CASSOPOLIS — Never in American history have we talked more about creating jobs and done less.

Seventy percent of all new jobs come from companies that already exist in a community, plus 20 percent from citizens starting businesses, except there are fewer existing businesses in rural areas, which need to build from their talent bases instead of encouraging the brain drain.

Only 10 percent come by attraction, or “running all over the country trying to steal other people’s companies. We keep talking about quality of life and incentives and how pro-business we are, but that’s frosting. When you’re trying to keep a company in your community, frosting can become important — in the last analysis. But don’t forget the two basics, real estate and workforce. It doesn’t matter how good your frosting is if you have no cake, and without a cake you can’t compete. We need to get a sense of urgency because the most serious war going on in the world today has nothing to do with the Taliban, Iraq or Afghanistan, it’s an economic war we are precipitously close to losing as a nation. We’re not mobilizing for that war” in which only 10 percent of jobs lost were outsourced, compared to 90 percent eliminated by technology.

Recession? There are 1.2 million jobs unfilled because of lack of skills.

Last year, 12,600 people in the United States graduated with a bachelor’s degree in electrical engineering for 25,000 unfilled jobs. Six thousand of those were foreign students who went home.

Likewise, we graduated 12,600 people with bachelor’s degrees in park management for 150 openings.

Ninety-five percent of all new jobs in America are created by 4 percent of companies.

George L. Robertson, Kosciusko County’s first fulltime economic development director from Warsaw, Ind. (population 14,000), made many such points in “Earth Shift — New Directions and Paradigms of Economic Development“ Wednesday morning at Inovateus Business Center.

Spiced with observations about elephants, mice and gazelles, he predicted retail clerks will soon be replaced by “smart cart“ technology.

Carts will need repair, and app programmers start at $88,000, so why waste time training for non-existent park management positions?

Entrenched higher education institutions need reform more than the typical target of bashing, K-12.

Plumbers in New Orleans command $164,000, noted Robertson, who helped rebuild 11 central Louisiana parishes after Hurricane Katrina where there had never been economic development efforts before.

Reciting a list of U.S. attributes — richest in the world, highest standard of living, largest military, center of world finance and business, the center of innovation and invention, its currency used for global trade — Robertson cautioned that those also describe England in 1900 and laid out an array of staggering statistics which suggest an imminent end to the “American century.”

Where a young person in China would want to meet Bill Gates, an American is more likely to name a sports star or celebrity such as Britney Spears or Angelina Jolie.

“We can succeed if we get smart,” Robertson insisted, by which he means local “cyber communities” — not state or federal governments, which are set up with slow-moving processes and procedures to serve businesses that “need it yesterday” to compete in a global marketplace.

“If we do things right, I’m a firm believer we can continue prosperity,” he said, “but we have to start doing it right.”

Robertson talked about the prophetic 1972 Alvin Toffler bestseller “Future Shock,” which predicted the 1990s a decade before personal computers, although one forecast went wide of its mark.

Earth’s knowledge “since we left the caves” didn’t double, it quadrupled and now doubles every 24 months, which means what students learn as freshmen is outmoded by junior year.

Robertson reached beyond the typical technology examples to illustrate how it can spawn new ways of doing things, such as real estate.

Rather than build specs, “cyber buildings” can be tweaked to customize, adjusting cost estimates instantly.

After 70 years, businesses desire “clear span” structures without posts for total flexibility in shifting aisles.

Fiber is a key component of any conversation, with streaming video and hospital charts gobbling bandwidth.

If you’ve noticed your computer operating more slowly in the evening, it might be because Netflix changed its delivery system away from mail, Robertson informed a SCORE audience of about 30 that included County Administrator Charles Cleaver, County Commissioners Roseann Marchetti of Edwardsburg and Ron Francis of Cassopolis, Cassopolis Family Clinic Executive Director Mary Middleton of Dowagiac, Eileen Toney of Southwestern Michigan College and Leonard Kanczuzewksi, owner of the Cassopolis business incubator.

“Between 4 and midnight, Netflix uses 70 percent of all bandwidth in America,” he said.

If anyone found it odd for Michigan officials to be seeking advice from Indiana — “we pride ourselves on 120 lakes, and you have twice as many,” Robertson began — the county down the road was a competitor, but now “we’re competing with other states, Ireland and China.”

