Dear Friends,
It seems to me, since the US is at it’s core an innovation economy, the best practice would be to remove all barriers to innovators. From well meaning regulations that protect entrenched corporations, to crony capitalism, all the impediments to entrepreneurs should be removed. If this is done, the US economy will go into overdrive, both in GDP growth and in the standard of living of the American people. Moreover, this is not a singular American possibility, it could be replicated across the planet, by any nation that was willing to make the difficult choices, politically deadly choices, that would eliminate the barriers to innovators. Because the drive to live a better life is a basic quality of a human being, to harness that into a means to improve the lot of Man may be genius… but is political suicide.
Innovation is where the real money is. Banking is obviously lucrative in that a banker can steal money from everyone and create money out of thin air… but that money is not from economic improvement, it is parasitic. As Lawyers have become. Parasites on the corpus economic. There is of course a valid role for both banks and attorneys, to facilitate economic activity. Instead, these two have become huge obstacles in starting a business, operating a firm and especially innovating. Lawyers have created a morass of laws and regulations that, as Madison said is tyranny, in the Federalist Papers… when the law is so circuitous that even a learned man cannot understand the laws, there is tyranny. How can one start a business or innovate without millions of dollars to pay the tyranny of lawyers today?
That is where banks come in. They will lend 100 Grand to a child to get a degree in advanced underwater basket weaving, with a minor in gender studies, but deny a young man a 20k loan to buy a 3D printer to start a business. This is because of the pernicious incentives government has set up. These incentives hinder innovation by making non economically relevant debt, government backed, and economically valuable debt, dangerous. As a result banks loan to government, students, and hedge funds but not entrepreneurs. Making lawyers and banks a huge road block to innovation today. These two important sectors of the economy need to be addressed, to make the environment more conducive to innovation, both in the US and anywhere a transition to an innovation economy is sought.
The culture is of the utmost importance to fostering innovative and entrepreneurial people. If the culture says it is impossible to get ahead, you have no stake in society, you are held down by the man, etc… the people will not be entrepreneurial, instead they will be angry, bitter and vengeful. Not the best recipe for a functioning economy let alone the improvement in the lot of Mankind. Education is another place where an economy is made or broken. Children have to be taught reading, writing, math, history in context, and philosophy, but most importantly, agriculture, industrial arts, how to write a business plan, and home economics. Not everyone will be an innovator, as not everyone will be an architect, give everyone the opportunity though… and some may excel who otherwise would be on the dole.
The basic ingredients are in every nation… to become an innovation nation and reap unlimited riches. The problem is that entrenched powerful political forces’ will not tolerate it. Corporations make good money from cronyism… by paying bribes, lobbying and graft. Lawyers make gobs of cash from frivolous lawsuits, entrepreneur crushing regulations and an arcane legal system that requires an attorney to brush your teeth. Banks have no interest in helping the little guy, they make much more money loaning to governments, students and hedge funds. No need to sully their portfolios with small business loans. To change the paradigm will infuriate many powerful factions, yet if any nation seeks to become an innovation based economy, politicians need do just that… as Trump is doing.
Sincerely,
John Pepin
