Readings on Entrepreneurship and Economic Growth

What are we, as investors, to make of all the dire predictions about our economic and financial futures? A little over a decade ago we were simply overwhelmed with the prospect of a limitless future and all the wealth it would bring; our “irrational exuberance” drove the stock markets to unimagined heights, until the tech bubble ended in tears. But now, as technology has indeed changed the entire world – in many ways beyond what we imagined – pervasive pessimism rules. I mentioned Endgame a while ago, a book written by a very smart guy detailing how the world’s debt was out of control and we were on a course to imminent financial disaster. He makes a compelling case.

start-up-nationThen I read Start-Up Nation, and had the pleasure of visiting Israel and spending a week with the authors and many of the entrepreneurs and investors from the book, the stars of Israel’s remarkable emergence as one of the world’s most important places for innovation and entrepreneurship. This tiny country leads the world in Venture Capital investments per capita by a large margin over #2 – the United States.1

Recently I referred to an article from The Economist entitled “European Entrepreneurs,” which told the sad tale of the dearth of start-up activity in Europe. This and many other publications these days are suggesting that economic growth and job creation are driven less by macroeconomic variables – e.g., government “stimulus” spending – than the last of the old fashioned ivory tower economists would have you believe. Instead, economies grow, and have always grown, at least partly because entrepreneurs started businesses and grew them. Thus, the article opines, the serious obstacles to start-ups such as exist all over Europe account for the massive unemployment many of those countries are experiencing.

Happily, the U.S. is still a pretty good place for start-ups and, short term issues aside, that ought to make for a good future if we do not muck it up. On the other hand:

1. We might well move in the direction of Europe, in terms of taxes and regulations, and thereby undermine our engine of growth.

2. Our debt and deficit issues could spiral out of control and destroy our chances for recovery and growth.

So, do you believe we will spiral downwards into a morass of debt and unemployment, as some predict, or will the energy of new business and growth once again lift us beyond our present woes?  There are arguments for both sides; it is just a shame the optimistic point of view gets so little press these days.

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Readings on Entrepreneurship and Economic Growth

time to read: 2 min