Rapid globalization makes innovation and collaboration critical.

Robertson started owning seven small businesses. “A couple of them made me an awful lot of money and a couple of them were significant educational opportunities. You tend to learn much more from when you screw up and fail than when you succeed.”

Then he hit the road as a site consultant for Fortune 500 companies scouting locations. A friend became governor of his home state, South Dakota, so Robertson became development director for four years.

“Then I began the career I call economic development entrepreneurship,” he said. “We had stolen a little company from New York called Citibank Credit Cards and moved 2,500 jobs to the middle of the country. A headhunter called one day and said Schenectady, N.Y., had lost 20,000 GE (General Electric) jobs and was starting an economic development group, and could I be as good at keeping jobs in New York as I had been at stealing them? It looked like Beirut after the war after all those layoffs. It took almost two decades to rebuild that economy. We did it through business retention and start-ups. New York had the highest tax rates in the country and the worst regulatory climate. You’re not going to attract companies into New York, so we had to do it from the grassroots.

“I’ve also spent 15 years teaching at the Economic Development Institute of Oklahoma University. Teaching forces you to constantly go back to the basics. Too often we get lost in economic development. When I was doing site selection work, every community in America is either the Crossroads of this or the Gateway to that, all exceptionally pro-business, with the friendliest people anywhere on the planet. By the time you visit four of them, you wish one said, ‘We’re in the middle of nowhere and we don’t particularly like business.’ At least that would stick in your mind.”

Small businesses and start-ups “have to look at where they’re going four years from now and keep future—focused,” he said. “As hockey great Bobby Orr said, ‘Never look at the puck, look at where you want the puck to go.’ In terms of local economies, we can’t look at where we are today, but where we want to be.

“Earth Shift means a different world than we grew up in. It’s a different world than 10 years ago. We have to do things smarter. The changes in technology mean we all have to learn more to keep up. Changes in communication mean relationship-building has become a primary goal of economic development, which is harder when you’ve got less time. Used to be, I enjoyed e-mail. Now I dread going back after four or five hours and opening up my computer at the office because there will be hundreds of messages sitting there. The reality of the new economy is that if you’re tired of change, get used to it because we continue to get faster in a global marketplace. On top of that, we have the worst economic recession of our lifetimes, which is a game-changer. We have some inklings of what’s different, but all I can tell is that it’s different and will never be the same again.”

Quoting Ayn Rand’s observation, “We can evade reality (stick our heads in the sand and play ostrich), but we cannot evade the consequences of reality,” Robertson said job creation fundamentals remain unchanged.

“We get lost because we think the action is attraction,” Robertson said. “That’s not where jobs come from in America. Seventy percent of all new jobs come from companies you already have in your community, so 70 percent of an economic developer’s time needs to be spent taking care of those companies, but most don’t. They’re constantly figuring out how to get somebody new to move in. In a recession, there’s nobody in the pipeline. We simply do not have corporations making capital investments. The pipeline has never been drier.

“But 20 percent come from people in our communities starting businesses. Ninety percent of job creation comes from resources already in a community. So why do economic developers spend 70 percent of their time running all over the country trying to steal other people’s companies when only 10 percent come from attraction? By the way, if you don’t take care of existing companies, you’re not good at attraction. You learn in site selection work that if you’ve got problems and your existing businesses aren’t happy, we’re going to find out.”

Cyber communities refer to having “the bandwidth companies need.”

Robertson said, “On a business retention call a couple of weeks ago, the owner said he was thinking of moving, which you don’t want to hear. This was an engineering company and he said they didn’t have fiber. Their drawings are mega bits of information. He was sending his son with a laptop to McDonald’s, where they had free wi fi every time they needed to send or receive a drawing, which is not efficient. We talked to a local provider and that company and six others on the same street now have fiber. We need to be aware that’s part of a cyber community.

“Technology is not just something neat, we need to make it work for our communities. One state, North Carolina, does incentives differently. They give a manufacturer incentives if it modernizes plants and equipment to be more productive and profitable and, in the process, decrease jobs.”

Politicians talk of the loss of 2 million manufacturing jobs as if they all were moved offshore.

