The U.S. economy is struggling to emerge from a recession that led to the destruction of eight million jobs. At the same time, the federal budget deficit remains stuck above $1 trillion. Having already allocated more than $1.6 trillion toward economic stimulus (the 2009 stimulus package and the December 2010 tax cut agreement), both parties in Washington should be looking for ways to boost growth without spending even more money, directly or through even more tax cuts.
We know one thing for sure: New jobs will come from a healthy and growing private sector. Furthermore, the businesses that are most likely to create jobs are new businesses. In fact, between 1980 and 2005 nearly all net job creation in the United States took place in firms less than five years old.
Keep in mind, new businesses aren't necessarily small businesses. The key to a new business isn't its size, but rather its entrepreneurial mindset. New businesses aren't afraid to upset old ways of doing things. They uncover new markets and new business opportunities. They don't just exploit existing demand; they create new demand (think Apple). And the most successful grow rapidly -- from 10 to 100 to 1,000 employees and more in a few years' time.
Getting America out of its economic doldrums requires more of these new, high-energy firms. Policymakers should focus their efforts on creating the conditions that allow these companies to be born and flourish.
Last summer, the Kauffman Foundation pulled together leading experts in business, law, and regulatory policy to think creatively about how to reframe America's legal system to promote innovation and long-term growth in incomes and jobs. They came back with a series of recommendations we call the Rules for Growth, which is also the title of a new book on the subject. Perhaps most importantly, these "rules" have zero or negligible budgetary costs but could dramatically improve the climate for entrepreneurs and job creation.
To fuel entrepreneurial activity, we need more entrepreneurs. Where do entrepreneurs come from? Frequently they come from abroad, and more often than not, they study at our universities. Research shows that educated immigrants are disproportionately likely to start a business.
More than a quarter of technology and engineering companies started in the United States from 1995 to 2005 had at least one founder who was foreign born. These companies produced more than $52 billion in sales and employed nearly 450,000 people in 2005. In today's capital-rich and highly mobile global economy, these skilled foreigners can settle anywhere. Policymakers should reform America's immigration laws to make it easier for highly-skilled immigrants to make their homes and start their businesses in America.
We also need to reform our tax code by taxing consumption rather than income and investment. Taxing income and investment penalizes entrepreneurial risk-taking, while taxing consumption encourages saving that will finance national investments and risk-taking. To promote faster innovation in particular, the Congress should finally make permanent the existing research and development tax credit.
Another way of increasing our entrepreneurial pool is to make it easier for entrepreneurs to get innovative products to market. Two key changes can guide the way.
First, improve university technology licensing practices so university-generated innovation is more quickly and efficiently commercialized. In 2009, the federal government spent $90 billion (60 percent of the government's total R&D budget) on university-based research. Yet too many of the breakthroughs achieved at universities languish in the laboratory because universities are not as effective as they could be at giving their faculty innovators what they need to bring new discoveries to market. Congress should direct federal agencies to make commercialization a higher priority for federally sponsored university research and to encourage universities to provide greater freedom to faculty inventors to license their discoveries either to firms they start or to other firms.
Second, the U.S. legal system, while giving needed protections to intellectual property, frequently stifles innovation and unduly protects patent holding firms from needed competition. The patent process should be reformed to be more socially useful, allowing post-grant reviews of contested patents, while enabling patent applicants to pay more for speedier examinations (which would both reduce the huge patent backlog and help fund the patent office's activities).
These steps, along with the rest of the Rules for Growth, can jump start America's entrepreneurial engine, paving the way for sustained growth in jobs and income -- all at little or no cost to taxpayers. What's not to like about that?
To access the Rules for Growth book online or download in e-book format, please visit www.kauffman.org/rulesforgrowth.
Rules for Growth: US entrepreneurship, startups, universities and ...
Rules for Growth: US entrepreneurship, startups, universities and strategies ...
Pro-Growth Rules That Won't Grow The Deficit
White House launches Startup America
From the right: Cut regulatory burdens, lower corporate taxes
This is the same old tax wages not the wealthy argument. We have that now and the economy is not improving. Just look at the economic numbers, Before and after tax cuts for the wealthy. The wealthy and corporatioÂns just take the money out of the country. That is why economic growth shrinks after each tax cut.
