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RE: Entrepreneurship Rhetoric vs Action in Washington

September 14, 2010 @ 11:39 AM

Jeff said...

The problem with Washington is that there’s been too much of the wrong kind of action that’s unfavorable to an entrepreneurial climate. If Thomas Friedman thinks that President Obama will abandon his Keynesian ideology to push favorable legislation for entrepreneurship, he may be waiting for quite awhile. Obama’s plan to serve up higher taxes to businesses employing between 20-299 workers (over 25% of the workforce) will do nothing more than set back job creation and investment in innovation.

Morris notes, “President Obama has had a series of CEO lunches at the White House. When you examine the list of invitees, it is shocking how few are entrepreneurs. I counted two (Jeff Bezos and Howard Schultz) among 28.” This tells us a lot about how little President Obama knows about economics and job creation.

If the federal government really wants to spur innovation, they need to create a better climate for it to flourish. They should start with taxes and regulation. In regards to taxes, how about a substantial cut in the payroll tax? How about cutting the second highest corporate tax rate in the developing world? How about getting spending under control?

All of these measures would give the economy what it really needs – a jolt of confidence and stability first, and motivation to invest capital in job creation secondly. The uncertainty created by pending regulation, higher taxes and increased healthcare costs is paralyzing in and of itself. There doesn’t seem to be a coherent plan from the top down.

Regarding regulation, many small business owners can relate to the overwhelming strain of complying with IRS and EPA regulations while having to comply with very costly Sarbanes-Oxley regulations with fewer resources to do so than larger firms. It’s an unfair penalty on small business.

Friedman makes some good points, explaining, “If we want to bring down unemployment in a sustainable way, neither rescuing General Motors nor funding more road construction will do it. We need to create a big bushel of new companies — fast.” Exactly.

Unfortunately, the Keynesian brand of questionable economic policies coming out of Washington has diminished the previously attractive entrepreneurial environment from one that rewards hard work and innovation to one that rewards failed car companies and values temporary work over permanent growth.

Friedman concludes, “The best way to counter the Tea Party movement, which is all about stopping things, is with an Innovation Movement, which is all about starting things.” I would be very much in favor of the Innovation Movement and starting things. We need a lot more of that in the U.S. But Friedman wastes a nice thought with his unnecessary and divisive remark about the Tea Party.

We will have to all work together at the grass roots level to rejuvenate the job creating machine that is the American economy. We need to pressure our political leaders and hold them accountable for their economic policies, stressing the need for entrepreneurial tax and regulatory reform that transcend party politics and boost innovation and permanent job growth. If what’s being done at the present isn’t working, and hasn’t worked for the past 3-4 years, we need to look for smart alternatives this coming November.