“Ten percent did,” he said, “but 90 percent were eliminated by technology. Those of us in rural areas remember family farms and families of 10 or 12. Just 100 years ago, 70 percent of all U.S. workers worked on farms. Now 3 percent do, yet we produce more ag products than we ever have in the history of the country. The same is happening with manufacturing. You don’t book flights with a travel agent anymore, you go online. The biggest job category in any community is retail clerk. Stores want to get rid of them. Grocery stores want you to check yourself out.

“Developed two years ago and now they’re getting the price down are smart carts with radio frequency around the outside, bags on the side and a computer in the handgrip. You go down the aisle, you pick an item and put it in the bag. You push your cart through the checkout stand, swipe your card and you’re out the door. Millions of clerks will be eliminated in a few years. As communities, we’ve got to start preparing and thinking about what we’re going to do with them.”

“Relevant” is the word Robertson attaches to higher education and retraining.

“Workforce is the future, the No. 1 criteria for where a company locates and expands,” he said. “Fifteen years ago it was called the cost of workforce and the South killed us because they had cheap labor. That’s why offshore killed us, cheaper labor. In a technology age, the No. 1 criteria is the availability of skilled labor. There are 1.2 million unfilled jobs in America because nobody has the skills. SCORE needs to upgrade the skills of all of our small businesses. I’m still amazed that they hand me business cards and have to write their e-mail address on it because they don’t use it. This is the 21st century! Without a Web presence you’re in trouble. We’ve got a lot of work to do. There are 3,500 new books published globally daily. The World Wide Web has 200 billion pages, doubling every six months.”

In terms of global competition, the United States, “the country that invented the Internet, dropped last year to 25th place in broadband usage and hook-ups,” Robertson said. “We were surpassed by the United Kingdom, Sweden, Belgium, Australia and … Estonia! That is not pride-building. When fiber is today’s connection, the United States is only at 3-percent penetration,” lagging Japan’s 40 percent and Korea’s 36 percent. “Fiber is the No. 1 priority in my county. It’s not the superhighway of the future, it’s the superhighway of the present.”

As for elephants, mice and gazelles, Robertson talked about Dr. David Birch’s MIT research beginning in the 1970s, concluding that small and medium-sized businesses are the engines of job creation, despite it still being the post-World War II economy of Big Business, Big Labor and Big Government.

Elephants are like GE, going where they want, sitting where they please.

Mice are all over, the beauty salons and eateries which blanket the landscape.

Gazelles are important because they’re small businesses with growth potential.

Second-stage companies, they call them at the Edward Lowe Foundation.

“Two years ago he made an amazing finding,” Robertson said. “Ninety-five percent of all new jobs in America are created by 4 percent of our companies. Two national foundations, the Brookings Institute and the Ewing Kauffman Foundation, studied Birch’s study and concluded he was correct. In fact, what’s amazing was 1 percent of our companies generate 40 percent of our job growth. More interesting, 1 percent of our new companies under a year old are creating 10 percent of all new jobs in America. We as economic developers have to change. I remember when we didn’t care about small business.

“We think of Bill Gates and Steve Jobs of Apple as gazelles, but so were Ray Kroc (McDonald’s) and Sam Walton (Walmart). The first thing we learn is we don’t know how to define gazelles. They may be a technology company from students who sit in their dorm room and come up with some new software. Or, they may be retailers. The good news is we’re beginning to take start-ups seriously. The personality of a great small business owner and an entrepreneur are not interchangeable. Restaurants are the toughest business, with the highest failure rate. A good owner can cook better than the chef, greet you friendlier at the front door than the receptionist and they’re at your table, checking with you, like Energizer Bunnies. But if they open a second restaurant, both might go broke because they can’t clone themselves. The great small business owner is the best hands-on controller you’ll ever want to meet. Great entrepreneurs have to know how to delegate without abdicating. The challenge to communities is that to get four gazelles, we have to start 100 small businesses.”

There are six broad categories of start-ups — lifestyles by passionate individuals; creating a job for themselves to feed their families; scalable companies by visionaries looking down the road; buyable companies, built to sell; existing mid-size businesses which realize they must innovate or evaporate; and social businesses by individuals who want to make a difference in the community.

“One thing we do know is going to change from the recession is financing,” Robertson said. “Banks will never be what they once were. Federal rules that came in after TARP make it almost impossible for them to lend money to businesses,” necessitating alternatives, from loan funds to angel investors.

