Mr Isenberg has two important bits of advice for policymakers who genuinely want to foster entrepreneurship. First, they should remove barriers to entry, and growth, for all sorts of business, rather than seeking to build particular types of clusters. Second, they should recognise the importance of the profit motive. There has been much fancy talk of “social entrepreneurship”—harnessing enterprise to do good deeds—but in truth the main motivator for entrepreneurs is the chance of making big money. This is what drives people to take huge risks and endure years of hardship. And this is what encourages investors to take a punt on business ideas that, at first sight, look half-crazy. Politicians and bureaucrats do not just confuse entrepreneurship with things they like—technology, small business—they also fail to recognise that it entails things that set their teeth on edge. Entrepreneurs thrive on inequality: the fabulous wealth they generate in America makes the country more unequal. They also thrive on disruption, which creates losers as well as winners. Joseph Schumpeter once argued that economic progress takes place in “cracks” and “leaps” rather than “infinitesimal small steps” because it is driven by rule-breaking entrepreneurs. It might be nice to think that we could have growth and job-creation without a good deal of Schumpeterian cracking. But, alas, some thoughts really are worthless, impossible and stupid.
Posted on: Sat, 27 Jul 2013 21:09:00 +0000
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