How Washington Can Support Entrepreneurs(washingtonmonthly.com)
washingtonmonthly.com
How Washington Can Support Entrepreneurs
http://www.washingtonmonthly.com/features/2009/0905.spc-sec.html
14 comments
Especially for techies, there are some good programs available for people who want to try a startup. Specifically SBIR (small business innovative research) and STTR (Small business Technology TRansfer) are really well suited to get money to get your feet off the ground. And they don't want any equity in return, they just want to be a customer!
You're kidding, right? No, seriously, you're kidding, right? They're predicated on "protectable IP" and only go to established companies - i.e. your side project doesn't qualify unless you've already incorporated. I could go on, but I already did:
http://www.businessinsider.com/economic-advice-from-an-entre...
http://www.businessinsider.com/economic-advice-from-an-entre...
Odd, I worked for a small (3 people) company that lived off of these things. We didn't have any problems.
I'll note that these were all DoD.
I'll note that these were all DoD.
When I worked for NASA I knew several researchers who were funded through NASA's SBIR program as independent investigators.
Just remember that both of these programs require paperwork that has to be submitted at an appropriate time of the year. It's not like you can just walk up and get SBIR funding.
Washington has one purpose today - feed the beast. Entrepreneurship and small business isn't on anyone's radar that matters. I can assure you that Pelosi, Frank, Obama and Maxine Waters - none of whom have ever been in business - couldn't care less about an Entrepreneurs dreams or ambitions. They're blinded by their own.
There is a lot government can do to help, mainly by doing less:
1) Reverting bankruptcy laws to pre-2005
2) Health care availability for individuals (if I knew the perfect solution to US health care I'd be doing that as a startup, but some decoupling of employment and health care is key
1) Reverting bankruptcy laws to pre-2005
2) Health care availability for individuals (if I knew the perfect solution to US health care I'd be doing that as a startup, but some decoupling of employment and health care is key
I think the "support" of DC is the kiss of death for any industry or field.
I don't think you deserve such down-voting ... Paul Graham's page has a link to T.J. Rodgers' congressional testimony to this very point.
However, there is "support" and there is throwing money. You're right about throwing money, but I think you're wrong about intelligent support.
DC can always, _always_ do a better job by:
1) Not subsidizing anyone, ever.
2) Increasing transparency of its laws
3) Taxing negative externalities rather than positive ones (so tax carbon instead of capital gains)
4) Removing market distortions like the immigration issue discussed in the article.
Notice that these measures are largely undoing rather than doing, and therefore don't sell well. DC is also, as you rightly point out, in a unique position to completely screw up any field it turns it eye to, by:
1) Subsidizing some part of the industry which therefore damages the innovation that would out-compete it.
2) Preventing failures and disallowing the knowledge acquired there to be applied to subsequent successful ventures
3) Making complicated, vaguely worded and frequently changing specific to an industry's particulars (like only allowing Cable providers to supply Television over their wires)
Sadly, the second set of policies sells a lot better politically than the first set. Which raises the question - why not? What's wrong with it?
Why does the US always feels the need to be "world-leading" at everything?
Is it really necessary to be world-leading? Is it so fundamental to the national ego that it is unthinkable to assume that like every other major power, our influence will wane and our leadership will become first co-operation and then acquiescence?
It seems silly, sometimes, to strive so vehemently for predominance, yet to have no use for it when obtained.
However, there is "support" and there is throwing money. You're right about throwing money, but I think you're wrong about intelligent support.
DC can always, _always_ do a better job by:
1) Not subsidizing anyone, ever.
2) Increasing transparency of its laws
3) Taxing negative externalities rather than positive ones (so tax carbon instead of capital gains)
4) Removing market distortions like the immigration issue discussed in the article.
Notice that these measures are largely undoing rather than doing, and therefore don't sell well. DC is also, as you rightly point out, in a unique position to completely screw up any field it turns it eye to, by:
1) Subsidizing some part of the industry which therefore damages the innovation that would out-compete it.
2) Preventing failures and disallowing the knowledge acquired there to be applied to subsequent successful ventures
3) Making complicated, vaguely worded and frequently changing specific to an industry's particulars (like only allowing Cable providers to supply Television over their wires)
Sadly, the second set of policies sells a lot better politically than the first set. Which raises the question - why not? What's wrong with it?
Why does the US always feels the need to be "world-leading" at everything?
Is it really necessary to be world-leading? Is it so fundamental to the national ego that it is unthinkable to assume that like every other major power, our influence will wane and our leadership will become first co-operation and then acquiescence?
It seems silly, sometimes, to strive so vehemently for predominance, yet to have no use for it when obtained.
"Taxing negative externalities rather than positive ones (so tax carbon instead of capital gains)"
Problem: Negative externalities are supposed to go away. At which point you have no money. So you have to tax things (like income) that people just aren't going to do away with!
Problem: Negative externalities are supposed to go away. At which point you have no money. So you have to tax things (like income) that people just aren't going to do away with!
Taxing the negative externality behavior doesn't have the aim of eliminating it -- just causing it to be weighed properly in the firm's decisions.
But, you do have a point because 'proper' tax rates for negative externalities only pay for abatement/offset of the externalities' harm. You can't count exclusively on such taxes to pay for other unrelated public goods. (If you did, you'd be overtaxing the externality, causing underproduction of the related goods, which can be just as damaging to overall welfare as the original unabated negative externalities...)
But, you do have a point because 'proper' tax rates for negative externalities only pay for abatement/offset of the externalities' harm. You can't count exclusively on such taxes to pay for other unrelated public goods. (If you did, you'd be overtaxing the externality, causing underproduction of the related goods, which can be just as damaging to overall welfare as the original unabated negative externalities...)
"Taxing the negative externality behavior doesn't have the aim of eliminating it -- just causing it to be weighed properly in the firm's decisions."
But it does tend to reduce the externality, thus reducing tax base. Which interferes with revenue collection.
But it does tend to reduce the externality, thus reducing tax base. Which interferes with revenue collection.
Of course - _if_ you've already taxed away every negative externality ;) Also, this is much more easily said than done. What, exactly, is the price of a drowning polar bear, and how much of it is subsumed into the present discounted value of a flooded coastal city?
The reason I singled out capital gains is that it can often lead to a genuine positive externality: capital accumulated in the hands of those best able to discriminatively lend it out (i.e. not bankers). I liked Rodgers' suggestion of taxing short-term capital gains (taxing negative effects of short-term speculation) but not long-term ones. There are probably even more finely-grained policies that can work here.
The reason I singled out capital gains is that it can often lead to a genuine positive externality: capital accumulated in the hands of those best able to discriminatively lend it out (i.e. not bankers). I liked Rodgers' suggestion of taxing short-term capital gains (taxing negative effects of short-term speculation) but not long-term ones. There are probably even more finely-grained policies that can work here.
You can tax land. Land isn't going to go away:
http://en.wikipedia.org/wiki/Geoism
http://en.wikipedia.org/wiki/Geoism