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


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  1. icon
    vruz (profile), 10 Jan 2012 @ 2:34pm

    For me, fascism is the deal breaker

    I don't need to see the OECD report really, some time ago I was excited about the prospect of starting up in the US.
    You know what killed it?
    The crazy fascists killed all they joy.
    I am perfectly aware that those idiots are a minuscule minority in the developed states of the US.

    Look what happened to a well-established executive of Mercedes in Alabama:
    http://www.reuters.com/article/2011/11/22/us-immigration-alabama-mercedes-idUSTRE7AL0DT201 11122

    The same happened to a Toyota executive a while later:
    http://www.guardian.co.uk/world/2011/dec/02/alabama-car-boss-immigration-law

    I know, I know, such crazy cases are "just" in Alabama...
    But do you think it's reasonable for an immigrant to be risking everything in the minefield of US-wide state laws whenever she needs to travel for business?

    Just crazy.

    You can only think these are isolated cases if you are 1) white 2) american. Being white alone didn't save the Mercedes executive the trouble.
    It's not racism, it's unlimited, rampant, xenophobia.

    Why do you think entrepreneurs would be willing to risk their mental and physical integrity in order to give jobs to the USA?
    Only the unaware who have too little to lose would jump in such sorry state of lawlessness.

    The America the world used to admire is being destroyed by the crazy idiots, and you're not doing nearly enough, nor seriously taking up the fight to preserve that precious legacy.

    Rant over.

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