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Letter from the editors: Encouraging Entrepreneurship — the Engine of our Economy

Letter from the editors: Encouraging Entrepreneurship -- the Engine of our Economy
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The problem that has been manifesting itself in our generation is that the people who are supposed to be some of the smartest, most capable graduates in the country are the ones who are the most risk-averse. The most conventionally “qualified” graduates are the ones least likely to become entrepreneurs. Of course, there are plenty of high-profile exceptions like the Mark Zuckerbergs of the world. Then, there are those who go into business for themselves halfway through their careers. Nonetheless, the prevalence of graduates seeking out and staying put in their corporate jobs instead of taking their talents to the market and going into business for themselves is drastically increasing. This trend, and the risk-aversion of the “elite” that is largely responsible for it, needs to change in order to get our economy back on track.

Entrepreneurship, simply put, is the engine of our economy. American enterprise, and the fulfillment of the narrative of the American Dream, has made us the leader of the global economy. And it’s what we’ll need more of to keep us on top. Ironically, more Americans need to take their cues from immigrants desperate to come to America to achieve their own version of the American Dream. For this to happen, we need more young Americans to take calculated risks and not shy away from all risk whatsoever.

Rather than encouraging this attitude shift to parallel the prevalent attitude throughout our history of economic prosperity, the Obama administration has done exactly the opposite. By saddling small business owners and the self-employed with increasingly larger burdens in taxes, healthcare responsibilities, and other impediments, the government is seriously disincentivizing entrepreneurs. Moreover, these burdens on small business owners are responsible for some of the turn away from entrepreneurialism in this country today.

Even more unfortunately, the Obama administration isn’t the only part of the government to blame for this problem. State and local governments, especially in states like California and New York, have their hands in the pockets of everyone trying to make it on their own at every juncture possible. Dartmouth College graduate and Harvard Law student, David Mainiero, said:

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“Opening a restaurant in California was incredibly expensive, even before we built or bought a single thing, and even before we hired anyone whatsoever…Between the $800 annual franchise tax, the $5,000 sales tax permit, the $1,500 city business license, the city’s mandatory contribution of a fixed percentage of your renovation budget to ‘the arts, the $3,000 design review application fee, the $500 signage application fee, the $5,000 liquor permit transfer fee, the $2,000 building permit and construction plan review fees, it’s like having the wind knocked out of you while trying to run a marathon. And that doesn’t even begin to get into the healthcare, FICA, payroll taxes, and many other items you get hit with over the life of the business.”

This is not the kind of environment in which businesses flourish.

Many educational institutions have recognized this and have tried to act to encourage entrepreneurship as criticism of the academy for being insulated from the real-world and the workforce has grown over the past decade. Harvard has their “I-Lab” (Innovation Lab) to bring together students from all of the schools within the university to translate their ideas into tangible successes. Yale has a center for entrepreneurship and innovation and helps students accelerate their startups. For instance, Dartmouth College graduate Joel Butterly co-founded inGenius Prep–the fastest growing admissions consulting business in the world–while a student at Yale Law School and is taking advantage of Yale’s venture incubation program to help accelerate the company’s growth. Tons of schools are integrating entrepreneurship classes into their curricula and creating stipend programs to enable students to work on their startup ventures over the summer instead of taking a more traditional internship. The government needs to follow the lead of the academy in this respect by helping to support these types of programs.

The fight to take back our economy has begun. What are you doing about it?

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