"Yet while a pro-business agenda may intersect at points with a pro-market one, they are not the same thing. Pro-market public policies make markets function fairer and more efficiently for everyone. They encourage competition and "creative destruction" and entrepreneurial capitalism. Pro-business policies often shift taxpayer money and other government goodies to favored companies, raise barriers to entry and otherwise defend the status quo." (James Pethokoukis, Money & Politics Columnist, Reuters Breakingviews).
Public Policy, Economics and Entrepreneurship: July 2010 Archives
On Monday, July 26th, the U.S. Chamber of Commerce ["the Chamber"] will partner with the National Federation of Independent Business [NFIB] and the American Action Forum ["AAF"] to host a forum entitled "Behind the Curtain: The Health Care Law's Impact on Small Business". The event will feature Washington experts and opinion leaders, as well as the entrepreneurs who run small businesses and create American jobs. Some of the highlights will include:
The Chamber, NFIB, and AAF will pull back the curtain on the new law, placing the spotlight directly on the entrepreneurs who will feel the financial and regulatory impact of the health care law - some of the people who constitute the nation's real economic engine, who are the key to creating enterprise and lifting the U.S. out of the recession.
Click here to register for this free event (to be held at Chamber headquarters), or to view the webcast from anywhere.
- Senator Mike Johanns (R-NE), who recently introduced S. 3758, the "Small Business Paperwork Mandate Elimination Act", a bill to protect small business owners from the financial burden of filing the endless amount of 1099 forms the health care law requires.
- Scott Womack, an IHOP franchisee who has created 100s of jobs, who also crunched the numbers and has serious concerns about the effects the new health care law will have on his company.
- Doug Holtz-Eakin, president of the American Action Forum . In the past he was Director of the Congressional Budget Office, Washington's top budget prognosticator, and he also served as the Chief Economist on the President's Council of Economic Advisers. He will be releasing a new white paper discussing the impact the new health care law will have on small business.
- Bill Rys and Bob Graboyes of NFIB, James Gelfand of the Chamber, and Michael Ramlet of AAF. These policy analysts will discuss important provisions in the new health care law.
- Benefits advisor Tom Christina (Ogletree, Deakins, Nash, Smoak & Stewart, P.C.) and two entrepreneurs, Joe Olivo (Perfect Printing, Inc.) and Eric Oppenheim (Burger King franchisee). This panel will discuss how the new law is affecting their businesses.
The Chamber, NFIB, and AAF will pull back the curtain on the new law, placing the spotlight directly on the entrepreneurs who will feel the financial and regulatory impact of the health care law - some of the people who constitute the nation's real economic engine, who are the key to creating enterprise and lifting the U.S. out of the recession.
Click here to register for this free event (to be held at Chamber headquarters), or to view the webcast from anywhere.
This is a tale of two trains heading full steam down different tracks.
The first train was called U.S.A. It had pulled out of the station in the city of Entrepreneurship and had been streaming down the tracks toward the little town called Socialism for some time. All of the politicians had given up on the power of the free market. When the Republicans were the engineer of train U.S.A., having control of both the White House and the Congress, there was an unprecedented expansion of government and deficit spending -- expanding entitlements more than any of his recent Democratic predecessors, expanding government regulation with the entrepreneurship stifling Sarbanes-Oxley Act, and beginning the binge of corporate bailouts that continues today. Who can forget President Bush's now infamous quote, "I have abandoned free market principles to save the free market system".
The Democrats soon took over control of the train and stoked the engine with coal to push it to speeds that nobody had imagined possible as it chugged along toward Socialism. In fact, that train gained so much speed that many suspected that it may pass right through that little town of Socialism and right on down to the next stop -- the village of Communism. The Democrats (and in fact most Republicans) believed that it was government that was the economic answer to all problems. For example, one of the stewards on the train, Speaker of the House Nancy Pelosi, said that unemployment benefits are a great driver of economic growth. She said that that unemployment benefits "creates jobs faster than almost any other initiative you can name." I guess the U.S.A. doesn't need small business to pull it out of the recession after all!
