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Carpe diem: Fostering entrepreneurship equals NEW JOBS

…the only real economic policy today that has any chance of working in the United States today is to promote the emergence of small business.  Many of those businesses will fail; some will become thriving though never large enterprises; a few will become world-changing giants like Microsoft and Google.

Unfortunately for Democrats, the policies needed to support the emergence of an entrepreneurial, small-business-fueled society are almost the opposite of the classical policies that 20th-century Democratic ideology supports.  Large business usually welcomes government intervention in the economy — if only because large businesses have the power to influence the government policies that affect them most directly.  Regulations that raise the cost of entry into the market (everything from minimum wage laws, extensive paperwork requirements, taxes, environmental regulations, health care and other social mandates) benefit well-capitalized, large firms who thrive on economies of scale by making it hard for feisty newcomers to emerge and challenge existing product lines and business models.

source: Walter Russell Mead

I agree with Walter Russell Mead.  The current policies are hurting the spirit of small businesses and entrepreneurs. More regulations and the big government is not what fosters entrepreneurship. Entrepreneurship flourishes when entrepreneurs do not get micro regulated by the government. Like Mead indicated in his piece, big corporations have deep pocket and corporate counsel to match any added compliance.

This is not the time for small businesses and entrepreneurs to get distracted from their core competency, sustainable innovation, continually scale their operation. The result could be devastating for already crumbling job numbers. There is a lot of uncertainty for small businesses and enterprises related to upcoming policies in 2011. Among various governance changes, letting Bush tax cuts expire this year means in 2011, small businesses will be hit with additional tax burden. Long term affect will be felt when businesses will lay employees off to offset the additional taxes, regulation expenses. I am still trying to understand the rationale made by Nanci Pelosi that increasing funds for food stamps and extending unemployment insurance will create more jobs. Larger government is not the solution for sustainable job creation. Increasing funds for food stamps and extending unemployment insurance might create a short term federal job surge managing the program, but the model is simply not sustainable.

3 Responses to “Carpe diem: Fostering entrepreneurship equals NEW JOBS”

  1. Jay Maharjan says:

    Peter A. Diamond, Dale T. Mortensen and Christopher Pissarides won nobel prize today for their on work on job theory – the theory that directly contradicts what nancy Pelosi is claiming…Here are some excerpts from the academy. BTW, Peter A. Diamond is Obama’s nominee for Federal Reserve Board waiting to be approved by the senate.

    “One conclusion is that more generous unemployment benefits give rise to higher unemployment and longer search times,” the academy said.

    “One of the key things we found is that it is important to make sure that people do not stay unemployed too long so they don’t lose their feel for the labor force,” Pissarides told reporters in London. “The ways of dealing with this need not be expensive training — it could be as simple as providing work experience.”

  2. Jay Maharjan says:

    Great article! the spirit of James Smith Moore is what Detroit and the country as a whole needs right now. Government mandated programs can not create the entrepreneurial spirit. The article makes a good point that cities like Detroit needs to leverage on the entrepreneurial momentum from within.

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