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A new study has confirmed it. A close look at our entrepreneurial history reveals that entrepreneurship is an engine for job creation and economic growth even during difficult economic times. This new study by the Kauffman Foundation suggests that policies that support entrepreneurship also support recovery. It also reveals that job creation from startup companies tends to be less volatile and sensitive to downturns when compared to the overall economy.
In the midst of much speculation surrounding the upcoming decisions on how to best address the poor performance of venture capital (VC) in the U.S., a new study on VC opportunities and returns offers myth-busting findings. In “Right-Sizing the U.S. Venture Capital Industry,” Kauffman Foundation Senior Fellow Paul Kedrosky draws interesting conclusions on the size the industry needs to be in order to function as an economic force. In particular, he argues that the sector must shrink if VC is to provide competitive returns and secure its own future as a credible asset class.
Cost-effective physical infrastructures provide the essential platforms for the activities of any healthy economy. Modern infrastructure should be increasingly “smart,” incorporating next-generation technologies to manage scarce resources, such as clean air and water, used in infrastructure systems. As our leaders invest stimulus funds devoted to infrastructure projects, it is important that they not overlook the role of entrepreneurs in building infrastructure that supports creative, risk-taking behavior.
The American Clean Energy and Security Act of 2009 (ACES) or the Waxman-Markey energy bill attempts to reduce carbon emissions from American cars, power plants and factories by 83 percent over the next 40 years. This pending legislation, which passed the House Energy and Commerce Committee last week in a 33-25 vote, embraces several positive concepts. Most promising is its emphasis on increased funding and infrastructure for clean energy innovation and its rapid commercialization. It is worth exploring these provisions in the bill, as well its flaws.
It is inevitable that a healthy economy will create new job opportunities, while also displacing existing jobs, as successful ventures survive and grow while others fail– even in good times. The process of job creation and economic growth relies on the constant “churning” of firms. Even so, new firms are responsible for the large majority of net new jobs in the U.S. From 1980-2005, firms less than five years old accounted for all net job growth in the country. This is why we need to approach labor rules carefully.
I was alarmed last week to see the House introduce a health care overhaul bill with a measure to punish certain businesses that do not provide health insurance. Companies with payrolls exceeding $400,000 will have to pay a penalty equal to 8% of payroll. Companies with payrolls between $250,000 and $400,000 a year would pay between 6 and 2 percent, and only those with less than $250,000 would be exempt.
Taxes influence decisions regarding hiring, financing structure, and ownership structure. Taxes also often affect the very decision to launch a business. Given these incentive effects, yet another important task for this Administration should be to question whether our taxes are helping or hindering entrepreneurially-driven economic growth.
With Global Entrepreneurship Week initiative, the Kauffman Foundation has been promoting the appreciation of entrepreneurship around the world and energizing the young to become entrepreneurs.
The economic downturn has placed a new focus on how to generate more “job creators” in our economies and made the idea of a global celebration of entrepreneurship as a path back to positive growth rates especially relevant. This past Saturday marked the 100-day countdown to what is now the largest entrepreneurship event in the world, kicking off November 16th, 2009 - Global Entrepreneurship Week - and I am asking for your help.
As with any politically loaded term, any attempt at honest discussion of ‘regulation’ risks getting caught up in a web of assumptions and intellectual shortcuts. One common fallacy is to put government regulation (e.g. patent laws, health care, tax compliance regulations, etc.) on one end of a continuum in which innovation and entrepreneurship are the opposite policy preference. However, a new approach seems to be emerging in innovation discussions: that the freedom to innovate is not governed by how much or how little regulation innovators face, but how smart it is.
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