Is America Losing Its Startup Edge?

from the not-good dept

We've talked, in the past, about the paradox of job creation by the government. Too often the government acts as if "job creation" is about propping up or subsidizing big companies, hoping that they'll hire lots of people. And, intuitively, you can see the appeal there for two reasons. First, it's much easier to think that Giant Telco A will likely hire another 5,000 workers to dig ditches if the government gives them a bunch of money, than it is to think that random startup A will hire 5,000 people. Second, often the disruptive innovations that actually do create economic growth and jobs comes at the expense of legacy companies in older industries. And the fear there is always job losses. So, some new startup comes along with a technology that makes life more efficient and makes stodgy old legacy company obsolete... and upfront you're going to see job cuts at the legacy company, even if the end result is many more jobs (and greater economic efficiency).

But the truth is that if the government wants to really create new jobs, it needs to support the startup ecosystem. Research from the National Bureau of Economic Research (NBER) and the US Census Bureau last year found that startups really are the key to both gross and net job growth. So if the government really wants to encourage economic growth and new jobs it should be focused on making sure the startup ecosystem is strong and vibrant. Unfortunately, that doesn't appear to be the case. When we see proposals like SOPA, which will hinder startups by placing tremendous liability on them and scaring off investors, we get worried.

Already, the situation isn't great. While the US certainly has the reputation for being friendly to startups, Aaron DeOliveira, points us to a report that shows that the US is actually 23rd on a list of startups per working-age population within countries that are members of the OECD. Even France is ahead of us.

This does not bode well for the US economy or for job growth. For innovation to thrive, we need the creative destruction and economic and job growth brought about by startups and entrepreneurs. We don't get that when the government is "captured" by the large legacy players who are only focused on "protecting" and defending their turf, rather than fostering innovation, growing the economy and creating jobs.

Filed Under: america, innovation, jobs, startups


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. icon
    JavaBean.Anon (profile), 10 Jan 2012 @ 4:00pm

    Sounds like they want to recommend the U.S adopt Capitalism.

    That would be an excellent thing to do for the the economy, But(and this is huge) it would get in the way of the MASSIVE Corporations that give "Career Politicians" Untold BILLIONS of dollars every year.(discussions on "Career Politicians" will have to wait for an appropriate topic)
    But Mr. Bean(joke intended) how would Capitalism effect the Massive Corporations?...

    Capitalism def2 wiktionary # (economics, uncountable) a socio-economic system based on the abstraction of resources into the form of privately-owned capital, with economic decisions made largely through the operation of an unregulated market.

    Note the last little bit....Operation of An Unregulated Market.... what does that mean?

    Stay with me now......Nothing like Patents....what is a patent?....a monopoly on an idea.....why can't Capitalism work with patents?..... because in order to innovate in such a way that different companies have different but similar products differing only slightly(like one is red and round but the other is rectangular and blue) they would use similar ideas or even the same ideas to get to different ends.

    what proof do you have that patents stifle capitalism/competition/innovation?.....The "mobile device patent war" is one example that is only a google away.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.