LinkedIn Founder Offers Good Ideas

Reid Hoffman, founder of LinkedIn, offers an interesting proposal to help use start-ups to revive the economy in an op-ed piece in the Washington Post. 

His proposal has three components:

First, encourage small business with loans. Apply to the United States the micro-lending model that has proved successful in developing countries, extending credit lines of up to $50,000.

I like this idea as long as it is done privately.  We need more groups like Kiva, the social enterprise that does micro lending around the world.

Second, welcome foreign innovators. Harvard research fellow Vivek Wadhwa reports that immigrants have founded more than half of all Silicon Valley start-ups in the past decade. These immigrant-led, American tech companies employed more than 450,000 workers and grossed $52 billion in 2005.

Amen to this idea.  I have been arguing this for some time.  Our immigration policy is stuck in the mid-1900s.

Finally, match funds for venture capital and angel investments. Venture firms and investors need financial incentives to invest in companies that create U.S. jobs. What if firms with credible histories could receive as much as $100 million in federal matching funds if their investments create jobs in the United States? Investors could keep their normal return plus 50 percent of the returns on the matching funds, while the other half goes back to the government to revitalize further investment.

Well, two out of three ain't bad.  We don't need a government bureaucracy meddling in venture capital and making decisions about winners and losers.  Trust me -- they would not just enact a neutral, across the board matching program.  Those eager little lobbyists on K Street would make sure to create all kinds of special incentives for their clients.  Remember how political the SBA programs have gotten over the years.  We could achieve the same ends with a large tax cut.  It would have the same affect without creating another power base in DC.

What I like best in his essay is a call for creative debate on what should be done.

This is the time for President Obama to take a page from his campaign playbook. Why stop at tapping the grass roots to debate the stimulus? He should seek to fund innovation at the grass-roots level. Obama is familiar with using YouTube and social networks -- products of start-ups and tools of the people.

Problem is, those in charge in Washington have their agenda set that is driving their policy.  Free enterprise, market-based economic growth, and property rights are not part of their play book.

(Thanks to Bruce Schierstedt for passing this along).