Want to see the logical conclusion that one reaches when one buys into the notion that the government is the answer to every problem we face? Go to this blog post at Yu-Kai Chou to see the “logical” conclusion one reaches when one assumes that the government knows best when it comes to fixing our economy. Here is an excerpt:
The government can give entrepreneurs a VERY low amount of survival money,
like $20,000 a year, as a salary to do entrepreneurial work. This is
useful because there are lots and lots of people who would be entrepreneurs but
they couldn’t pursue their dreams due to realistic survival issues.
This plan allows them to pursue the innovation work they want without the fear
of dying on the streets.
That’s right…it is a call for an entrepreneurial welfare program. I kid you not. Read the entire post and the comments, but make sure you do it before you have had too much caffeine. Your blood pressure may go off the charts.
I have been warning you that there is a movement to push for socialized entrepreneurship in America.
Oh, my goodness. I’m not sure what made me laugh more – the ultra-theoretical rhetoric that would never work in practice (and was incredibly difficult to read to boot) or a bunch of people actually agreeing with this individual.
Since when has the government succeeded with any type of program? Dave Ramsey has clearly shown time and time again how programs like Social Security and Medicare flounder under government mismanagement. Now someone wants to include entrepreneurship as a government program?
This idea is a classic ivory tower theory from someone who has never experienced what entrepreneurship is like.
Hello Jeff,
Thanks for including my post here. I fully respect your opinion and your right to disagree with me, and I sincerely hope that I can learn something from you. I want to clarify that this is not really an entrepreneurial welfare program. It is the government paying entrepreneurs a salary to do entrepreneurial work.
In a welfare system, people are given help without doing any work. It’s a sympathy vote. In my model, entrepreneurs are paid to do things that could help with recovering the economy. Also, medicare aims to all people. The model I laid out is quite selective.
I would say that because of these 2 reasons, you cannot view it as the same as a welfare program. If you would like, I would love to you more about the subject. Maybe you can talk me out of it.
Dallon: First I want to clarify that I am a clear entrepreneur who has bootstrapped my way up and am running a decent company called Viralogy.com. We’ve had a lot of ups and downs and struggles and lessons, and I have been working on startups for five years now. We have 10 people who are contributing passionately and creating value, but I will say that we also lost exceptional entrepreneurs too simply because of bad luck. I may be wrong, but it’s not because I have a classic ivory tower theory due to never experiencing entrepreneurship.
I’m sure there are some government programs that worked, but I won’t argue with you on this one. I’m going to say that this is like an employee of the government. Can you say that the government failed by hiring people to work at the agencies, and as a result, it encourages socialism? I think not.
Again, I thank both of you for your attention, and hopefully I will be able to learn something from your experiences.
We’re going to let the government make business decisions and allocate resources instead of the market? They aren’t always motivated by profit or by return on investments; additionally, subsidizing even some very promising entrepreneurs isn’t something that can be easily done with tax revenues or treasury-backed debt in these times.
Even the private sector gets it wrong sometimes. Weren’t there a lot of new dot-com startups with flashy business plans that went belly up in the 90’s?
Hello Heathen,
I think you commented on my blog too. Thanks for the conversation. My response here will be similar because I think it addresses your concerns.
The private sector is best at determining which businesses are profitable, but they are also the ones that got Wall Street out of control. That’s why I think it’s better to discuss good strategies on a case-by-case decision instead of just saying “This is public so it is bad” or “This is private so it is good”. I think both the public and the private sectors need to make right moves for a society and economy to function well. Without a government, there would even be problems with a universal exchange currency, and that would definitely not be efficient, though very “free”.
I agree that startups are a hit or miss model, and most startups fail. However, VCs do learn from experience. In 2000, VCs invest on a powerpoint. After the dot-com era, VCs invest in companies that have traction. I think after this recession, VCs will focus on companies that have some form of revenue. In my model, if you look at the numbers, a VC can actually be A LOT below par and still have the entire model work out for society. And like I suggested, that money will be spent into others’ pockets.
If the government can use tax revenues or treasure-backed debt to delay the demise of large dying companies, I’m sure they could easily take 1% of that and put it into more startups instead. I think the economy would turn out better.
If you look at world history, there are numerous recessions that are saved because of very active governmental actions. You may argue that if the government is hands-off, it might even recover faster, but one point or another, the recession recovered, so it’s hard to say that the government intervention was “bad and disgusting”.
I can tell you that a lot of great start ups that create a lot of jobs happened because the founders had middle class parents and they could move home (or they were at school). When you remove that, a lot of these great companies would not have been there. That is why I believe if more scenarios of that situation was created in the name of the government paying a “salary” to entrepreneurs to do work that can help the economy recover, it would be a good model.
Again, thanks for the comments and I hope you have a great weekend!
Hello Jeff!
It’s been over a year and I still firm of my belief that this is a potential solution. It may have flaws in it and I am happy to have more discussions on it. However, I am disappointed to see that no one is answering my comments and potentially showing me things that I have missed myself. If you read any of your comments, here’s a re-invitation to start this conversation again. I find it a bit unfair for throwing out relatively personal attacks without backing up the responses. So lets talk more 🙂