Why don't you ask politicianÂs to provide proof ?
Annualized Growth Rates, Before and After TAX CUTS
Clinton
1993 to 1996 Real GDP = 3.44%
1993 to 1996 Real GDP per capita = 2.22%
1997 to 2000 Real GDP = 4.44%
1997 to 2000 Real GDP per capita = 3.26%
1993 to 2000 Real GDP = 4.01%
1993 to 2000 Real GDP per capita = 2.81%
Bush
2001 to 2004 Real GDP = 2.62%
2001 to 2004 Real GDP per capita = 1.68%
2005 to 2008 Real GDP = 1.75%
2005 to 2008 Real GDP per capita = 0.79%
2001 to 2008 Real GDP = 2.31%
2001 to 2008 Real GDP per capita = 1.36%
This is a sad statement on domestic education and for the opportunities arising from it.
Kauffman is asking for even more federal government interference in the markets. Until they can prove that they are serious about securing the borders and ending H-1B work visas and abuse of B-1 and all the other dozens of work visas that already exist then we would be FOOLS to support any further visa programs.
If Congress abolished the H1-B and L1 visas, the unemployment problem would disappear practically overnight. There are a MILLION workers here (majority from India) on those visas taking our jobs away.
The H1-B and L1 visas serve as a feeding tube, a vampire funnel through which jobs are sucked out of the U.S. and brought to India and China. Heck, even the Prime Minister of India referred to the H1-B program as the "outsourcing visa."
So what if India gets ticked off? Instead of taking our jobs, they should focus on building more toilets over there. I'm all for globalization -- but each nation has the responsibility to MANAGE it properly to their own best interests.
Germany was able to do it, and in having done so, now maintains high employment rates, a very educated population, and a very globalized industrial base.
You know how they did it? THEIR PEOPLE PROTESTED AND FOUGHT AGAINST OUTSOURCING and forced their politicians to LISTEN. That's how.
I honestly haven't the knowledge to pin point the cause of this dilemma. I would however argue that the lowering of tax on wealth has a large part to play. If I no longer need to reinvest in my business to avoid taxes. Why should I.
It is at this point the American system starts breaking down. I think the founding fathers knew this. Taking away the Federal Governments funding for such things as infrastructure. Including R&D funding in the private sector. By far the largest financier of private enterprise in this country is the Federal Government. Diversity is core in maintaining a healthy economy. At this time in our nations history there seems to be one philosophy. Money. Stocks. Bonds. Futures.
When manufacturing was outsourced with other lucrative occupations. The foundation of our economy cracked. To generate huge amounts of wealth for some. Will lead to one bubble after another. Leaving the labor class to pick at what few scraps remain. Manufacturing is the key. If business wishes to operate here. Let them. Our rules. Their benefit It worked for decades, Did it not?.
You, sir or madam, are absolutely correct! F&Fed.
Most business start up are not financed initially through equity loans at banks or by venture capitalists - they are financed by "angel investors". This is particularly true of main street businesses that mushroom from 10 to 1000 employees over 5 years. These "angel investors" are usually successful business people in the same community, and occasionally include doctors and lawyers. These are the local "golf club" handshake start ups. And high taxes on that group is a high motivation to take the risk. Low taxes on that group is a motivation for conspicuous consumption, a low job producer by comparison.
No... no... no.... Please - we need to invest in AMERICANS!
We need to invest in community development as well as industry/engineering - in fact, even more so. True small business! We need to save our small business... so much has been done to destroy it over the last decade!
Of those companies that produced more than $52B and employed nearly 450K people, how MANY of those were technology and engineering companies had founders who were foreign born?
"Policy makers should reform ... immigration laws to make it easier ..."? Are you JOKING? We already have the MOST liberal and generous labor immigration protocols in the civilized world. There are nearly ONE MILLION people here right NOW working in high tech on H1-B and L1 visas, taking jobs away from Americans. And you want MORE of them here??
