Sunday, September 12, 2010

"Start-ups are where the job-creation action really occurs"

The way forward is clearly the implementation of startup-centric policies. The Democrats have been helpfully demonstrating the inadequacy of their old, mid-20th century policies centered around Big Business, Big Labor, Big Government. Unfortunately Democrats won't give up their outdated ideology until forced by circumstances to do so which will eventually happen as their current policies continue to fail to revive the economy. But conservatives are no help here as they keep engaging in behavior that appears to everyone except conservatives themselves as anti-immigrant, anti-Muslim xenophobia. Which only serves to discredit some good ideas about markets by association with this ugliness. A key element as we move forward needs to be embracing immigrant innovators and entrepreneurs but instead the right's behavior is creating an environment that many immigrants perceive as hostile. Thus we risk driving away people who could be making important contributions. Despite this I hope we are able to make the right policy changes to enable immigrant entrepreneurs to stay, become Americans, and help build the next iteration of the American Experiment.

For decades, the assumption has been that small business is the economy’s dynamic engine of job generation. Look at the numbers broadly, and that is the irrefutable conclusion: two-thirds of net new jobs are created by companies with fewer than 500 employees, which is the government’s definition of a small business.

But research published last month by three economists, working with more recent and detailed data sets than before, has found that once the age of the businesses is taken into account, there is no difference in the job-producing performance of small companies and big ones.

“Size plays virtually no role,” says John C. Haltiwanger, a co-author of the study and an economist at the University of Maryland. “It’s all age — start-ups are where the job-creation action really occurs.”
...
For Mr. Silbert, work-force issues trump taxes as a long-term concern. Like many other entrepreneurs, he advocates granting more residence visas to skilled immigrants, especially those who attend American universities.

“The best and the brightest from other countries come here, and then we’re not letting them stay,” he said. “That will damage innovation and job creation in the United States.”

FOREIGN-BORN entrepreneurs have long played a big role in American start-ups. A study that tracked technology and engineering start-ups from 1995 to 2005 found that one quarter of them had a foreign-born chief executive or head technologist; by 2005, the surviving companies generated $52 billion in sales and employed 450,000 workers.

There are signs that policy makers are looking to accommodate highly skilled workers and entrepreneurs, says Robert Litan, an economist at the Kauffman Foundation. As one example, he points to legislation proposed this year by Senators John Kerry, Democrat of Massachusetts, and Richard G. Lugar, Republican of Indiana. Called the Start-Up Visa Act, it would grant visas to immigrant entrepreneurs who create jobs in the United States.

NYT

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