Just What Exactly are We Trying to Stimulate?


Question: What written document is so expensive that it comes out to about $4,800,849 per word?

Answer: With approximately 177,052 words and a price tag of around $850 billion dollars, it is the recently approved American Recovery and Reinvestment Act of 2009 – a.k.a. the stimulus plan.

At roughly $4.8M per word, I wanted to understand how creative or insightful (or not) our policy makers were in crafting this historic spending plan; one that will undoubtedly impact not only my life options but those of my children as well.

Now you might guess that working for the Kauffman Foundation, I would immediately search for intelligent allocations of resources for the benefit of encouraging entrepreneurship. After all, it has been entrepreneurs growing new ventures that have led the recovery from our last seven recessions. In fact, all net job growth in our country has come from companies that are less than five years old. Well, I did do that analysis and will reference it below. But let's warm up with some easy ones first.

Most practitioners of effective economic development agree that if one went about the work to stimulate the economy in a leveraged, globally competitive fashion; advancing innovation should be an obvious priority. Sadly, the language of the stimulus plan comes up lacking. Variations including innovation, innovative, and innovate have a combined 12 cameo appearances, usually in a generic parlance; "grants for innovative programs to encourage sustainable adoption of broadband service" for example.

Tangentially related terms and phrases of equal importance would be commercialization, technology transfer, and venture, as in ‘new venture’ or ‘venture capital’. Venture and commercialization are big goose eggs and tech transfer weighs in with 2 hits, one as a generic section title and one honorable mention to the National Institute of Standards and Technology, in reference to a consortia to establish multidisciplinary Centers for Health Care Information Enterprise Integration.

So clearly I am missing something if such terms that would be related to high-tech growth industries are missing from this tapestry of spending. So just what does hit high on the charts … transportation 54 hits, infrastructure 64 hits and construction tops the chart at 127 hits.

When you consider the above (in the very unscientific way that I did), what is easy to deduce is that the overwhelming majority of spending priorities in the plan are for physical, capital investment types of projects, which are temporary (only lasts as long as the construction takes) by design. Sure there will be physical assets left behind, better roads for example; but, these physical assets are only as valuable as the innovation and commerce they catalyze.

Gone are the days of build it and they will come. The successful economies of tomorrow will leverage technology, encourage new venture creation, stimulate private sector investment, and nurture an entrepreneurial ecosystem that rewards new discoveries, job growth and overall value creation.

With that said, where does ‘entrepreneur’ rank in the $850 billion dollar stimulus plan … just ONE time, in a generic way, as part of spending for broadband. Clearly our policy makers don’t understand the entrepreneurial imperative that built this country, lead previous recoveries, and will once again remind Americans of the importance on self reliance. It is just a shame we couldn’t have had the long term vision at this time of crisis to plant the seeds of a new economic forest, one that could return our nation to the position of leading global economic growth.

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  • Thom Ruhe Director of Entrepreneurship The Kauffman Foundation