Government is the problem, not the solution
A recent research article making the rounds from Bridge
Magazine titled “Michigan
and the death of entrepreneurship” seeks to find the answers for the dearth
of risk-takers willing to step out and gamble their fortunes on starting a
small business enterprise in Michigan.
The article does a good job in surveying the landscape of
empty storefronts and shuttered enterprises and offers solid research as to the
fact that, indeed, small businesses have declined in our state and nation, but
it offers little in the way of an honest examination as to the cause and the
solutions. Instead, the article makes the case that the answer to this dilemma
is: “more access to seed money, and improving the business literacy of
first-time entrepreneurs.”
While poorly financed start-up businesses with a bad
business plan are almost guaranteed to fail, to suggest that this is the root
cause of the problems plaguing entrepreneurship is to treat the outward
symptoms of a disease while ignoring the root causes. Many of the boarded up
storefronts and vacant buildings dotting the landscape in Michigan were going
concerns that were in business for many years before their demise. It is
doubtful that after years of successful operation they were in need of seed
capital and a literacy lesson in entrepreneurship. In fact, Research from the
National Federation of Independent Business blames the uncertain political
climate as the main reason for small businesses not expanding and not a lack of
capital.
The efforts of various government supported economic
development agencies to address the woes of small business are featured in the Bridge magazine article, yet the responsibility of the government in creating much of the
hardship faced by today’s entrepreneurs and small business owners is not
examined.
Government regulation, confiscatory tax policy, activist
labor policy and micromanagement of small business has much to do with raising
the bar of entry for any entrepreneur or business start-up. Throw in a major
recession in addition to an expansive and intrusive government and you have a
formula for failure that no amount of “seed capital” or a class in “business
literacy” will cure.
Over the last six years Michigan has made great strides in
addressing these issues and our state has improved dramatically in removing or
lowering the barriers to business start-ups and ongoing enterprises.
Unfortunately, for every step our state takes forward the federal government,
and many local governments, have taken two steps back. To pretend that
entrepreneurship can be jump started with money and government programs while
ignoring the overall economic environment within which they must operate is the
surest formula for failure.
