There are simple steps Washington lawmakers can take to revive America’s fading entrepreneurial activity, say star real estate investor Sam Zell and Professor Stewart Thornhill.
“If America is to maintain its position as a global economic leader, then the pace of new business model innovation, new company startups and wealth creation need to surpass erosion of opportunity,” the two wrote for Forbes.com.
“The will is there. Now let’s get out of their way, and accelerate their potential to make a difference,” they wrote.
Zell, chairman of Equity Group Investments and a member of the Forbes 400, is a supporter of U. Michigan’s Institute for Entrepreneurial Studies, which Thornhill heads.
“Yet, according to a Gallup report earlier this year, the U.S. now ranks “not first, not second, not third, but 12th among developed nations in terms of business startup activity,” they claim. “For the first time in at least forty years the net number of business startups versus closures is negative, at -70,000,” they wrote.
“Conversely, this year’s Forbes 400 list included a “self-made” score, indicating the degree to which people made their own fortunes, versus inheriting. Nearly 70% of the people on the list today were self made, versus less than 50 percent 30 years ago,” they wrote.
They keys are regulation and education.
“If new businesses and innovation are the fuel in the economy’s engine, then all regulation should be considered through that lens. Navigating often unpredictable or inconsistent government regulation processes – from complex tax policies to arduous patent-approval processes – is expensive, time and resource-consuming, and often prohibitive to young companies. One bright spot is the recent “patent box” proposal by the House Ways and Means Committee, which would reduce taxes on income generated from patents and other types of intellectual property. It is a small step in the right direction,” they wrote.
“The one area in which our country seems to be on the right track in fostering entrepreneurial activity is education. We are seeing an increase in entrepreneurial programs within higher education institutions, often driven by the private sector. And we need more of it,” they wrote.
Other prominent financial voices also say that U.S. potential can soar, if lawmakers only will clear the path of obstacles.
Former Treasury Secretary Larry Summers, now a Harvard professor, says the last thing the U.S. economy needs right now is higher interest rates while wages continue to stagnate amid uneven growth.
"We're caught in a vicious cycle. Incomes are too low, therefore investments are too low. ... We need to get out of that cycle," he told CNBC.
He called on lawmakers to implement tax reform and rules to discourage the kind of activism that strips cash out of companies.
(Newsmax wire services contributed to this report).
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