Innovation, American Entrepreneurs and the New Job Agenda

May 14 2014, 12:53pm CDT | by

American ingenuity. It’s the stuff of lore and legend, and it’s what drives the global economy. We literally bank on the next disruptive entrepreneur — and innovative new technology — to completely redefine or create new industries. It’s what America does really well, our goose that continues to lay golden eggs.

And yet, maybe not.

The truth is that America’s startup engine is sputtering. The hope doesn’t always match the hype, and incubators, accelerators and entrepreneurial enclaves across the country are full of well-intentioned new products, if not real, scalable, game-changing innovation.

null

A February 2014 Kauffman Foundation study found the high-tech entrepreneurship rate peaked in the U.S. in 1982 – 32 years ago – when it represented 60% of all new firms. Today that rate has dropped by half. To be sure, there’s still an explosion of startups spreading across the country, and it’s cheaper, faster and easier than ever before to launch a new venture. But it’s also harder than ever before to succeed and scale, especially in a way that creates lots of jobs and lots of wealth for lots of people.

The condition of the nest – to belabor the analogy – does seriously impact that golden goose. Few American policy makers seem concerned about the conditions, particularly at the federal level.

Investors may love the idea of the capital efficient startup – a new venture that can launch and quickly grow big with as few people and resources as possible — but it’s so staggeringly rare that it’s barely a statistic. And when it does happen, the success of a venture like WhatsApp ($19b “value” with 55 employees) does relatively little to actually grow our common economy.

Innovation takes people, capital, research and development. It takes time and a big picture, long-term view. And it takes smart public policy that encourages and fosters those conditions. The political stalemate and gamesmanship in Washington has compromised America’s true drivers of entrepreneurship, innovation and our high-tech industry.

And yet both sides of the aisle talk about growth and jobs and new economic booms. Both parties talk about nurturing young, growing companies.

There really could be a common growth agenda in Washington, were it not mired in inaction and no sense of urgency. The consensus items are foolishly frozen as pawns in one or another political negotiation.

Align the education system to crank out more entrepreneurial-minded, tech-savvy kids

There’s a push in many states to include more coding, tech and design into secondary education, but computer literacy should be a part of the national discussion of basic competencies we expect of all kids. We need more specialized middle and high school technology programs. Becoming a great technologist takes about as much experience and knowledge as becoming a medical doctor, but those 10 to 12 years’ experience usually start in the family basement playing around with computers. More kids need access to start this learning path in more structured, supported programs.

null

Reopen America to the brightest, most motivated immigrant minds

More than 25% of all new businesses in America are started by immigrants, more than one-third of the venture backed companies that went public in the past six years, and for that matter, 40% of the Fortune 500, were all founded by immigrants. Our universities continue to attract the brightest minds around the world. Fifteen years ago we retained many of those minds in the United States. Today, those folks are increasingly educated here and then shown the door.

null

I’ve met very few politicians from either party who disagreed with stapling a green card to the diploma of a foreign born graduate in science, tech, engineering or math, yet it doesn’t happen. For every 1% increase in H1B STEM employment, there’s a 7% to 8% increase in wages for US workers. Yet the tiny allotment of H1B visas disappear each year within a matter of hours. Immigration reform is stalled by some Republicans in the House, and that inaction is strangling our ability to grow jobs and increase wages.

Invest into long-term, basic research

The innovations that drive American productivity and quality of life often originate in basic, government funded research. And while overall private sector research and development is woefully stagnant, the situation is even worse in long-term basic research funded by the tax payers, a mounting crisis that will reverberate for generations. Increases in basic government research in the United States accounted for as much as 50 percent of US economic growth between 1950 and 1993 (and that doesn’t include the internet driven growth of the past 20 years, an innovation that would not exist but for government funded research). And yet we’re dramatically underfunding research today.

null

Smarter tax policy could also be linked to encourage investors that support early-stage R&D and dedicate themselves to long-term research projects, not just quick, short-term gains. An Ernst & Young study of R&D Partnership Structures (a bipartisan idea that’s bouncing around Capitol Hill) suggests the idea would increase investment by an estimated $10.3 billion per year, and create 150,000 new jobs in short order.

Focus on growing new, small,  fast growing companies

The House of Representatives just passed a much needed research and development tax credit, but it does very little to impact young, growing companies. Most new ventures (the ones where the vast majority of new jobs are created in America) don’t yet have much income tax liability. If you want to free up capital for real job growth, support ideas like the Startup Innovation Credit Act, which would allow small businesses to offset payroll tax liabilities.

null

Fix, don’t tweak, the patent system and frivolous abuse

Patent litigation reform to curb abusive tactics is critical, but it starts with a more effective patent office that has the proper resources to evaluate and issue valid patents in the first place. The cost of frivolous litigation is suffocating innovation, especially among small companies, but so, too, is the timing and process young companies must go through to get valid patents.

null

Help American companies reinvest into America’s future

Big US-based, multi-national companies (including many in the tech industry) have about $2 trillion trapped offshore, avoiding repatriation under one of the highest corporate tax rates in the world. Democrats are skeptical that a reduced rate or tax holiday would result in the kinds of reinvestment into American growth that big companies promise, so nothing happens. Smart corporate tax reform could include incentives to reinvestment that capital into innovation, venture growth and national infrastructure. It’s not an intractable problem, but Washington hasn’t been up to the challenge.

