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The relative absence of entrepreneurship in election rhetoric from either party is disappointing. Job creation, protecting jobs, and getting the most out of the labor force are frequent topics of discussion.
However, both candidates have surprisingly little to say about entrepreneurship, the largest net creator of jobs in the United States.
Why is Entrepreneurship Policy Important?
The American economy relies on entrepreneurship. Micro and macro economists agree that it has resounding positive economic effects. Entrepreneurship has also been linked to non-economic benefits such as community development, social change, and an increase in egalitarianism. It is not hard to see why Entrepreneur magazine says entrepreneurs represent the “backbone of America.”
U.S. entrepreneurship has two major categories. One is high-tech, high-growth industry like the kind seen in Silicon Valley or on Massachusetts Route 128. The other is the small to medium-sized enterprises owned by self-employed Americans.
The 2008 recession caused a dip in U.S. entrepreneurship, disproportionately affecting these small firms. These enterprises experienced a drop of nearly 150,000 less than 1-year-old businesses between 2008 and 2010. High-tech, high-growth firms experienced a dip as well. Venture capital dropped from roughly 4,000 deals a year to 3,500 in the same period.
U.S. Bureau of Labor Statistics data shows that both high-tech firms and small to medium-sized businesses now approach pre-2008 levels. Venture capital investment in high-growth, high-tech firms has nearly doubled. According to PricewaterhouseCoopers data, aggregated investment dollars totaled $30 billion in 2013 compared to roughly $60 billion in 2015.
Pew Research Center polling show an overall desire by the public to engage in entrepreneurial activities. The poll indicates 71% and 68% favorability rates for small businesses and tech firms respectively. Smart public policy is critical to harness this popular support and immense economic power.
Entrepreneurship in the 2016 Election
Discussions of entrepreneurship have been largely absent from the election. Many of the policy issues that have been discussed could indirectly impact entrepreneurship, especially those concerning economic regulation, immigration, and healthcare. Policies focused on areas adjacent to entrepreneurship, including capital investments, STEM research, and high-tech education, are also important.
However, a primary focus should be on getting capital directly into entrepreneurship markets. Competitive capital is crucial - government money is sometimes invested in startups that are unlikely to succeed, which leads to a “crowding-out” effect. The government should invest along side competitive, returns-focused capital to promote the development of America's high-tech high-growth industry and its small business economy.
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