Wanted: more entrepreneurs to revive the global economy!
Posted on 26 August 2011 with 9 comments from readers
Yes your country needs you, wherever you live if you are an entrepreneur. These are the guys who start businesses and employ people. All the jobs created in the US in recent times have come from small and medium sized enterprises, some of which later became huge businesses like Microsoft or Apple.
Why then does the government respond to the global economic crisis by raising taxes, increasing regulations and generally promoting big government to the detriment of business?
Smaller public sector
Sacking bureaucrats and making that money available to entrepreneurs would work better. Certainly downsizing government is a good thing. Entrepreneurs do not need governments to tell them what to do. Government has gotten way too large and the deficits needed to pay for it around the world now hobble the expansion of real enterprises.
Ironically the do-gooders who aim at greater fairness in society often end up doing real damage to the economy by stifling the wealth creators. This is where the money comes from, not government initiatives to create jobs and richer societies generally heal their own social problems.
Governments have nothing to do with job creation. Governments do not start businesses, and if they do these are generally corrupt and incompetent, and only good for privatization and handing back to entrepreneurs.
In Jaqueline Novogratz’s book ‘The Blue Sweater’ about new business-style approaches Third World aid there is one example that strikes home.
A woman close to death in the horrific aftermath of the Rawandan genocide is given four litres of milk by a neighbor, sees an opportunity to sell what she cannot drink herself and suddenly understands how to make a living trading milk. Today she owns a sizeable catering business and restaurant.
Starting young
Everybody can start somewhere. This editor’s 11-year old nephew sells sweets at school for double the price he pays in bulk at a local sweet shop. That is the entrepreneurial gene at work. How many people will he employ in future when he has his own shop? That is how Warren Buffett got started.
We really do need to get back to basics. What makes an economy work? Governments overborrowing and messing up currencies does not help with deflation, inflation and devaluation. Solid money is important. Bad government helps nobody.
Goodness knows what the global economy faces this autumn in terms of the Day of Reckoning and atonement for the sins of the past generation of central bankers and politicians. However, the fastest way out of the mess will be to stand back and let entrepreneurs do what they do best: make money! Investors should of course be right behind them.
9 Comments posted by readers:
Can anything save the global economy? Entrepreneurs will be making currency, true, but what currency! Devaluing the whole time and based on yet more borrowed currency.
The old wealth cycle, where entrepreneurs like Buffet flourished, is dying because of the constantly inflating currency it used to get rich. The new wealth cycle is money, not fiat currency.
If your nephew was taking gold or silver for sweets, then he would be using money, real money, and he would be getting rich. He would not be getting swamped with inflating currency, losing its value over time.
In past centuries, he might well have been able to take gold and silver money, but we are so dependent on the currency which the politicians say we must use, even thieving our money once by Roosevelt, that we cannot get back to money to sell our “sweets”.
My son sell sweets at school too. How nice to know that he’s on a great career path.
Welcome JJ..good to have you aboard..you have a sense of humor..Peter, you should know that no govt can deregulate itself..only little people are robbed of life by constant regulation..bureaucrats & pols are on public assisstance @ VIP level..caviar food stamps i call it..the fiat money/pollitical police had their shot at sobriety/rehab..they left treatment against medical advice..until hope is a recognized currency, the system is broken..powers that be are banking THEIR hopes on the total police state..they care for entrepreneurs not one cent
Interesting example you give:
> A woman close to death in the horrific aftermath of the Rawandan genocide is given four litres of milk by a neighbor, sees an opportunity to sell what she cannot drink herself and suddenly understands how to make a living trading milk. Today she owns a sizeable catering business and restaurant.
If the more wealthy person hadn’t charitably given away 4 litres of her milk to her neighbour, then she may not even have lived to start the business and restaurant!
One of the big problems is government pushing the burden of regulation onto business. In the UK, the employer pays a pregnant woman’s maternity leave; this is a hidden tax. By contrast in France the government pays for maternity leave, not the employer; so all tax is accounted for centrally.
Subsidies for wind farms operate on the same principle – a hidden tax is levied on everybody’s electricity bill and paid directly to the operators of wind farms. None of these hidden taxes are captured in the regularly-published global tax comparisons.
“Why then does the government respond to the global economic crisis by raising taxes, increasing regulations and generally promoting big government to the detriment of business?”
Because big business has all the lobbyists. A few years ago, agricultural equipment maker John Deere lobbied the US government in favour of stricter pollution controls on gasoline-powered lawnmowers, chainsaws, and the like. Why would they do this? Because at the time John Deere was the only company whose products polluted less than the proposed threshold. Politicians get to look good and receive kickbacks (campaign contributions) at the same time.
The main reason why Microsoft, Apple, Google, Facebook, and all the rest came from the USA is because the USA has the rule of law. Corrupt government is what limits prosperity in most of the world. It constrains human achievement more than anything else.
Excellent commentary, Peter.
This should be “required reading” by every politician in the western world (and elsewhere!); after reading it, they should be given an exam to see whether they’ve learned anything.
@ Andrew M.
I enjoyed reading your perspective on this topic . . . absolutely on target.
The Importance of “Rule of Law” to Economic Prosperity:
Bill’s remark about corrupt government is also noteworthy; however, over the past few years, we’ve witnessed too many examples of where the “rule of law” was repeatedly violated by our own government. Here’s just one very recent example: US Attorney General Holder and Mr. Obama are violating the “rule of law” in the interests of obtaining $500 million in campaign contributions! Matt Taibbi’s commentary about why Obama is trying to muzzle the NY state Attorney General:
http://www.rollingstone.com/politics/blogs/taibblog/obama-goes-all-out-for-dirty-banker-deal-20110824
Shameful. Just shameful.
Wanted: more entrepreneurs to revive the global economy ? Huh I had a very good Idea passed it on to a Cuban Agriculture chap this country ( Britain ) not interested he was very impressed with what I told him .