The other train was called Iceland, which had begun its journey somewhere between the town of Socialism and the village of Communism. For years, the train called Iceland was considered a socialist utopia -- a gleaming example of what socialism can accomplish when left unfettered by the trappings of free markets. It did not move very far down the tracks from Socialism. They did have big businesses, but these companies were firmly in bed with a very expansive socialistic government.
But over time, the people of Iceland began to question if the town of Socialism was such a great place to live in. It seems that socialism was not helping them deal with a series of economic crises that had rocked their little country. So they turned their train around and started it heading down the opposite track toward the city of Entrepreneurship. The President of Iceland, Ólafur Ragnar Grímsson, has made public his commitment to conquering their economic crisis through with innovation and entrepreneurship.
Then one day, not so long ago, these two trains, U.S.A. and Iceland, passed each other heading in their opposite directions. While the people on the Iceland train seemed bewildered as to why U.S.A. was heading full speed to where they had just come from, those on train U.S.A. hardly even noticed that Iceland was heading the other way.
The end of this tale has yet to be determined.
But let me offer a little glimpse as to what will likely happen with a quote about Iceland from Jonathan Ortmans, president of the Public Forum Institute, at Kauffman's entrepreneurship.org policy website:
The stream of positive signs I noticed began in March this year when Iceland replaced the United States as the INSEAD world champion in innovation. Then in Dubai that same month, Iceland won the Global Entrepreneurship Congress award for best entrepreneurship movement during the 2009 Global Entrepreneurship Week. And more recently, entrepreneurship was incorporated into public discourse as a main driver of economic regeneration when Iceland's President led a summit in his country on innovation, entrepreneurship, and green energy. With Iceland getting so much attention for being on the brink of bankruptcy, I thought such good news about signs of an entrepreneur-led economic resurgence deserves note.Choo-choo. The train is leaving the station. Get on board!
My previous column offered advice to entrepreneurs on how to cope with the tough economic times that seem to have become the "new normal" for the American economy.
The latest nationwide poll of small-business owners by the National Federation of Independent Business supports what I am hearing from the entrepreneurs I work with in Middle Tennessee.
The NFIB Index of Small Business Optimism lost 3.2 points in June, falling to 89.0 after posting modest gains for several months. Entrepreneurs seemed to have been wishing for good times to come over the past few months, but now they seem to be facing the reality that things are going to be tough for some time.
Most of the decline in the NFIB Index of Small Business Optimism is due to deterioration in the outlook for business conditions in general and the realization that sales won't be improving any time soon for small businesses. Owners have no confidence that economic policies will fix the economy.
"The U.S. economy faces hurricane-force headwinds, and the government is at the center of the storm, making an economic recovery very difficult," said William Dunkelberg, NFIB's chief economist.
This is very worrisome, as small businesses accounted for 77 percent of all new job creation for the 20 years leading up to this recession. Entrepreneurs have led the way in job creation in almost every past recession.
Public can make a difference
So what can we do as individual citizens to help support small-business owners and help them face the challenges of their entrepreneurial journey? Here are two simple steps to consider:
First, remember the New Year's resolution I suggested at the outset of 2010 -- support small-business owners with your business. When you have a chance to choose an independent small business for a purchase, please make that choice. They need your support and with it you can do your part in helping improve their sales, which eventually will encourage them to start adding new jobs.
Second, when you vote, look for candidates who truly want to support small business. This has nothing to do with party affiliation. And it has nothing to do with "I want to help entrepreneurs" rhetoric in campaign speeches.
We know from research around the globe that cutting income tax rates increases business startups -- and that these new ventures are what create the most new jobs.
Cutting tax rates also leaves more money in the pockets of American citizens, which can then be spent with small businesses.
We also know that regulation has been choking small businesses. Small businesses spend more than 50 percent more per employee complying with regulation than their large-business competitors. This stifles their ability to fund growth. And without growth they cannot create new jobs.
Look beyond what letter is after politicians' names and take the time to learn their records.
There are no quick fixes in this economy. If entrepreneurs persevere, and we all do our part to support them, our economy will eventually improve. Together we can rebuild sustained growth that will soon begin to add jobs and return us all to prosperity.
(This post ran as a column in today's Tennessean).
The latest nationwide poll of small-business owners by the National Federation of Independent Business supports what I am hearing from the entrepreneurs I work with in Middle Tennessee.
