Saturday, March 07, 2009

An Entrepreneur Stimulus Plan

"The president must include entrepreneurs on his advisory council to help stimulate the economy," writes Sramana Mitra, a technology entrepreneur and strategy consultant, in her most recent Forbes column. "As the government tries to assess what might stimulate entrepreneurship, I don't see many "practitioners" of true entrepreneurship represented on President Obama's advisory council."

"Who represents the voice of the bootstrapped entrepreneur in the government? Who understands the extreme cash-strapped conditions under which entrepreneurs operate? Without understanding, how can they design an effective system?"

Excellent questions from one of the bloggers who attended the Kauffman Foundation Economics Blogger Forum with me last week in Kansas City.

11 Comments:

At 3/07/2009 4:05 PM, Blogger PeakTrader said...

California is generally an anti-business and pro-government state (for example, legalizing drugs is really a tax and spend policy to expand government power).

Exxon wanted to build a refinery in California. However, after threats with lawsuits, attacks on its reputation, biased media coverage favoring enviornmentalists, etc., Exxon concluded it would be crazy to invest in California, because the risks and costs were too high.

When California had those blackouts, the California Public Utilities Commission blamed speculators on Wall Street and energy firms (although two major energy firms operating in California declared bankruptcy). California bought energy from firms in other states, at the highest prices in history, to avoid further blackouts, which drove prices higher in those other states, and later sued them for charging too much.

 
At 3/07/2009 5:13 PM, Anonymous gettingrational said...

The "Entrepreneur Stimulus Plan" is an excellent post. The administrations's plan seems to be all about finding funding for new spending agendas but not on job creation. Please everyone who reads this post and agrees go to:
http://www.whitehouse.gov/contact/
and give your short, concise and positive opinion. Thanks

 
At 3/07/2009 8:53 PM, Anonymous BCM said...

Nice quote, unfortunately, the rest of her article sucks. She rips into VC's and suggests a "two tiered" tax structure which raises carried interest taxes on VC firms who run their business "en masse" (whatever that means) and not those who work with start-ups. Yay! Another complex and elitist approach to government!

 
At 3/07/2009 10:25 PM, Blogger bobble said...

This comment has been removed by the author.

 
At 3/07/2009 10:30 PM, Blogger bobble said...

This comment has been removed by the author.

 
At 3/07/2009 11:34 PM, Blogger PeakTrader said...

Bobble, I suspect, there's more corruption in some states, e.g. California and Massachusetts. I've written about differences between Denver Colorado and Oakland California before, where I spend a lot of time.

In Denver, there's little government redistribution compared to Oakland. Yet, there are greater inequalities in Oakland. In Denver, politicians work with business people, and Republicans and Democrats work together (i.e. more moderate), to get things done. In Oakland, they don't work together well. Anyway, to make a long story short, Denver is a shining city and Oakland is a dump (Denver also has a Silicon Valley-the Denver Tech Center, which has been booming for over 20 years). In Oakland, taxes and the cost of living are both much higher than in Denver.

However, I've noticed there's more wealth in California, although living standards are much lower compared to similar affluent people in Colorado. Just the value of land in California is much higher than in Colorado. Also, I think, people are more likely to retire in California than Colorado, and the average age in Colorado is lower. California's unemployment rate was 10.1% when the national rate was 7.6%. There may be more business start-ups, but also more failures.

 
At 3/07/2009 11:51 PM, Blogger PeakTrader said...

Also, I may add, over the past 10 or 15 years, Denver built a new international airport, renovated lower downtown to look like the 1920s when it was new, built a new convention center, a new central library (where the G-8 meeting was held one year), constructed a new football stadium (Invesco Field at Mile High), and new baseball stadium (Coors Field), and a new basketball-hockey stadium (the Pepsi Center), began and expanded a light rail system, improved the main mall that ran through downtown (16th street mall), including rebuilding the sidewalks, roads, lamps, etc. Moreover, near the Denver Tech Center (about 20 miles south), seas of upper middle class housing tracts were built all the way to Castle Pines to the south and the mountains to the west, along with many impressive new malls.

There's nothing like that in Oakland, which can't even fix its pot holes, although taxes and fees are very high and the city gives out parking tickets most aggressively, while skipping trash pick-ups some weeks.