null

Turn over the giant asset of open data to jumpstart new markets

We’re entering an exciting time for data, analytics and opportunities for increased insight and efficiency. Open data projects will result in smarter, more responsive and transparent government, there should be a national push to make more government records and data available across all departments. The innovative ideas and insight that could come from releasing that incredible asset to entrepreneurs would no doubt spawn new industries.

null

Most of the priorities above aren’t particularly political or divisive issues. These are all job and growth creating policies. The list is far from complete. Some are just basic common sense. Voters in every region of the country would benefit from their impact, and that would mean every politician would enjoy the credit along with their thanks. The only thing missing is for Washington to think and act more like the entrepreneurs they celebrate.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Pakistan blocks three Saarc connectivity pacts; Modi, Sharif avoid meeting (Intro Roundup)
Kathmandu, Nov 26 (IANS) Pakistan Wednesday played spoilsport by blocking three major Saarc connectivity projects initiated by India, even as Indian Prime Minister Narendra Modi conspicuously avoided meeting his Pakistani counterpart Nawaz Sharif while he met five other South Asian leaders here.
 
 
Way out of debt crisis far from easy: Angela Merkel
Berlin, Nov 26 (IANS) German Chancellor Angela Merkel Wednesday said the way out of the European debt crisis is long and far from easy.
 
 
The Black Friday 2014 Sales You can Shop Today 11/26
The Black Friday 2014 Sales You can Shop Today 11/26
Over 20 Black Friday 2014 sales are already launched. Get the deals early to get your head free for the hard to get Black Friday deals to be released on Thanksgiving Day.
 
 
Pakistan blocks three Saarc connectivity pacts; Modi, Sharif avoid meeting (Roundup)
Kathmandu, Nov 26 (IANS) Pakistan Wednesday played spoilsport by blocking three major Saarc connectivity projects initiated by India, even as Indian Prime Minister Narendra Modi conspicuously avoided meeting his Pakistani counterpart Nawaz Sharif while he met five other South Asian leaders here.
 
 
 

Latest from the Network

Putin says Russia to stay out of geopolitical conflict
Moscow, Nov 27 (IANS) Russian President Vladimir Putin said Wednesday Russia is not a threat to any other countries, vowing that Russia will stay out of any geopolitical conflict. "We are not threatening anyone and we...
Read more on Politics Balla
 
Brothers sentenced on terrorism charges in Britain
London, Nov 27 (IANS) Two brothers from London have become the first Britons to be jailed for attending terrorist training in Syria, London's Metropolitan Police said Wednesday. Mohommod Hassin Nawaz,31, was sentenced...
Read more on Politics Balla
 
Spanish minister resigns after implicated in corruption case
Madrid, Nov 27 (IANS) Spanish Health Minister Ana Mato resigned Wednesday after a judge concluded she had benefited economically from a corruption scandal. "I have decided to present my resignation as minister of...
Read more on Politics Balla
 
Nicole Kidman wants four more kids
Los Angeles, Nov 27 (IANS) Actress Nicole Kidman already has four children, and she'd love to have four more. The 47-year-old, who is a mother of an adopted daughter and son, Isabella and Connor from her previous...
Read more on Celebrity Balla
 
Apple Black Friday Deals are on Sale in MacMall Black Friday 2014 Sale
Apple reseller MacMall has launched their massive 60 Hour Black Friday 2014 Sale.Savings on Apple MacBook Pro with Retina reach $300. While Best Buy and others offer Black Friday deals on lower end models, MacMall lets...
Read more on Apple Balla
 
NewEgg Black Friday 2014 Sale launched
The NewEgg Black Friday 2014 starts at 1pm PT. This is in a couple of minutes. Get your mouse ready and load up newegg.com in your browser.NewEgg has released a NewEgg Black Friday 2014 Ad a couple days ago.The NewEgg...
Read more on Black Friday Countdown
 
Kanye West delays flight and doesn't say sorry
Kanye West delayed an aeroplane flight and refused to apologise to fellow passengers. The hip-hop superstar was travelling from Paris, France to Helsinki, Finland yesterday morning (11.25.14) and despite boarding the...
Read more on Celebrity Balla
 
Damian Lewis likens OBE to being a prefect
Damian Lewis has likened receiving an OBE to ''being asked to be a prefect''. The 'Homeland' star was handed the prestigious civilian award by Britain's Duke of Cambridge during a ceremony staged at Buckingham Palace...
Read more on Celebrity Balla
 
French Montana won't sign prenup agreement with Khloe Kardashian
French Montana won't sign a prenuptial agreement if he marries Khloe Kardashian. It took the 30-year-old rap star two years and $2 million to finalise his divorce with ex-wife Nadeen Kharpouch - whom he married in 2007...
Read more on Celebrity Balla
 
Ariana Grande and Big Sean are 'loved-up'
Ariana Grande and Big Sean are ''loved-up''. The couple confirmed they were an item in October and in a candid interview, the 21-year-old songstress has gushed about her rapper boyfriend, describing him as ''a...
Read more on Celebrity Balla