Here He Goes Again

I am baffled by the number of university faculty who seem to be almost hostile to small businesses.  If it is not a high growth, high potential venture, some think it is not worthy of the term entrepreneur. 

I wrote a while back about one such professor, Dr. Scott Shane of Case Western, who argued that entrepreneurship education is misguided as entrepreneurship programs do little to fuel our economy.  Unfortunately, he did not factor small business into his analysis -- looking only at venture capital backed firms.

Well, Professor Shane is at it again.

In an article at CNN Money Shane debates Ken Blanchard about the value of entrepreneurs in our economy. 

Here is what Prof. Shane states:

From a societal point of view, if you have a group of people who do something that makes them happier but less productive (which the data support), and you aggregate that, then entrepreneurship is an economic drain. If the goal of the policymaker is to make everybody in your country happy, then let everybody start businesses.

But most policymakers seek to create jobs and promote growth. If that's your goal, you want to stop all these people from starting marginal businesses that don't go anywhere and devote the resources to encouraging high-growth companies. In terms of tax policy, for example, you could argue that the government should eliminate the home-office tax deduction - which doesn't differentiate between high- and low-performing businesses - and beef up R&D tax credits.

This animosity to small business is nothing new in academia. Part of the reason I left academics in the 1980s was that there was little interest in what I wanted to teach -- entrepreneurship and small business.  I remember having a senior full professor yell at me in the hall one Saturday morning saying something like this: "Hey Cornwall!  What are you trying to do with all of this entrepreneurship stuff around here?  We prepare corporate leaders.  We are not a trade school for merchants!"

Professor Shane is looking at a very narrow set of data with his "evidence."  There are years and years of data that show the real impact of the entrepreneurial ventures that he calls "marginal businesses."  Half of today's GDP is being generated by small business and they have been the only reliable job creation engine for the past twenty years.

What Prof. Shane seems to want is more government directed economic policies toward business formation -- what I call socialized entrepreneurship.  Give me free markets any day!

(Thanks to Andy Tabar for passing along the CNN Money article to me).