aside My Policy Wish For USA, Part X (Expand Small Business Development)

bus small outstanding heading Cq89MwLWYAAm75YBoth republicans and democrats agree that the U.S. needs to be doing more to encourage small business startups but as usual, little has been done. The typical republican solution of reducing taxes is not sufficient. What most small business owners claim that they want are, simpler and easier access to diverse sources of funding; less cumbersome, time consuming, expensive and unnecessary government regulations; laws that are effective and enforceable to protect property rights and contracts. According to an 8/238/16 USA Today Money tweet, the 2016 democratic presidential nominee, Hillary Clinton is committing to do the following to support small businesses which could have a big impact: Drastically cut down on paperwork required by small businesses; improve access to funding; and work on saving small businesses money.

There are steps that government can take to jump start small business activity which in turn creates more jobs. Steve Mariotti in his 6/20/15 Huffington Post article, makes some recommendations on this subject and here are the excerpts:

Hillary Clinton
Hillary Clinton

“Last fall, Hillary Clinton was widely mocked for declaring, “Don’t let anybody tell you that it’s corporations and businesses that create jobs.” Kicking off her presidential campaign in Iowa last week, Clinton positioned herself as a champion for entrepreneurs and noting that her father, a textile wholesaler, had been a small business owner.”

“At her Norwalk, Iowa, roundtable, Clinton quoted a World Bank survey ranking the United States “Forty-sixth in the world in how hard it is to start a business.” Clinton blamed “unnecessary regulation that has really put a damper” on entrepreneurship and said, “I want my campaign to figure out how we’re going to jump-start small businesses.”

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“Many entrepreneurs can’t help but groan when they hear politicians promise to help. As Austrian economist Peter Klein says in my new book An Entrepreneur’s Manifesto (Templeton Press, fall 2015), “The best thing government can do for entrepreneurs is get out of their way.”

“Klein notes, however, that entrepreneurs do need “secure property rights, the rule of law, and sound money.”

“So, is there anything government can do to promote entrepreneurship?”

“After decades of academic neglect, entrepreneurs are finally being studied in an effort to answer that question. Reports like WEF’s Global Entrepreneurship Monitor—the biggest comparative study of entrepreneurship across cultures and countries—are uncovering policy areas that must work in concert for entrepreneurs to flourish.”

business small good pix 45download“I surveyed this new research and interviewed many experts like Klein while writing An Entrepreneur’s Manifesto. Based on my findings, here are eight steps I believe government can take to help small business:”

  1. “Provide a fair legal system with strong property rights and contract law, and an orderly bankruptcy system that reassures lenders and enables failed entrepreneurs to get back on their feet.”
  2. “Streamline business registration. The average time it takes to open a small business varies dramatically around the globe. New Zealand wins, with an average half-day and one official procedure to register a business. In Venezuela, it takes 114 days and seventeen procedures—seventeen opportunities for delay and corruption. The U.S. ranks twentieth, averaging five days and six procedures.”
     business small great picture 78AR-131139937
    3. “Enforce strong intellectual property laws. Microsoft might never have succeeded if IBM hadn’t licensed the fledgling company’s operating system—a deal made possible by intellectual property law.”
    4. “Destigmatize business failure. Countries that do so experience higher rates of business formation. The European Commission Competitiveness Council reports: “Failed entrepreneurs are a precious resource. Due to experience, failure rates of second start-ups are lower. We should support entrepreneurs and give them a second chance.”
    5.“Invest in education. Development experts agree that government investment gets the biggest bang for the buck in education. Over a third of America’s universities are now partnering with small business incubators to generate new businesses. In addition, we should provide entrepreneurship education to our high-school students.”
    6. “Simplify tax laws. The 2013 Ernst & Young G20 Entrepreneurship Barometer notes: “Countries that offer favorable tax rates, simplify procedures, and provide entrepreneurial support will enjoy high numbers of start-ups.”
    business small great pix hrc 5209343517. “Reform immigration and open borders. Immigrants account for nearly a third of all new businesses in the U.S., more than twice the amount created by the overall population.”
    8. “Encourage a diverse funding universe. Entrepreneurship experts say it’s more important to have multiple money streams than one giant pipeline. Government can encourage development of new capital sources—such as equity crowdfunding and peer-to-peer lending. The 2012 JOBS Act, for example, provided new exemptions that enabled small businesses to use crowdfunding to raise money.”

    business small great pix download

    “The U.S. ranked thirteenth out of twenty in Ernst & Young’s tax and regulation survey, trailing Saudi Arabia, Japan, and Russia. The U.S. was dead last in “coordinated support” that a country’s government and economy offer to entrepreneurs.”

    “Clearly, we can do more to encourage our entrepreneurs; including promoting the idea that failing is part of every success. It took Thomas Edison years to get the light bulb right. Asked what it felt like to “fail’ many times, Edison famously retorted, “I have not failed 999 times. I simply found 999 ways not to make a light bulb.”

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13 comments

  1. Gronda, this is well done. It is often portrayed by the GOP that we need to do away with regulations. No, we need to have smart regulations and test them to see if they are doing what is needed, changing them as necessary. The above recognizes this. One of the things that her husband needs more credit is his simplifying the small business process at the time under the tutelage of one Erskine Bowles, who later became his Chief of Staff and was a co-leader of Simpson-Bowles Deficit Reduction Committee.

    As I shared with you before, this is one reason the National Association of Business Economists rank Clinton as four times better equipped to handle the economy than Trump, with a 55% to 14% rate. Trump actually lags the Libertarian candidate Gary Johnson who is at 15%.

    The one thing I would add to her comment is “customers create jobs” as businesses would do without employees if they could.

    Great post, Keith

    • Dear Keith,

      In general, I am pro- business. I had hoped when Obamacare was enacted into law that there would be more small business start ups. I’ve known peoples that would have taken this route but didn’t because of health and insurance issues.

      With the internet, there is more opportunity but there needs to be a better support system from government or elsewhere.

      Thanks for taking time to comment, Gronda

    • Agreed. I am pro-business as well. I have heard several people say this (one being Warren Buffett), some business owners and managers say they are not doing something because of Obamacare or some other law or regulation, yet if they have a good idea, these won’t stand in the way of that. Too many companies sat on cash as they did not know where to invest. It seems that has loosened up over the past two years, yet more investment would be nice to see. I have seen many sandbaggers out there who like to downplay opportunity and the Board lets them get away with it, as some are doing the same thing at their companies. They like to show what they overcame, but also give a reason in case they don’t. Obamacare has been a convenient reason for too many, although I recognize it is stumbling block for some.

      • Dear Keith,

        Right now opportunity is out there. With access to multiple sources of funds, legal fairness, and streamlining of regulations, the sky should be the limit. Frankly, if TPP were written to protect employees from losing jobs, income etc., then this trade deal would have opened more doors for small businesses.

        Thanks for sharing your thoughts, Gronda

    • Jueseppi, GRAZIE MILLE!! I keep waiting for cooler weather in Chicago. The heat here is worse than in Florida. As always, I am grateful for your support and thank you for the reblog. Ciao bello! Gronda

    • Dear Alvarezgalloso, I agree that The Green and the Libertarians should be included in the debate. The contest of ideas should be encouraged. Thanks for taking time to comment. Welcome! Gronda

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