Wednesday, December 15, 2010


Entrepreneurs are different from small business. The entrepreneur is a larger scale risk taker, a risk taker focusing on an idea of some substantial size and uniqueness, a product or service which will have a chance of creating a change in the way things are done. Edison was an entrepreneur, as were Hewlett and Packard, as was Fred Smith and Federal Express, Steve Jobs and Apple, and the team at Google. For each entrepreneur who has made it to the peaks there are hundreds who have made it and thousands who tried but were not successful. Yet the United States is unique amongst nations in its history of entrepreneurs.

To have such a fertile environment for entrepreneurs one needs a collection of several things: 

(i) a pool of highly talented people who can conceive of an implement their innovative ideas, 

(ii) sources of capital to fund the development of the ideas, 

(iii) a set of Government regulations which allow and, even more so, foster such innovation, 

(iv) a relatively stable environment politically with some form of relative predictability and honesty of government and business practices, 

(v) a clear legal framework for the protection of property, the understanding of contract, and the ability to seek timely remedies, 

(vi) and most importantly, a strong spirit of individualism, an ability to strike out on one’s own and to be supported in such an effort by the community.

When these elements come together there can be a strong entrepreneurial spirit and entrepreneurial growth. In today’s world there really are just two countries where this flourishes. The United States and Israel. Despite what many think of China, their entrepreneurial talent at this stage lies in many ways in reproducing or extending what has been created elsewhere. China in many ways is Japan of thirty years ago. China has a growing pool of talent, and within bounds a sense of individualism. However, China lacks both a long term stable and predictable environment and it most importantly lack a legal framework or ethic for the protection of property and contract rights.

Japan on the other hand still suffers from a mercantilistic mindset, the spirit of the individual does not thrive. Europe has no true spirit of individualism, and in addition has governmental burdens which make entrepreneurial development difficult.

The risks in the United States however can be seen as significant, especially in the current Administration. First, the pool of talent is diminishing. This is so for two reasons. 

First, the non-US students find staying in the United States near impossible. The bent of the immigration policy is focused on the legalization of those here illegally yet who would represent a large voting pool. A student from China or India who wishes to remain finds it impossible in many cases. 

Second, the students who are native to the country find that the cost of education is exploding, due primarily to the added overhead on universities from Government programs, mandated by law, and adding layers of bureaucracy that has no merit other than meeting the demands of Washington. Thus we prevent those who are in the US from entering and then we eject those from outside from the country. This is the first fundamental flaw of the Current Administration and its supporters.