In his column today, Glenn Reynolds wonders why the current economic malaise is not generating start-ups, they way that they did in the Carter years, when Apple, Microsoft, and others began:
When the economy was last this bad for this long — back in the dreaded Jimmy Carter era — there was one upside: While inflation raged and unemployment stayed troublingly high in America’s big businesses, a lot was going on in America’s garages. Steve Jobs and Steve Wozniak were starting Apple, Bill Gates and friends were starting Microsoft and a variety of other new entrepreneurial ventures were lining up for takeoff.
So you might hope that there’s a similar silver lining in today’s economic Slough Of Despond. But so far, that hope would seem to be unjustified.
At any rate, the latest data indicate that start-ups are becoming rarer, not more common. A new report from JPMorgan economist Mike Feroli indicates that employment in start-ups is plunging. New jobs in the economy tend to come from new businesses, but we’re getting fewer new businesses. That doesn’t bode well.
Reynolds then goes on to blaming European-style socialism (taxes and regulation) for crushing the entrepreneurial spirit, and of course failing schools (ie, teachers unions). He says that the problem is cultural:
But I wonder if the biggest problem isn’t cultural. Since 2008, this country hasn’t celebrated achievement or entrepreneurialism. Instead, we’ve heard talk about the evils of the “1%” ” about the rapaciousness of capitalism, and the importance of spreading the wealth around. We’ve even heard that work in the public sector is somehow nobler than work in the private sector.
Well, Glenn, the problem might be more accurately described as a product of the policy of the United States. My friends in the start-up world have told me that as part of the agreement to get funding from the Venture Capitalists up on Sand Hill Road they must have a plan in place to not hire their engineering talent in the United States.
And why should they since the Clinton Administration forward there have been tax incentives and other incentives to move operations offshore? That’s policy, Glenn, policy that you promoted. And so in one swoop we are not only ensuring the rise of unemployment here in Silicon Valley and the rest of the country, we are also enabling low-wage countries to continue to exploit their workers. We’ve made the mistake of thinking of these low-wage countries as our partners, when in fact they are our competitors.
You decry that American kids are falling behind in math and science, and I agree, but I also see why. Here in the Valley, kids have grown up watching both of their parents work 80 hour weeks, forgo the family vacation because there is a new product release coming up, a tight schedule, a thousand reasons to work nights and weekends. They’ve watched their parents split up and get laid off, chewed up and spat out.
One of my friends from long ago, a brilliant man with a Computer Science degree from an A-list engineering college now works for Best Buy selling flat panel teevee machines, instead of designing them. So these kids, who should be the most likely to go into engineering and science, can see that it is a dead-end road. Kids are not stupid, Glenn. Why would they make the same mistakes as their parents?
(Glenn Reynolds in USA Today)
