Yesterday I argued that since bias is inherent in institutions and neutrality between individual and social spheres is illusory we should harness and direct the bias of institutions towards a free and virtuous society characterized by individual liberty and sustained by religious principles.
One of the ways we can do that in the economic realm, I believe, is to encourage a bias toward entrepreneurship and away from corporatism. As Derek Thompson, a senior editor at The Atlantic, says, “It would be naive to think we can cleanse the law of all biases. But what if the law were biased, not toward the oil and gas industry or the cotton farmers, but toward the creative, the self-employed, and the entrepreneurs?”
Thompson proposes a new framework for competitiveness:
“If you look at a list of US cities sorted by population, the number of successful startups per capita varies by orders of magnitude,” the renowned inventor Paul Graham wrote. “Somehow it’s as if most places were sprayed with startupicide.”
Until scientists invest such a thing for government procurement, the United States would be advised to do the second best thing and adopt a holistic policy to support startups. This isn’t industrial planning. It’s not about picking winners. It’s making rules that increase the odds that entrepreneurs play the game in the hope that many of them will win.
As a general rule, entrepreneurs don’t win. They mostly fail. Trying to start a company is like playing a high-risk casino game with your career. It’s roulette, except thousands of dollars, thousands of hours, and unquantifiable sacrifices are on the table. If we want more people to play startup roulette, we shouldn’t focus on how much to tax them if they win $200,000. We should focus on minimizing the downside of losing so that startup roulette feels less risky. After all, startups shouldn’t just be for rich kids who can afford to take a chance on a big idea.
While I think Thompson is on the right track, I get the impression that he believes that his recommendations are primarily applicable at the federal level. As an advocate of subsidiarity I would prefer the federal government to have, as far as possible, an extremely limited role in business policy. The federal level rarely gets involved in a way that doesn’t lead to an expansion of the corporate state. Because of this fact Thompson’s recommendations for an “entrepreneurial state” are (with the exception of federal tax policy) best applied at the state and local level.
However, some liberty-loving business folks, whether actual entrepreneurs or merely armchair capitalists, will take issue with the idea that the state and local levels of government should have a pro-entrepreneur bias. They believe that upholding the rule of law is not just the primary role for the government, but the State’s only legitimate role.
In an abstract sense, this might indeed be preferable. But as I pointed out in my previous post, the rule of law itself reflects the government’s bias. State and local government are not neutral; they are already biased either for or against entrepreneurs.
For this reason, we have to work within the system we have, not the system we would design if we were starting from scratch. As much as I am attracted to the abstract, ideal worlds of both distributists and libertarians, my preference for solutions that can actually be implemented in the real world keeps me from endorsing their policy preferences.
We can neither change human nature nor, as Thompson says, “cleanse the law of all biases.” But we can attempt to stack the deck in favor of liberty. Contrary to the view of my libertarian friends, I do not think that liberty can long survive in a state of government neutrality even if such a condition were possible (which it isn’t). We must continuously prod the government to maintain a bias in favor of liberty and economic self-determination. If we do not, then someone else will successfully push for the government to be biased in favor of corporatism, socialism, or other liberty-destroying idealogies.