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If business should invest during tough times, why not government?

"Tough times have a way of revealing what you really believe," a well-known leader said during the recession. His strategy, he said, was to continue "to invest in technology during the downturn because we believe our future growth depends on it."

Those words were not spoken by President Obama, who spoke at length Tuesday night in his State of the Union address about investing in innovation as a way of fostering future growth. Rather, they're attributed to Ivan Seidenberg, the chairman of the elite association of CEOs known as the Business Roundtable.

He's hardly the only top executive of a major corporation that's advocated a similar point of view. Here's ExxonMobil senior vice president Andrew Swiger in November 2009: "As we look beyond the current economic challenges, we see tremendous opportunity to apply our leadership in technology and project execution to invest during the downturn." Automatic Data Processing CFO Christopher Reidy told investors in May that back in the 2001 recession, his company did something "we regret, which is we tried to tighten our belt a little too much. And by doing that, it impacted our ability to be well positioned for an inevitable recovery."

But when President Obama spoke about funding clean-energy projects, rebuilding broken infrastructure and investing in education to better compete against other countries on the heels of a terrible recession, Republicans call it just more big-government spending. "With all due respect to our Democratic friends, any time they want to spend, they call it investment," Senator Mitch McConnell said on Fox News. "This is not a time to be looking at pumping up government spending in very many areas."

But many business leaders would argue that difficult times are exactly when you should invest in future growth. At the same time CEOs were slashing jobs and trimming 401(k) contributions for their rank-and-file, many were quick to trumpet the investments they were making in research and development, equipment that would help improve operational efficiency, and leadership training for their very top people. In other words, innovation, infrastructure and education.

To wit, consider what Jeffrey Immelt, the chairman and CEO of General Electric and the new chair of President Obama's outside economic advisory board, told investors in December at his company's annual outlook conference. He talked about investing in operational improvements in manufacturing and software inside the company. He told investors that despite how hard the company was hit during the downturn, "we still invest $1 billion here in training and education." And to keep the company's pipeline full for when things turn up again, "we've really through the crisis continued to reinvest in R&D."

I realize that it's stretching things a bit to compare a country facing a deficit crisis to companies that have relatively healthy bottom lines. And yes, most major corporations are far more efficient and effective than the federal government with how they set budgets and spend the money they're investing.

But the concept of investing for the future during tough times is one of the most fundamental ideas in business--or leadership, for that matter. Just as CEOs who cut off spending in R&D and employee training during a recession will find themselves slipping against competitors when things turn up again, a country that doesn't invest in education, innovation and infrastructure is likely to quickly fall behind its peers. One would think such pro-business conservatives would tend to agree.

By Jena McGregor

 |  January 27, 2011; 8:37 AM ET |  Category:  Crisis leadership , Economic crisis , Education leadership , Federal government leadership , Government leadership , Presidential leadership , Technology Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati  
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I give you one simple math question.
You should solve within 1 minute, yes ONE minute.
You have 2x10^6 cells/mL and 25cm^2 space. You want to seed 50000 cell per square centimeter (cm^2). How much cells do you need in volume?
This is really a simple algebra. One of my coworker, Johns Hopkins graduate, doesn't know how to approach it. If you can do it within 1 minute, you might have had a good education. If not, try to re-educate yourself. I also want to test all senators and congressman and women. I doubt all of them solve it within 1 minute.

Posted by: furan121 | January 30, 2011 4:28 PM

President Obama wasn't just making idle talk in the SOTU address. BIG things are already underway that will not just change energy policy, it will become policy. This year, the US Air Force will have certified a Bio Fuel on every airframe in their inventory. The DOD is the largest consumer of energy in the world. For the DOD unilaterally transition "out" of the gas and oil market is a huge signal that the changes near term will be massive. This will be fun.

Posted by: blackbox1 | January 30, 2011 1:02 PM

For once, everyone posting is right (to a degree). Business is more efficient than Government, but Government should fund initiatives too large for business to handle. No business would have attempted (or funded) what NASA pioneered. Now business can design and launch based on the experience of NASA. DARPA was instrumental in the internet we're all using now. So, business benefits from Government success without comment or gratitude, but complains about the money it takes to create those benefits.

Posted by: blackbox1 | January 30, 2011 12:45 PM

"If business should invest during tough times, why not government?"
I LOVE answering questions posed by those who obviously have IQs

Here's the difference. Our country runs on GNP (real production not banking, paper money shuffling). The gov't, in the main produces very little that is actually valuable. What it does produce is done with very poor efficiency. Money it uses for "investment" has to be taken from activities that, an a dollar to dollar basis, are FAR more efficient than the gov't.

If you can't figure out "why not" from this, you are heavily brain damaged.

Posted by: illogicbuster | January 30, 2011 8:27 AM

"I think America is getting fedup (sic) with their complaints." Right, America is getting getting so fed up with Republicans that in November we decided they should take over the House and nearly the Senate.

There is plenty of excess spending in current government programs to be able to redirect some of it for key investments in technology, etc. There is no way to add spending that will only increase the debt burden we are are leaving to coming generations. And I write this as an old fart who has up to now benefited from the deficit spending.

Posted by: capsfan77 | January 29, 2011 3:53 PM

"I realize that it's stretching things a bit to compare a country facing a deficit crisis to companies that have relatively healthy bottom lines. And yes, most major corporations are far more efficient and effective than the federal government with how they set budgets and spend the money they're investing"
- - - - - - - - - - - - - -
Stretching thigns a it?!?!?!?
There I no comparison!
Private companies invest their OWN money and suffer the consequences if they are wrong.
The government invests our TAXES - and walks away if they are wrong!!
The Volt - $55.000 hybrid (obama promised all-electric),requires the federal government to PAY people(our tax money) to take home!!
You can't fool all the people all the time! Private investments are totally different from government "investments".
When the government "invests" it's playing poker with someone else's money! OURS!!

Posted by: thornegp2626 | January 29, 2011 2:46 PM

Investment in education has been proven to pay $5 for every $1 invested. Creating future taxpayers and contributors to society is our best investment. But repubs will never buy into that because most of their base is too angry uneducated--they should start with history and science!

Posted by: tafffy | January 29, 2011 8:49 AM

the money the goverment invests is tax money collected from the people...
and most of the time, the goverment loses money...
and it can't keep politics out of it...
so no...
the goverment should stay out of it...

Posted by: DwightCollins | January 29, 2011 8:29 AM

Great point, Jena.

This should really be obvious. There is a difference between investment spending and other government spending. A lot of government spending doesn't pay for itself, but smart investments can pay for themselves in spades. That's the difference between spending and investing, and that's why all companies that want to grow need to invest. Countries are no different.

Posted by: beet | January 29, 2011 4:32 AM

Well said. The truth of the matter is that the Repubs only want to discredit the President not help the country. I think America is getting fedup with their complaints. As a young professional my boss told me once, don't bring me problems bring me solutions. Will the real republican leadership please stand up?

Posted by: slovelace | January 28, 2011 2:07 PM

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