"The patent process should be reformed to be more socially useful ..." Really? Maybe the U.S. Patent Office needs to FIRST get busy and mow down its backlog of 1.2 MILLION patent applications before doing anything "socially useful" to their processes.
For cryin out loud, more than 700,000 of those patents pending haven't even been opened.
The Patent office is overwhelmed with patents of no merit. Look at software patents. Software is algorithms - mathematics equations. Equations cannot be patented. Otherwise, Einstein would have been able to patent E=Mc^2 and own The Bomb.
Software used to fall under copyright. Business methods are patentable - how to make a hamburger. Yes. Exactly what The PTO was for. Genes, that have existed for a very long time, are still up in the air as to patents.
At one time, patents meant 'invention'. Something new and unique that had never existed before. Hard inventions. Think steam engine. The combustion engine. The atomic bomb. Lasers.
Now, it means the button you click on your screen to go to the next website.
The move of Global Finance is for a highly mobile, mostly poor work force. A global serf labour market. They sit at the top controlling the money and the wealth. Everyone else is a poor, landless temp employee.
Get used to it.
If Congress abolished the H1-B and L1 visas, the unemploymeÂnt problem would disappear practicallÂy overnight. The H1-B and L1 visas serve as a feeding tube, a vampire funnel through which jobs are sucked out of the U.S. and brought to India and China. Heck, even the Prime Minister of India referred to the H1-B program as the "outsourciÂng visa."
Each nation has the responsibiÂlity to MANAGE it properly to their own best interests. Germany was able to do it, and in having done so, now maintains high employment rates, a very educated populationÂ, and a very globalized industrial base. The Germans went thru their struggles, too.
It's time to stop blaming the recession for all this, and start to see that the recession is just another symptom of a GREATER malaise: UN-MANAGED GLOBALIZATION.
Even without the Wall St. and real estate bubbles collapse, local JOBS were already getting sucked out of the U.S. economy. The bubbles just helped COVER that up. Big corporations are now using the recession as a smoke screen and excuse to put people out of work, when the real reason is outsourcing.
The ongoing bail outs manifest themselves in the most dramatic ways, such as Ben Bernanke keeping interest rates stuck at 0% so Goldman Sachs and JP Morgan can borrow to speculate on food prices and commodities.
Why not first SHUT DOWN the Big Failed Banks and re-organize them under strict Glass-Steagall law and CLAWBACK the TRILLIONS of taxpayer backed credit from them to be used in investemnt in serious and MASSIVE INFRASTRUCTURE PROJECTS?
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This is the same old tax wages not the wealthy argument. We have that now and the economy is not improving. Just look at the economic numbers, Before and after tax cuts for the wealthy. The wealthy and corporations just take the money out of the country. That is why economic growth shrinks after each tax cut.
Why don't you ask politicians to provide proof ?
Annualized Growth Rates, Before and After TAX CUTS
Clinton
1993 to 1996 Real GDP = 3.44%
1993 to 1996 Real GDP per capita = 2.22%
1997 to 2000 Real GDP = 4.44%
1997 to 2000 Real GDP per capita = 3.26%
1993 to 2000 Real GDP = 4.01%
1993 to 2000 Real GDP per capita = 2.81%
Bush
2001 to 2004 Real GDP = 2.62%
2001 to 2004 Real GDP per capita = 1.68%
2005 to 2008 Real GDP = 1.75%
2005 to 2008 Real GDP per capita = 0.79%
2001 to 2008 Real GDP = 2.31%
2001 to 2008 Real GDP per capita = 1.36%
1770's we used tariffs to save domestic trades (vs B.E.I.C.)
Protectionalism has its flaws, but, it has worked.
Vs. net jobs created by smaller companies?
Better pay more attention to smaller companies.
Big companies don't create jobs in the United States.
Offshore outsourcing is destroying us. It's time to quit blaming the recession, and start realizing Un-managed Globalization is the reason why so many are unemployed right now.
To answer your question, I've read less than 800,000 new jobs created here versus 1.4 million created elsewhere.