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The Policy Dialogue on Entrepreneurship Informs and connects thought leaders looking to understand policies that help entrepreneurs start companies, create jobs and strengthen the economy. Sign up to receive our weekly update!
Once again, entrepreneurial activity showed big in the United States. Last year was a tough year for entrepreneurs. We have experienced a deep recession, credit crunch and record unemployment rates. But although the odds were against them, new-business creation during the 2007-2009 recession years increased steadily year to year (e.g. 60,000 more starts per month in 2009 than in 2007) and 2009 became the year business startups reached their highest level in 14 years. The number of startups even exceeded the count during the peak of the 1999-2000 technology boom.
If you have ever been around somebody trying to start or grow a business, you know that entrepreneurs don’t have time for much else, especially not for going to Washington to help keep policymakers up to date on how to encourage high growth entrepreneurship in America—not hurt it.
Last week, I participated in the NASVF Annual Conference in Oklahoma City where experts discussed again how to ensure that credit crunches do not negatively impact start-up performance. The good news is that those gathering at this conference started from a common appreciation that entrepreneurship cannot be on the sidelines of economic and financial policy.
Congress is considering the American Recovery and Reinvestment Bill of 2009. This new $825 billion economic stimulus package includes $275 billion in economic recovery tax cuts to individuals and businesses over two years, making it clear that the U.S. is relying heavily on entrepreneurs to jumpstart our economy. And they’re right to do so.
“Lizard King” John Bello describes his first entrepreneurial venture as a miserable failure. Bello launched South Beach Beverage Co. in 1995. Despite the popularity of other geo-based drink brands such as Nantucket Nectars and AriZona iced tea, South Beach didn’t resonate with consumers, not even in the upscale Florida community that shared its name. Within two months, Bello knew the $2 million startup investment was heading, well, south.
Employment in the U.S. has been in a free fall. Payroll employment has declined by 3.6 million since the start of the recession in December 2007, according to the latest report from Bureau of Labor Statistics. Firms have shed jobs every month since January 2008. Last January alone, the national payroll dropped by 598,000 jobs. The unemployment rate has risen from 4.9 percent in January 2008 to 7.6 percent in January 2009. Is it time to consider a payroll tax cut?
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.
Universities, particularly research universities, are an important component of an innovation economy. Universities around the world have long been instrumental in developing much of the innovation that benefits our lives. A key question, therefore, is how well universities are prepared to support the transition to a more entrepreneurial economy. The various successful experiences from around the world show that shaping entrepreneurial universities requires commitment to institutional innovation.
The Obama Administration is now coming up on the end of the first 100 days, so it is a good time to revisit its innovation agenda to determine which directions it has taken. Although it is too early to judge any outcomes, we see positive signs that the role of innovation and entrepreneurship is at the core of this Administration’s approach to the economy.
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.
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