Monday, June 3, 2013

Risk-Adverse Culture Infects U. S. Workers, Entrepreneurs

Today's Wall Street Journal has a front page article that should frighten any American:


The article offers substantial evidence that the driver of American innovation and prosperity -- the desire of Americans to eschew safe, comfortable employment to take a risk and start a business -- is failing.  Historically much of this occurred when a person lost his or her job and had little other choice but to start a company.  And doing so was straight-forward and possible.

But now it seems as if that risk-taking is going, going, gone.  Companies and people have become adverse to taking a risk.  The Journal illustrates many reasons.  The rise of outsourcing to other countries and automation have increased productivity, which gives companies greater revenues without more employees.  And fewer companies are being started.  In 1982 new companies were half the number of U. S. businesses; now it's under a third.  Then 20% of employees worked for those new firms, now it's 11%.  Venture capital -- the raw material of startups -- has fallen 10% last year alone, and it has concentrated geographically with nearly 40% of it going to Silicon Valley, the greater San Jose area near San Francisco, against 30% twenty-five years ago. 

My guess is that there are several reasons, all centered in an anti-business government.  Both in the Democratic Senate and the powerful business-ignorant Progressive Progressive Barack Obama.  Businesses face vastly increased rules and regulations, the micromanagement of their every activity.  And random hugely expensive fishing expeditions of regulators who "think" someone might be breaking their mental laws, thus bringing investigations, subpoenas and sometimes civil lawsuits by government entities leading to balance-sheet breaking class action private lawsuits by tort lawyers looking for a settlement from frightened executives.  (And a tithe to the Democratic Party from the winner.)  Millions and billions of settlements seem standard.  Nothing ever has to be proven.

Let me repeat: nothing ever has to be proven.  The media piles on along with "plaintiffs" rounded up by bundlers in the thousands or tens of thousands facing one company.  So wary, but smart companies keep piles of cash on hand: nearly 6% of their assets today almost double that of thirty years ago.  And the Federal Reserve System's manipulation to virtually nothing of the interest rate means companies receive little for that cash, versus 5% or 8% thirty years ago.

Then there's the unknown of Obama's armtwisted, rules-bypassed ObamaCare with tens of thousands of rules, regulations, taxes, fines, punishments, most not written.  Costs completely unknown.  It is a crazy power-mad ignorant grab of healthcare, the largest industry in the country, by Far-left, anti-free enterprise, Progressive zealots.  Plus now nearly 30% of U. S. employees need some government license to work, up from under 5% in the 1950s.

The success of free enterprise is the chaos of hundreds, thousands, tens of thousands of people starting businesses, most of which fail.  It is freedom to fail (or succeed) that drives the entrepreneurs.  It is completely opposite to the pathetic need of Progressive government bureaucrats, politicians and administration appointees to try to understand something foreign to them (business) and minutely control  that which they cannot understood.

The tried and true formula over centuries: central control does not work; free enterprise works.

People who are not challenged or frightened from being out of work, will settle, not start companies.  With vast recipients of two year unemployment insurance, food stamps galore (by "credit" card, no less) and hundreds of other "programs" to give the impression of ease (at huge and coerced cost to many fellow Americans, but nevermind that) fewer companies are started, many fewer jobs are created and long-term unemployment is rampant.  The government does no one (except their own reelections) any good by making life too easy. 

One czar no matter (or especially) how educated cannot know or guess ("plan") correctly about what will happen in the future.  But one of a thousand entrepreneurs -- a Bill Gates, Steve Jobs, Elon Musk, Jeff Bezos, Sam Walton, Mark Zuckerberg, Eric Schmidt, Thomas Edison, or Henry Ford --  might survive; out of ten thousand one might strike it big.  It might come in part from luck or being in the right time at the right time, but that's always a big success for every participant in the American economy.

Toss in an inadequate (becoming more inadequate) union-monopoly educational system and Obama gets his desire: a weak America.

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