In the middle of this column on what regulations are doing to small businesses and startup companies, Michael Malone dropped a fact I find interesting.
From the beginning of this decade, the process of new company creation has been under assault by legislators and regulators. They treat it as if it is a natural phenomenon that can be manipulated and exploited, rather than the fragile creation of several generations of hard work, risk-taking and inventiveness. In the name of “fairness,” preventing future Enrons, and increased oversight, Congress, the SEC and the Financial Accounting Standards Board (FASB) have piled burdens onto the economy that put entrepreneurship at risk.
The new laws and regulations have neither prevented frauds nor instituted fairness. But they have managed to kill the creation of new public companies in the U.S., cripple the venture capital business, and damage entrepreneurship. According to the National Venture Capital Association, in all of 2008 there have been just six companies that have gone public. Compare that with 269 IPOs in 1999, 272 in 1996, and 365 in 1986.
From what I can see of P-E Obama’s policy proposals, he’s only going to tighten down the regulations that have stifled entrepreneurship. What will that do to our tax base and our employment outlook? Without new and growing businesses (and public offerings are a sure sign of business growth) who is going to provide jobs to the people who will need them for the next four years? The Obama administration would have you believe that the Federal government is going to do that, but they don’t exactly say how, beyond a blizzard of makework programs. Those programs, which have historically provided a lot more to labor unions and government bureaucrats than they have to upwardly-mobile workers and our economy, aren’t going to be the answer. Thus far, though, that’s all he’s given us.
It looks to me like we’re in for at least four of the most anti-business, anti-wealth years we’ve known in this country in a very long time. It’s going to be a rough ride if we don’t get off our duffs and demand that our government get the heck out of the way so that we can produce the wealth our country, and the rest of the world, needs us to produce.