Who is going to implement such a social net? Congress? The same Congress that has a 15% approval rating and a 97% re-election rate? The same Congress that is run by K-street? Currently, we spend as much as a percentage of GDP on Medicare/Medicaid as every other developed country spends altogether on healthcare. Theoretically, we could just turn Medicare into a single payer system that covered everyone, get the same benefits as the European countries, and not even raise taxes. Strangely, no presidential candidate has mentioned such a sensible proposal.<p>The problems Aaron cites can almost all be blamed on the government. The drug companies, insurance companies, and big city hospitals are effectively state cartels. The AMA and nurse unions are a state guilds. They have all worked together to drive the price of healthcare through the roof. Government zoning regulations and negative interest rates have made housing prices rise at a far greater rate than wages. The decline of the dollar has led to massive investment in commodity indexes, driving up the price of food and oil. SEC regulations make it very difficult for entrepreneurs to raise money from small time investors. What makes you think that the government that causes all these problems is going to wake up tomorrow, and in a fit of competence and good sense, actually fix them? Better idea: abolish the Feds altogether. Without paying taxes to Washington and monopoly prices to state guilds, we could all retire at 30.
Providing a safety net might or might not encourage startups, but it's misleading to suggest that this idea is somehow in opposition to allowing economic inequality. To decrease economic inequality, you have to confiscate the wealth of the rich, not merely give money to the poor.
As long as you allow people to become billionaires, you'll have huge economic inequality, no matter what's happening at the other end of the scale.
All if his suggestions are great until it comes time to pay the bill for them. It's rather naive to suggest that universal child and health care and free college for everyone will make our country so much better without explaining the very serious effects (many of which we probably don't know) that paying for all of it will have.
Beware, the social safety net can be a 2 edged sword.<p>Sure, more people would start small businesses.<p>But more people would give up earlier because the landing would be less painful.<p>The social safety net would decrease the importance of perseverance, one of the most critical ingredients of success.
One reason people pursue startups is to achieve so-called "FU money". A strong safety net gives everyone at least a minimal version of "FU money". So at the same time it makes risk-taking easier, it might remove a major incentive for risk-taking.
I have to say I strongly agree with this. The personal risks I am taking to start a company, are a little crazy, and I've had no shortage of people telling me so. And I know so many people who are waiting for their life to be settled and stable before they begin. This is one of the main social influences repressing our potential founders.
Yes, why don't we have the government promote our preferred group of people while penalizing the others? Let's help startup founders, and screw the large corporations!<p>We want it to be easy for us to fire people, but it should be hard for big companies.<p>We want other people to pay for our "safety net", to encourage more people to be like us.<p>Or, why don't we just play on a level playing field instead of legislating a blessed group of people? If starting a startup is really that great, then it should happen naturally, not by having other people pay for our success.
A serious problem with this thesis is that in addition to making good profitable startups easier, a strong safety net makes many other competing activities easier, too.<p>One of those competing activities is: bad startups.<p>When we accept the premise that "promoting startups" is a good thing, we are assuming such startups are still a net social positive. In fact, that quality may depend on them failing-fast, attracting investment from greedy investors, and generating enough income in a competitive market to sustain the founders/employees.<p>With a strong safety net, it is easier to pursue a money-losing, wealth-destroying startup indefinitely -- really just a hobby masquerading as a startup.<p>A strong safety net also makes it easier to be a painter, or a musician, or a writer... even if there's no paying audience for your work. Perhaps some who do startups now would, with a bottomless safety net, prefer to sit in a cafe all day sipping coffee, blogging, and posting snarky comments about real startups. "That seems easier."
>While there's much less of a culture of entrepreneurship and only 15% of Europeans think about starting their own company, nearly all (14.7%) of them actually go ahead and do it.<p>I wonder what the average payoff is though. When the going gets tough, I can easily imagine that the reduced costs of failure cause more founders to bail out.<p>(This is ignoring that any comparison between the USA and Europe will probably have so much baggage attached as to be meaningless.)
I am conflicted on this issue. On the one hand, I believe in a situation where perseverance and risk taking is rewarded. On the other, it is true that many people with bright ideas do not go the startup route because they have family responsibilities or something similar that holds them back.<p>It's too simplistic to say that a social safety net will encourage entrepreneurship. It will probably enable more people to start up companies, esp in the tech sector, but it will equally lead to more deadwood entering the system.
Since he brought up a number "European" policies, I felt qualified to say a few words on the subject myself, but it got sort of wordy, so I posted it here:<p><a href="http://journal.dedasys.com/articles/2008/06/09/startups-government-help-and-hindrance" rel="nofollow">http://journal.dedasys.com/articles/2008/06/09/startups-gove...</a>
My biggest hold-back from forming a startup has been Health Insurance. The pre-existent condition clause will pretty much ensure that I can't get my own health insurance, and leaving my 15 month old without insurance is just unacceptable.<p>Once my wife gets out of Masters that will all change :).<p>Thought I must disagree with the universal health care point. The government can help regulate the way insurance companies operate vs give universal healthcare which by empirical evidence is failing in European countries.<p>Now my quick point on risk: You WILL fail (hence RISK) but sometimes you will succeed. All you need to ensure is that when you fail you can still have enough money to eat. Have a friend who didn't realize this point.