Innovation, American Entrepreneurs and the New Job Agenda

May 14 2014, 12:54pm 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.

Here are a few of those policies rooted in common sense:

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

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.
 
 
One-third of Libyans suffer mental health problems: Report
Tripoli, Nov 26 (IANS) Human rights violations in Libya have left nearly a third of the population suffering from mental health problems, according to a new report.
 
 
1.7 kg of drugs found in Iranian's stomach
Tehran, Nov 26 (IANS) Narcotics weighing 1.7 kg have been found in the stomach of a 20-year-old man in Iran's northeastern Khorasan Razavi province, police said.
 
 
 

Latest from the Network

The Black Friday 2014 Sales You can Shop Today 11/26
While most Black Friday 2014 ads state that Black Friday 2014 sales start on Thanksgiving Day, we are already seeing more than 20 Black Friday sales that are live online and even several that launched in stores. The...
Read more on Celebrity Balla
 
Tori Spelling wants to display breast implants
Tori Spelling wants to get her breast implants removed and display them in a glass dome on her wall. The 41-year-old reality TV star is keen to have her fake boobs taken out because they have ''expired and recalled''...
Read more on Celebrity Balla
 
Prince leaves social media
Prince has removed himself from social media. The 'Little Red Corvette' hitmaker has deleted his Instagram, Twitter and Facebook accounts and removed his work from YouTube and Soundcloud, just a year after joining the...
Read more on Celebrity Balla
 
Party-pooper Pharrell Williams
Pharrell Williams says asking him if he wants to go out partying is like asking a McDonalds worker ''if they want chicken nuggets for dinner''. Despite being a successful singer, the 41-year-old star insists he's not a...
Read more on Celebrity Balla
 
43 IS militants killed in clashes with Iraqi Kurds
Mosul (Iraq), Nov 26 (IANS/EFE) At least 43 members of the Islamic State (IS) Sunni radical group were killed in clashes with Peshmerga Kurdish troops near the strategic Mosul Dam near the northern Iraqi city by that...
Read more on Politics Balla
 
Five soldiers killed in Yemen Al Qaeda attack
Sanaa, Nov 26 (IANS) Five soldiers were killed in a massive attack by suspected Al Qaeda miltants against a Yemeni military base in the southeastern province of Shabwa Wednesday, a police source said. The source told...
Read more on Politics Balla
 
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...
Read more on Politics Balla
 
IS pamphlets distributed in Pakistan
Islamabad, Nov 26 (IANS) Unidentified people have distributed pamphlets of the Islamic State (IS) Sunni radical group in Pakistan's South Waziristan tribal region, residents who have seen the pamphlets said Wednesday...
Read more on Politics Balla
 
Three policemen shot dead in Egypt's Sinai
Cairo, Nov 26 (IANS) A police officer and two recruits were shot dead Wednesday by unidentified gunmen in Arish city in North Sinai province, a security source told Xinhua. "The militants set an ambush for a police...
Read more on Politics Balla
 
Ferguson burns as racial protests spread across US
Washington, Nov 26 (IANS) As night fell, Missouri state in midwestern United States deployed more security forces to quell violence in Ferguson after a grand jury failed to indict a white police officer in the August...
Read more on Politics Balla