Student Entrepreneurs Speak Out: #5 in a series
Entrepreneurs: The Solution to the Slowing Growth
by Carnegie Mellon Junior, Rohan Wadhwani
Across the world, there are major financial problems, whether it’s the contagion in Europe or our own national debt issues here in the United States. These deficits can be exacerbated by fear in the marketplace, decreasing job growth rates, increases in foreclosures, etc. However, one viable solution to help placate these international difficulties is to promote entrepreneurial activity.
Carl Schramm, President and CEO of the Ewing Marion Kauffman Foundation, wrote an article on RealClearPolitics.com describing how entrepreneurship adds value to slowing economies. Schramm writes, “These two abilities, job creation & innovation, are powerful weapons against a slowing economy.” Schramm goes on to list three reasons how entrepreneurs are a major part of economic stimulus. The first, “We know from empirical research and anecdotes that immigrant entrepreneurs have contributed enormously to the American economy for over two hundred years, creating jobs and developing innovations. Today, however, we make it as difficult as possible for immigrants to come here and start companies or, for those who study at American universities, to stay here and start companies. We should immediately grant startup visas for this population. The trade‐off here is stark – immigrant entrepreneurs will start their companies no matter what happens in Washington, but they will start them in other countries if we don’t welcome them.” Schramm raises a poignant problem, if we do not let an entrepreneurial immigrant into the US, not only do we lose the revenue, job creation and innovation from that company, we also gain another international competitor within that field.
His second idea, “Make the commercialization process out of university labs as smooth and painless as possible. The federal government could help nudge universities toward a ‘free agent’ model, which would free academic innovators from the current monopoly of technology licensing offices in which they are now trapped.” If this solution were implemented, startups formed in universities could grow much quicker in earlier stages, and better companies would succeed more quickly by natural selection.
Schramm’s final idea, “taxes: we should create capital gains tax exemptions for startup investments held for a period of years and offer tax incentives for startup operating capital.” These tax cuts would not only allow companies to use that previously lost revenue to develop new products, make acquisitions, pay dividends, etc, but also to promote long‐term economic growth.
Schramm concisely concludes the article with his viewpoint on entrepreneurs and their role in helping the current national economic situation, “Entrepreneurs are the vital core of economic growth and job creation, and while much of Washington is busy squabbling, they are out there doing their best to build a better economic future for their communities and their country. Let’s help them out.”
Rohan Wadhwani is a junior at Carnegie Mellon majoring Economics and Business Administration.