Entrepreneurship


By CARL J. SCHRAMM:

Trump should set a goal: fix the business climate so a million Americans a year can start companies. . . .

More people have joined the ranks of the chronically unemployed, slipping into poverty at alarming rates as their skills decay and dependency on public assistance grows. Considering population growth, America needs at least 325,000 new jobs every month to stanch the growing numbers of discouraged workers. . . Merely bringing back factories from overseas will not solve this problem. Technology has made every factory more productive. Fewer workers make more goods no matter where they’re located. At the same time, fewer U.S. businesses are being started. . . .

New firms are the country’s principal generator of new jobs. Data from the Kauffman Foundation suggest companies less than five years old create more than 80% of new jobs every year. . . .

This absence accounts for an estimated seven to 10 million jobs that, had they existed, could have provided employment for every one of the nation’s discouraged workers. Simply put, the U.S. will never reach full employment without more startups. . . .

First, increase economic growth. More businesses start when GDP expands at 4% rather than 2%. Existing businesses look for new markets, often turning to young companies for innovative ideas. . . .

Mr. Trump should also focus less on Silicon Valley, which already receives disproportionate attention from Washington. . . .

Government must also widen the scope of innovation by stepping back and letting the market find the future. By promoting trendy ideas and subsidizing politically favored companies, government dampens diversity in creative business ideas. Why start an electric-car company when the federal government already has picked the winner?

The new president must also make it possible for local banks to get back in the business of financing startups. For 200 years, community lenders were the principal source of capital for startups. The application of complex Dodd-Frank provisions has led community banks to finance fewer and fewer promising businesses—despite their unique knowledge of local markets. . . .

Mr. Trump can also reverse regulatory sprawl and cut government-imposed requirements that add to every entrepreneurs’ costs and risks. Anti-growth policies like ObamaCare and minimum-wage increases make hiring workers prohibitively expensive. Municipal regulation is particularly onerous. Cities commonly use sanitation and building codes to protect incumbent businesses. Uber cannot operate in many cities because officials have chosen to protect local taxi cartels, denying their citizens the innovative efficiencies of the shared economy.

With these policies in mind, President Trump should set another goal: that his administration will create an environment that enables one million Americans to start companies every year.

 

Here

This is great. A 3-minute sketch on a whiteboard with voiceover on how new firms create jobs and add wealth to society. Here.

Here’s the entrepreneurial column.

While our two companies run very differently, we have come together to support what we believe is the only set of ideas that stand a chance of turning things around—ideas that can pass political muster in an otherwise very deeply divided Congress. These ideas center on reinvigorating what up to recently has been the most reliable source of job growth and innovation in our economy—the formation of new firms.

Right now, health care and grade-school education are so government-controlled they are wasting resources.

Thanks for all the great gadgets you brought to market and the positive, transformative effect you had on commerce and culture.  Stay well. You’ll be missed.

Here’s Felix Salmon:

It’s a sad day: only this morning I was reminiscing about my days exploring the Apple Macintosh in Palo Alto in 1984. Like much of the world right now, I’m reliving Steve Jobs’s greatest hits on YouTube, I’ve got a bit of a tear in my eye, and yet I can’t imagine how Jobs could possibly go out on a higher note than this.

Thanks, Steve.

But both moves are also in line with a trend I’ve observed, one that makes me optimistic about the future growth of the American and world economies, despite the recent turmoil in the stock market.
. . .
My own theory is that we are in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.
. . .
Why is this happening now?

Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.

Awesome stuff, Marc.

No matter how aggressively manufacturing output rebounds, and it has done relatively well the past two years, production workers in manufacturing will remain below 10 percent of the labor force. Manufacturing in the United States is so automated that labor input is not really a variable factor of production any more.

It’s worth noting that this is a mark of manufacturing’s maturation and ascent. It is not, as some would put it, a sign of manufacturing’s “decline.” American manufacturing is by most measures robust, healthy, and extremely productive. However, with the immense productivity gains over time from new technology and business techniques, fewer employees are needed even as output increases dramatically.
. . .
The two sectors of the economy that are increasing most as a share of output and employment are education and healthcare. In a new essay in the journal National Affairs, we call these sectors the New Commanding Heights. When Lenin coined the term “Commanding Heights” early in the 20th century, he was referring to critical industries that dominated economic activity, such as mining, farming, electricity, and transportation. While those sectors are still important, the economy today is very different than it was in Lenin’s day, or even 20 years ago.
. . .
So what’s the problem? The problem today is that government policy is impeding innovation and job creation in these sectors. Both education and healthcare are already heavily influenced or controlled by federal and local government. That means that the evolution of those sectors is driven by top-down command and control, rather than by bottom-up innovation.

To revitalize these sectors and revive the American job market, we must open up these industries to competition and entrepreneurial reform. This will require tolerating a certain degree of messy experimentation. But entrepreneurial growth in these sectors is what will get the American economy back to work.

Here.

Don Boudreaux observes An Anniversary of A Regrettable Movement.

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