The NFIB Index of Small Business Optimism lost 3.2 points in June, falling to 89.0 after posting modest gains for several months. Entrepreneurs seemed to have been wishing for good times to come over the past few months, but now they seem to be facing the reality that things are going to be tough for some time.
Most of the decline in the NFIB Index of Small Business Optimism is due to deterioration in the outlook for business conditions in general and the realization that sales won't be improving any time soon for small businesses. Owners have no confidence that economic policies will fix the economy.
"The U.S. economy faces hurricane-force headwinds, and the government is at the center of the storm, making an economic recovery very difficult," said William Dunkelberg, NFIB's chief economist.
This is very worrisome, as small businesses accounted for 77 percent of all new job creation for the 20 years leading up to this recession. Entrepreneurs have led the way in job creation in almost every past recession.
Public can make a difference
So what can we do as individual citizens to help support small-business owners and help them face the challenges of their entrepreneurial journey? Here are two simple steps to consider:
First, remember the New Year's resolution I suggested at the outset of 2010 -- support small-business owners with your business. When you have a chance to choose an independent small business for a purchase, please make that choice. They need your support and with it you can do your part in helping improve their sales, which eventually will encourage them to start adding new jobs.
Second, when you vote, look for candidates who truly want to support small business. This has nothing to do with party affiliation. And it has nothing to do with "I want to help entrepreneurs" rhetoric in campaign speeches.
We know from research around the globe that cutting income tax rates increases business startups -- and that these new ventures are what create the most new jobs.
Cutting tax rates also leaves more money in the pockets of American citizens, which can then be spent with small businesses.
We also know that regulation has been choking small businesses. Small businesses spend more than 50 percent more per employee complying with regulation than their large-business competitors. This stifles their ability to fund growth. And without growth they cannot create new jobs.
Look beyond what letter is after politicians' names and take the time to learn their records.
There are no quick fixes in this economy. If entrepreneurs persevere, and we all do our part to support them, our economy will eventually improve. Together we can rebuild sustained growth that will soon begin to add jobs and return us all to prosperity.
(This post ran as a column in today's Tennessean).
Last week Inc magazine came out with their 16 point plan to jump start job creation through start-up firms. It has been creating a lot of discussion about proper economic policy, which is a good thing these days.
Some of their ideas make sense to me -- at least to some degree. For example Step 1 is to take entrepreneurship out of the business school. At many universities this may be a good idea. Universities, especially large ones, tend to build really tall silos around various disciplines. Since over 50% of college students want to be entrepreneurs, this can limit access to the majority of these students who are not in those business schools. And many larger business schools add other barriers, such as separate admissions processes to get in to their program once you are admitted to the university.
But let's not assume that this is necessary at all schools. It is not an issue here at Belmont. I work with students from across campus. I have done workshops on taking entrepreneurship across campus for many other colleges and universities. They generally do not suffer from the barrier problems that some major schools have.
Several other steps in the Inc plan also have merit Creating more ways to help support bootstrappers would help, such as more incubators, shared workspace, and hatcheries for new ventures, could also help break down barriers. But, please, oh please, keep this out of government hands! And their recommendation to reform immigration laws to encourage entrepreneurs to come here, or in many cases, stay here is something I have argued for a long time.
But, much of the list gets too far into a neo-Keynesian mode. It is as if the authors trust government more than markets.
"Step 6: Cut College Graduates Some Slack." Hey, I make a living these days by teaching entrepreneurial college students, but their idea of modifying the college loan program to have a business start-up category will be a disaster. Remember that the government just did a massive power grab and took over the college loan program. If we do this, we can expect the American Medical Association and any number of other groups lobby for their special breaks. Before you know it, the college loan program could begin to look like the federal tax code or the small business loan programs of the SBA.
"Step 7: Give Angel Investors a Tax Break." There is no evidence that such tax breaks increase investment. Sure, angels will take the tax break if offered. But, there is no evidence that these tax breaks lead to any increase in investments. If taxes are too high, cut them for everyone!
