Jonathan Ortmans

Building One Global Entrepreneurial Ecosystem

Month: August 2009 (page 1 of 2)

In the National Interest: High-Skill Immigration Reform

Before the August congressional recess, key Senators anticipated that an immigration reform bill will be ready for the Senate to consider this fall. Given that congressional action on immigration could start soon, it is time again to highlight why the U.S. needs a smart immigration reform that considers high-skilled immigrants’ contributions to the economy. Continue reading

Liability Litigation and Entrepreneurship: A Delicate Balance

Last week, I highlighted the need for a smart regulation framework that doesn’t inhibit entrepreneurship. Today, I would like talk aboutliability litigation in more specificity. All businesses should beconcerned about the inherent risk of bringing a new product or serviceto the market. However, entrepreneurship can suffer if liabilitylitigation is pursued in ways that create too much uncertainty. Continue reading

Cutting Anti-entrepreneurial Red Tape through Smart Regulation

As with any politically loaded term, any attempt at honest discussion of ‘regulation’ risks getting caught up in a web of assumptions and intellectual shortcuts.  One common fallacy is to putgovernment regulation (e.g. patent laws, health care, tax complianceregulations, etc.) on one end of a continuum in which innovation andentrepreneurship are the opposite policy preference. However, judgingby the discussion at the National Academy of Public Administration(NAPA) conference on regulation and innovation,a new approach seems to be emerging in innovation discussions: that thefreedom to innovate is not governed by how much or how littleregulation innovators face, but how smart it is.

Entrepreneurs,the drivers of the economic recovery, have the most to gain from asmart, sensible regulatory environment because their ventures tend tobe smaller in size, and thus often bear a disproportionate cost of regulation.Small firms do not have the large legal and compliance staffs of largercompanies, and therefore find compliance to be more difficult andexpensive.

Unfortunately, not all federal regulatory statutes currently require the agencies that set rules to satisfy a benefit-cost and a cost-effectiveness test beforeissuing those rules. As a result, government might be “over-correcting”market failures, hurting entrepreneurship and thereby impairingeconomic growth. For example, strict regulations currently govern thecommercialization of new technologies developed in any of thegovernment’s laboratories.

Our leaders should pay particularattention to “market-like” or of market-assisted regulation approachesto regulation (e.g., using tradable pollution permits) whereverpossible. Regulation that utilizes market-oriented approaches ratherthan direct controls is often more cost-effective because it enlists competitive pressures for social purposes,according to an Office of Management and Budget study. Further, thevarious government levels should work together to establish a clearinghouse of benefit and cost information on rules.

Ofcourse, another critical feature of innovation-friendly regulation isavoiding ‘industry capture.’  All too often the structure of regulationprivilege large, established firms as they seek to raise barriersagainst up and coming competitors. Arti Rai from Duke University notedthe dilemma: “innovation comes disproportionately from small firms, yetthey lack the ability to influence agencies.”

The regulation of entry is a critical issue. Cross-country evidence showsthat regulation plays a critical role in the individual decision tostart a new business. The same research showed that even individualswho have business skills and social connections are less likely toengage in new entrepreneurial activity when entry regulation is morestringent.

A regulatory approach that that recognizes theinnovating role of small startup enterprises throughout the economy canenhance productivity and competitiveness by increasing innovation andtechnological diffusion. If there was ever a time to ‘get smart’ onregulation and innovation, it is certainly now.

Broadband Internet Grants

Two broadband internet grants guides became available this week for small businesses interested in applying for $4 billion in American Recovery and Reinvestment Act grants to bring broadband internet service to underserved and rural communities across the nation.
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Chicago: A Systems Approach to K-12 STEM Education

On Thursday, June 30, the House Committee on Science and Technology’s Research and Science Education Subcommittee held a hearing to examine how the private, public, and nonprofit sectors in an urban K-12 system can work together to improve science, technology, engineering and mathematics (STEM) education both inside and outside of the classroom. This is the third hearing the Subcommittee has held on STEM education this year.  Continue reading

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