 
At 3/08/2009 1:01 AM, Blogger bobble said...

PeakTrader, i deleted my comments because, upon checking my facts, i found what i stated to be incorrect.

LOL, usually i check my facts *before* posting. this time i screwed up.

but i appreciate your response. to be more factual, it appears that california is number 7 among the states in startups. massachusetts apprear to be among the laggards.

 
At 3/08/2009 7:39 AM, Blogger David said...

Why would anyone think Obama cares about entrepreneurs? He is--perhaps consciously, perhaps unconsciously--the representative of credentialism, the belief that a person's life prospects should be determined by where he went to colege and what degree he got. The objective here is to create an American Mandarin class which controls all the routes to wealth and power--not a class of ornery independent entrepreneurs.

 
At 3/08/2009 7:47 AM, Anonymous Michael Smith said...

There are so many things wrong with Obama's economic plans one hardly knows where to start in correcting them. But let me point out two of his most egregious errors:

1)He's mistaking "need" for "demand". He's convinced that global warming means we need to convert to "green power" -- and that this need will "create" jobs making solar panels, windmills, etc.

Setting aside for a moment the multiple fantasies on which this belief is based, the mere fact that a need exists does not create jobs. This is the same fallacy that surfaced after WWII when some economists predicted a construction boom in Europe to replace all the bombed-out buildings. But the people that had been bombed out of those buildings had no money, hence no ability to pay for new buildings, hence there was no actual demand. Thus, there was no construction boom -- at least not until America poured billions into rebuilding Europe under the Marshal Plan.

The same thing applies to Obama's "green jobs". People simply don't have extra, idle dollars sitting around with which to pay for these vastly more expensive forms of energy -- and if Obama forces us to pay for them anyway through taxes, that will simply mean the end of other consumer spending that supports other jobs. Any green job creation that is accomplished in this fashion will be at the expense of jobs making other things that consumers then won’t be able to purchase.

The fundamental point is that since government produces nothing, it has no power to increase aggregate demand. At best, it can only shift demand around. And “need” is not the equivalent of “demand”.

2) Obama’s other disastrous error is believing that raising taxes on the rich and on businesses has no economic consequences and may be done with impunity.

But increasing taxes on the rich is increasing taxes on the largest investors in the economy. Such a tax increase will have the effect of lowering investment, which will lower both new job creation and productivity improvements that make possible higher wages.

It was precisely such tax increases -- along with the Roosevelt administration’s extreme hostility toward business and the vast uncertainty created by the various “New Deal” programs -- that caused private investment to disappear for most of a decade during the Great Depression. In this regard, Obama seems determined to repeat every mistake made by Hoover and Roosevelt.

As far as taxes on businesses are concerned, there is much truth to that old saying that businesses don’t really pay taxes as much as they collect them. Obama’s taxes on business will, for the most part, simply be passed on to consumers, primarily to the middle class who do most of the consuming. Thus, Obama’s repeated promise that only the upper 2% will pay more in taxes in false.

Obama’s economic plans are an economic disaster from start to finish. Rasing taxes, endless bailouts of the incompetent and the irrational, protectionist trade legislation, empowering unions, industry-killing “cap and trade” CO2 restrictions, nationalizing health care -- these are all anti-business, anti-growth measures, any one of which would seriously damage the economy. Enacting them all will kill the economy.

Obama -- with the help of the Federal Reserve drastically inflating the money supply -- is steadily pushing us to the worst sort of economic contraction: a hyperinflationary depression, i.e. an extended period of mass unemployment accompanied by exploding prices.

Economically, the Obama administration is best described as a group of clowns with wrecking balls -- destruction is the only thing they can achieve.

 
At 3/09/2009 4:23 PM, Blogger 1 said...

"Economically, the Obama administration is best described as a group of clowns with wrecking balls -- destruction is the only thing they can achieve"...

Mr. Michael Smith, may I introduce you to Robert Samuelson?

"Barack Obama is a great pretender. He constantly says he's doing things that he isn't, and he relies on his powerful rhetoric to obscure the difference. He has made "responsibility" a personal theme, and the budget's cover line is "A New Era of Responsibility." He claims that the budget begins "making the tough choices necessary to restore fiscal discipline." It doesn't"

 

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