"Step 10: Pass an Energy Bill, Already." Say what??!!??!! The authors argue that uncertainty of this issue is the only problem, so let's just pass it and get it over with. That may work on Wall Street, but not on Main Street. What worries entrepreneurs about this bill is not the uncertainty of it passing or not passing -- it is the impending mountain of new taxes and regulation that they know will choke their businesses.
"Step 11: Revamp the SBIR." Nope. Just scrap it entirely. Investment capital will make its way back into the R&D phase if we just give it time. Right now we have gotten the government so involved in R&D that investors sit back and wait for better returns from later staged deals. (And while you are at it, forget about their Step 14: Fund Big Science" for the same reasons).
I have a simple two step plan that would make all of this more simple and more enduring.
Step One: Stop trying to see what government can do to steer the economy. It can't. Have government less involved, in fact much less involved, and things will start to take care of themselves. It will take time, but sustainable growth can and will return. Cut taxes across the board. Don't cut them selectively. Leave money in the pockets of small business owner, investors and consumers. We don't need government to be the market middle man. Cut regulation and stop trying to use it to fine tune economic growth. And for goodness sake, repair the damage from the Kelo decision and get the heavy hand of eminent domain out off the table when it comes to local economic planning.
Step Two: Repeat Step One....Forever, and ever.
Some of their ideas make sense to me -- at least to some degree. For example Step 1 is to take entrepreneurship out of the business school. At many universities this may be a good idea. Universities, especially large ones, tend to build really tall silos around various disciplines. Since over 50% of college students want to be entrepreneurs, this can limit access to the majority of these students who are not in those business schools. And many larger business schools add other barriers, such as separate admissions processes to get in to their program once you are admitted to the university.
But let's not assume that this is necessary at all schools. It is not an issue here at Belmont. I work with students from across campus. I have done workshops on taking entrepreneurship across campus for many other colleges and universities. They generally do not suffer from the barrier problems that some major schools have.
Several other steps in the Inc plan also have merit Creating more ways to help support bootstrappers would help, such as more incubators, shared workspace, and hatcheries for new ventures, could also help break down barriers. But, please, oh please, keep this out of government hands! And their recommendation to reform immigration laws to encourage entrepreneurs to come here, or in many cases, stay here is something I have argued for a long time.
But, much of the list gets too far into a neo-Keynesian mode. It is as if the authors trust government more than markets.
"Step 6: Cut College Graduates Some Slack." Hey, I make a living these days by teaching entrepreneurial college students, but their idea of modifying the college loan program to have a business start-up category will be a disaster. Remember that the government just did a massive power grab and took over the college loan program. If we do this, we can expect the American Medical Association and any number of other groups lobby for their special breaks. Before you know it, the college loan program could begin to look like the federal tax code or the small business loan programs of the SBA.
"Step 7: Give Angel Investors a Tax Break." There is no evidence that such tax breaks increase investment. Sure, angels will take the tax break if offered. But, there is no evidence that these tax breaks lead to any increase in investments. If taxes are too high, cut them for everyone!
"Step 10: Pass an Energy Bill, Already." Say what??!!??!! The authors argue that uncertainty of this issue is the only problem, so let's just pass it and get it over with. That may work on Wall Street, but not on Main Street. What worries entrepreneurs about this bill is not the uncertainty of it passing or not passing -- it is the impending mountain of new taxes and regulation that they know will choke their businesses.
"Step 11: Revamp the SBIR." Nope. Just scrap it entirely. Investment capital will make its way back into the R&D phase if we just give it time. Right now we have gotten the government so involved in R&D that investors sit back and wait for better returns from later staged deals. (And while you are at it, forget about their Step 14: Fund Big Science" for the same reasons).
I have a simple two step plan that would make all of this more simple and more enduring.
Step One: Stop trying to see what government can do to steer the economy. It can't. Have government less involved, in fact much less involved, and things will start to take care of themselves. It will take time, but sustainable growth can and will return. Cut taxes across the board. Don't cut them selectively. Leave money in the pockets of small business owner, investors and consumers. We don't need government to be the market middle man. Cut regulation and stop trying to use it to fine tune economic growth. And for goodness sake, repair the damage from the Kelo decision and get the heavy hand of eminent domain out off the table when it comes to local economic planning.
Step Two: Repeat Step One....Forever, and ever.
