Fascinating. I constantly wonder about the psychological mindset of entrepreneurs in the US. It seems to me that being an entrepreneur is the riskiest profession imaginable in the USA. Unless you come from a family of means, failure becomes a one way ticket to homelessness, malady, and squalor. The social safety net is extremely poor and unforgiving, such that one mistake could be a life changer.
This is why I wonder, to this day, why a coalition of entrepreneurs do not support a basic income. It is the ultimate hedge against failure in a capitalistic society, and would severely curtail the risks of failed ventures for every individual.
This would massively incentivize the fail-fast mantra of startups, and unleash a scramble to create the most valuable and profitable companies with a long term focus.
I'm not holding my breath for basic income in the USA, but if Europe or the Commonwealth countries instigate it first, it would be a massive draw for serious entrepreneurs in the long term. Of course, this would have to be balanced by access to capital, which does not necessarily require presence in traditional VC hotspots (many UWaterloo companies have gone thru YC and received top tier VC funding).
This is the world I hope to see going forward. Basic income, single payer or nationalized healthcare, and a long term focus on efficiency at the state and national levels.
Family of means, I think, can include "someone I can live with rent free for a couple years." There is not as much in the way of means required as some think, but family itself has become a bit of an economic luxury.
But the larger issue is this: ballooning debt and harsher bankruptcy laws. The simple fact is that if you want to be an entrepreneur, it is hard these days to justify a college education if coming out of it means five figures of debt that you have to pay back. This debt hangs like a stone around the necks of the younger generations who are struggling to swim in turbulent economic waters.
So entrepreneurship becomes a privilege of the wealthy, and yet another way to suck money from everyone else. We don't need a government safety net. We need an organic one.
One option as you say would be something like an entrepreneur's guild. This could be a good idea--- it could function as a sort of labor union among startups, and also a safety net for founders. It could also help ensure that people who enter as early employees make the kinds of contacts that could let them go into business for themselves. And despite functioning as a labor union it would not be one, because the stated business would be to help new entrepreneurs succeed (i.e. it would not be adversarial against management). To work it would have to count as members investors, founders, and workers.
“This is why I wonder, to this day, why a coalition of entrepreneurs do not support a basic income. It is the ultimate hedge against failure in a capitalistic society, and would severely curtail the risks of failed ventures for every individual.”
Doesn’t that kind of sound like “privatize the gains, socialize the losses”? I don‘t really see how entrepreneurs would benefit overall from a basic income; successful individuals would have to pay for this through higher taxes, which would probably disincentivize risk-taking overall. Intuitively, it seems to me that any sort of scheme that tries to cheat the free market by subsidizing people who take risks and fail at the expense of those who either succeed or avoid risks probably overincentivizes risk-taking. Why should someone who doesn’t think their idea is good enough to put their own money at risk and can’t find anyone else who wants to invest and put their money at risk either get a taxpayer subsidy?
This makes especially little sense in Silicon Valley:
“OK, I quit my well-paying tech job with health insurance and free food because I thought I could successfully bootstrap the next big social media blogging platform with my entire life savings, and now I’m somehow unemployable, bankrupt, and homeless, I deserve a bailout!”
Obviously, there needs to be some amount of risk-taking, but I’m extremely doubtful that it makes sense in general for the government to subsidize starting tech companies, especially when there are so many willing private investors. I agree that having health insurance be largely the employer’s responsibility does complicate switching jobs and starting companies.
Doesn’t that kind of sound like “privatize the gains, socialize the losses”?
Yes it does, and it exists for ventures above a certain size, such as banks. Why not democratize that policy? The free market you mention and defend does not actually exist.
"Sensible" is a value judgement, and as such does not have to be anything, as we see in the current policy environment. We can say that the current policies are not sensible (or symmetric), but that's a response to a different question. The facts remain that the current markets are not free and that there are policies in effect that do socialize losses while privatizing gains.
In a lot of ways, isn't this what YC et al. are for? Essentially an interview for funding so that you can get a company started. If it works out, YC makes some money for the next group of people. If it doesn't, you got an investment. It's up to the panel of investors to decide whether they want to make that investment (i.e. if they think your idea is worthy of investing).
You're welcome to start your own coalition of investors, and lower the barrier of entry/investment. Guarantee entrepreneurs a certain salary for a certain amount of time. It could be interesting. I wouldn't invest in such a fund, personally, but it's an interesting idea.
Unless I missed your point and you simply meant that entrepreneurs should politically support such an idea. That's a different point all together!
On the flip side of that, taxes for the very wealthy are much higher in most European countries with a social safety net, especially when you consider the legal loopholes available to the rich in the US, so the potential payoff to successful entrepreneurs is greater.
The payoff is greater in another way too: Because our culture is generally less shameless about its love of materialistic success, the social reward is higher.
Said another way, we Americans love us a good lottery ticket, risks be damned!
Mainly because "basic income" is just a fancy word for welfare. If you want to be an entrepreneur in Australia, just go on welfare. Sure, you might eventually be forced to get a job, but you can easily live in the zone between having no work, and having full time work, and satisfy all the requirements for receiving welfare. In fact they even have a special program for entrepreneurs [1].
Removing the strings would be extremely costly, since there are a lot of non-entrepreneurs who would rather live off basic income and do nothing.
The people most drawn to the idea that wealth is earned, not just made, are the ones who want to be entrepreneurs. You don't create webapps and whatever because you are passionate about it, you do it because you are passionate about becoming rich and famous, and think that you can do it, if only you try hard enough. Failure is only for those people who didn't try as hard as you, right?
This is why I wonder, to this day, why a coalition of entrepreneurs do not support a basic income. It is the ultimate hedge against failure in a capitalistic society, and would severely curtail the risks of failed ventures for every individual.
This would massively incentivize the fail-fast mantra of startups, and unleash a scramble to create the most valuable and profitable companies with a long term focus.
I'm not holding my breath for basic income in the USA, but if Europe or the Commonwealth countries instigate it first, it would be a massive draw for serious entrepreneurs in the long term. Of course, this would have to be balanced by access to capital, which does not necessarily require presence in traditional VC hotspots (many UWaterloo companies have gone thru YC and received top tier VC funding).
This is the world I hope to see going forward. Basic income, single payer or nationalized healthcare, and a long term focus on efficiency at the state and national levels.