In a recent article in the Washington Post, Reid Hoffman has suggested that the way out of this crisis is not with a stimulus to the “same old same old” but a return to the 1990s when small firms and entrepreneurship led the way to technological change through innovation from start-up firms. In fact, that trend started in 1982 and lasted for over 20 years as year after year new start-ups brought us the wonders of inventions that changed our lives for the better. Can this work again this time in green energy, sustainable development, and plug-and-play cars?
This is a good question but during the last quarter of the 20th century the economy was growing, we had a robust financial system, and technological innovation. Today, we have a mini-depression that may turn into a major one. The stimulus package and the financial bailout were needed to stabilize the economy and the financial system and it’s nowhere near finished.
I support policies to promote entrepreneurship but this is a long-term strategy. Do we really believe that immigrants are the way to solve our economic problems? Will they return again? We should start to lay the groundwork for entrepreneurship but it is not a short-term solution to our financial problems but a solution to our long-term challenges.