greatness of America.”
- Democracy in America, Volume 1 (1835) by Alexis de Tocqueville. Chapter XIII.
- Greater Washington Initiative’s “Quick Facts”
- “Governor Gilmore to promote Virginia in East Asia.” from the Virginia Economic Development Partnership