Given the momentum gained in 2010 to get policymakers thinking about entrepreneurship, it is reasonable to expect that America’s commitment to entrepreneurship will grow, especially once we see that commitment translated into concrete policy action. Of course, the hope is that those policy actions will be the right ones—inspiring confidence, building up decision-making around risk-taking and investing, spurring new enterprises built on innovative products and services, and along with it, job creation. With that sense of optimism, comes the vision of a global economy finally starting to shake free from a global crisis.
We’ve come a long way in the U.S. since the focus of economic policy was mostly on big business. The notion of entrepreneurial growth, and the increased understanding of the importance of young businesses is finally gaining track among policy and opinion leaders. A Republican-controlled House of Representatives will share power in Washington between Democrats and Republicans which bodes well for smarter policies around private sector job creation. The establishment of new entrepreneur-friendly institutions—such as the Office of Innovation and Entrepreneurship inaugurated at the Department of Commerce in early 2010, a Presidential Summit on Entrepreneurship and a Presidential proclamation during Global Entrepreneurship Week—may be mostly symbolic but they honor a nation’s entrepreneurs and the role they play as catalysts for creating new industries, businesses and jobs. They are steps to foster a culture where entrepreneurship is publicly appreciated and celebrated. They also represent the success of the efforts of those who are ushering in a new foundation for sustainable growth.
While progress has been made to build awareness of entrepreneurship and the conditions that enable it, there is a lot more work to do to assure ongoing commitment in support of entrepreneurs. Even as the economy slowly recovers, it is widely believed that the long-run sustainable growth rate has fallen to less than 3 percent.
There is, of course, much that can be done without government. Entrepreneurs can bootstrap longer. Investors can operate more as angels and less as demons to startups. Those incubating entrepreneurs can create entrepreneurial ecospheres based more on industries and less on political geographical interests. And just as anyone who saw the movie Dead Poets Society knows, we can all help light a candle in the minds of the next generation of American thinkers and innovators.
But government sets the rules and incentives and still has a powerful role to play in stimulating new job growth in the private sector. Policymakers now need to demonstrate their commitment to nurturing tomorrow’s entrepreneurs who will power the engine of our economy by fast tracking policies that make it easier, faster, and less costly for entrepreneurs to set up enterprises, grow them if they are successful, or close them if not.
First, in the innovation age, even with the failure of the DREAM Act last month, Washington must courageously push forward on high skilled immigration reform by creating STEM/job creator citizenship opportunities and expanding visa quotas. It makes no sense to be the only nation in the world sending talented job creators back home. Second, Washington needs to better leverage its healthy $200 billion investment in Research and Development by adjusting the rules driving how technologies are transferred to the marketplace and thereby quickening the pace America moves its innovations forward. Third, America should push for the removal of known existing regulatory barriers to new start-ups. For example, did you know that there is an LLC filing fee of between $100 and $1000 in every state? Finally, when it comes to the constant lament of “access to capital”, Washington needs to try to understand this less in terms of institutional venture capital and more in terms of incentivizing more individual or super-angel seed capital. We are a nation of risk-takers and should reward those who take a chance on their fellow Americans by offering capital gains relief on early stage seed capital investments.
Entrepreneurs, their ideas and their energy are our best allies in making America a global leader in introducing new technologies and new ideas into the marketplace, and building opportunity and prosperity across our country. Just take the latest Kauffman Foundation research report pointing out that it would take between 30 and 60 new billion-dollar firms to permanently increase the U.S. GDP by one percentage point. Collectively, the cumulative impact from high-growth firms that are able to realize $1 billion in revenue could produce roughly three times the level of GDP than would otherwise exist. Policies conducive to creating billion dollar triple-scale home runs are good for all Americans. Let’s not suppress the positive benefits of inventive entrepreneurship and make 2011 the year of an entrepreneurship burst.
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Jonathan Ortmans is president of the Public Forum Institute, a non-partisan organization dedicated to fostering dialogue on important policy issues. In this capacity, he leads the Policy Dialogue on Entrepreneurship, focused on public policies to promote entrepreneurship in the U.S. and around the world. In addition, he serves as a senior fellow at the Kauffman Foundation.