Pethokoukis, Economics, U.S. Economy

Why didn’t Obama mention entrepreneurs and startups in his big economic speech?

Credit: The Wall Street Journal

Credit: The Wall Street Journal

You can certainly make a strong case that the US needs to invest more in infrastructure. But how could President Obama give a major speech on the US economy without a single reference to “enterpreneurs” or “startups?” They’re an important source of both new jobs and innovation. Is Obama not aware of any of the worrisome stats that Ed Luce mentions in the FT today? Luce:

The rate of small business creation in the US is in long-term decline. Last year, just 513,000 businesses were created, down from 543,000 in 2011. Overall, businesses under five years old account for just 8 per cent of US businesses, against 13 per cent in the 1980s, according to the Kauffman Foundation.

And there are even more troubling numbers here and here. Luce wants to cut taxes to give startups a boost:

The effective tax rate for big US businesses is 12.6 per cent but nearer 35 per cent for small businesses. Mr Obama should campaign to lower the headline rate, raise the effective one and put accountants and lawyers out of a job. He could call it the Entrepreneurs Dream Act. Since it would go to the heart of what it is to be American, the debate would put the Republicans on the defensive.

And Kauffman offers a few addition ideas worth perusing :

– Providing new firms with better access to early-stage financing, creating capital gains tax exemptions for long-held startup investments, providing tax incentives for startup operating capital, facilitating access to public markets, and allowing shareholders of companies with market cap below $1 billion to opt-in under the Sarbanes-Oxley Act.

– Accelerating the formation and commercialization of new ideas by creating differential patent fees to reduce the patent backlog and providing licensing freedom for academic innovators.

– Removing barriers to the formation and growth of businesses through the introduction of automatic ten-year sunsets for all major rules, establishing common-sense and cost-effective standards for regulations, and making assessments of state and local startup and business policies.

Does Obama not think a pro-entrepreneur agenda is a good fit with his inequality agenda? Race Against the Machine authors Erik Brynjolfsson and Andrew McAfee see things quite differently, arguing that “entrepreneurs need to keep inventing new ways to combine technology and people to create new industries and innovations. There’s never been a better time to be a talented entrepreneur and they will be needed even more in coming years as the economy undergoes faster creative destruction.”

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