Warsaw, where he has been for about a year, just saw its first angel group of 30 wealthy investors take wing to arm start-ups with capital.

Rebuilding Schenectady required a $150,000 loan fund, which they grew to $1.5 million.

Some $50,000 loans yielded companies which now employ hundreds.

Family and friend lending needs to be more “formalized,” he said, because self-generated capital is more enticing when they can realize a return of 4 percent versus 1 percent on a certificate of deposit.

Brazil, Russia, India and China are expected to dominate the global trade arena in years ahead, but the next tier, the N-11, is undeveloped nations which put in place the right investment mechanisms to follow in their footsteps, such as Indonesia, Egypt, Iran and Nigeria.

“In a flattened world (referring to Thomas Friedman’s bestseller), size, attitude and vision matter,” he said.

“I can’t comprehend a trillion-dollar debt or a billion people. To give you an idea, in the last five minutes, we’ve had 60 babies born in the U.S., 244 in China and India, 351. By 2015, India will surpass China in population. A billion people means there are more under the age of 10 in India than there are Americans. Americans do not celebrate innovation and success. Competence counts. Let’s say the 25 percent brightest high school students, there are more of them in China than we have kids in North America — Canada, the United States and Mexico. I don’t tell you that so we all give up, but so we understand the challenge; 65,000 young Americans in high schools were in Intel’s science fairs. Six million in China. I guarantee you when I drive home today, I will know every community who had a basketball or football championship team. I will not see one sign saying we won the science fair. We have to start changing that attitude in this global war. We need the right workforce with the right skills. Only 17 percent go to college and get engineering, technology or science degrees. We have to address higher ed, which is so entrenched with bureaucracy and tenured faculty it’s going to be five times harder to change — not K-12. One of the smart things you can do in a recession is send people back to school, prepared as recovery comes to take new jobs. Probably the best part of the Recovery Act was the hundreds of millions of dollars to send people back to college, except it didn’t have a career counseling component because we don’t do that in America.”

Robertson told about a Detroit woman who obtained bachelor’s and master’s degrees in social work, for which there are five applicants for each opening at a $23,000 starting salary.

“Nobody told her that. If they had gotten her into a nursing program, she’d be employed. That’s a sin to the economy, and you don’t do that to human beings. Communities that start giving smart career advice will succeed. Sputnik sent the wrong message to America, that every kid had to go to college. We forgot about trades, skilled technician jobs, so now we have the highest percentage going to college of any of the 35 industrialized nations and the lowest college graduation rate. They go so they’re not ‘losers’ and come home after a year without any skills. After my first year in college I was really good at pinball and drinking beer, but no job openings for beer-drinking pinball players.

“We have to start talking about getting people into the right jobs because the biggest workforce crisis in the history of this country is coming, and that’s baby boomer retirement. In the next 18 years, 70 million Americans will retire or die. The total number of Americans from 1 to 18 is 40 million. Every study indicates they will be less prepared. Read “Hollowing Out of the Middle — The Rural Brain Drain and What it Means for America.’ We’re having (co-author) Patrick Carr do a seminar in Warsaw Nov. 4. He went to an Iowa town and lived for two years. He’s an amazing demographer. He interviewed two decades of high school graduates and found that in rural America, everyone in the community — teachers, parents, business people — told the best and the brightest one thing: you’ve got to get out of here instead of staying. And while we tell the best and the brightest to leave, we ignore C students who are going to stay. We really have to rethink how we do things. Every community in America has workforce problems. Most spend a year studying it, then beat up on K-12 education for failing us. Then do nothing else. Eighty percent of the workforce of 2020 is working. Even if our colleges and schools get better, we don’t have enough skilled American workers. If you create skilled workers in your community, you will not have to worry about economic development or give away the farm in incentives. Companies go where workers are.”

As Albert Einstein said, “The significant problems we face cannot be solved at the same level of thinking we were at when we created them,” or, as Robertson tells his staff, “If you’re doing something the same way you did it five years ago, there’s a good chance you’re doing something wrong. We have to look at everything we do with that kind of perspective. Small towns and rural areas can succeed if we get smart, help innovative businesses, help kids get the right degrees and get our workforce retrained. America can stay strong.”