The September 13th issue of Forbes magazine had several interesting articles on job creation. The first one I want to discuss is that of Tim Kane of the Ewing Marion Kauffmann Foundation. Mr. Kane’s article is entitled Every Man (and Woman) An Entrepreneur. (Sorry no online version available). He makes the point that America will not see more job creation without more job creators and he quotes a study he had done that shows that since 1970 all net job creation was accounted for by new companies. Existing firms since that time have accounted for over 1 million jobs lost. Kane goes on to say that government(s) make becoming an entrepreneur too expensive with fees and taxes and therefore people are hesitant to start companies and thus create new jobs. Without freeing up the ability to start a company by removing these restrictions we will not see the jobs needed being created. He also says that the current structure requires companies to be “paternalistic” and thus life becomes too comfortable for workers discouraging them to become entrepreneurs. His solution is to make everyone an entrepreneur.
Now being an entrepreneur myself, since 1991 in fact, I am all for the concept. I am also for the concept of reducing taxes, removing fees and other roadblocks to people starting businesses. The only problem is the Federal and state governments themselves, particularly the current Federal administration. Mr. Kane even gives the real reason they will not change things to allow freer entrepreneurship. The third line of his article is “Of all the money government collects, none makes less sense than the $800 billion a year scraped from payrolls.” There is the answer… $800 BILLION… which I will say is easily collected from payroll taxes on corporations. If the government had to try and collect that from individual entrepreneurs they would be broke. And the government is not in a mindset to collect less taxes, they blame tax breaks for the recession.
Additionally, the current mindset of the Federal government is that workers cannot protect themselves so they have to do it. If everyone was an entrepreneur what would the US DOL do?
So as noble and productive as the idea may be of making everyone an entrepreneur, free to negotiate pay and benefits, I just don’t see it happening anytime soon. Any of you know any politicians willing to give up $800 billion?