Martin S. Feldstein — Why the U.S. Is Still Richer Than Every Other Large Country

Will America maintain these advantages? In his 1942 book, Socialism, Capitalism, and Democracy, Joseph Schumpeter warned that capitalism would decline and fail because the political and intellectual environment needed for capitalism to flourish would be undermined by the success of capitalism and by the critique of intellectuals. He argued that popularly elected social democratic parties would create a welfare state that would restrict entrepreneurship.

Although Schumpeter’s book was published more than 20 years after he had moved from Europe to the United States, his warning seems more appropriate to Europe today than to the United States. The welfare state has grown in the United States, but much less than it has grown in Europe. And the intellectual climate in the United States is much more supportive of capitalism.

If Schumpeter were with us today, he might point to the growth of the social democratic parties in Europe and the resulting expansion of the welfare state as reasons why the industrial countries of Europe have not enjoyed the same robust economic growth that has prevailed in the United States.

What's wrong with Martin Feldstein's argument?

First, he defines national wealth based on real GDP per capita regardless of distributional effects. Biased and skewed away from distributed prosperity.

Secondly, he proposes no rigorous method for identifying causal factors, determining their relationships and priority of importance, and isolating confounding factors. Methodologically unsound.

Thirdly,  it is blatantly political. A view of economics is used to promote a political viewpoint. Ideology rather than science.

He knows better. Fail. A grade for persuasion based on ideology though. It even appeals to authority (Schumpeter). And Feldstein is also using his own authority to persuade.

Harvard Business Review
Why the U.S. Is Still Richer Than Every Other Large Country

Martin S. Feldstein | George F. Baker Professor of Economics at Harvard University, and the president emeritus of the National Bureau of Economic Research

Tyler Cowen — Is this the most effective development program in history?

A study of Nigerian government funding entrepreneurs as a development program, taking advantage of the entrepreneurial spirit.

Marginal Revolution
Is this the most effective development program in history?
Tyler Cowen | Holbert C. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center

Walter Frick — Welfare Makes America More Entrepreneurial

Research shows that when governments provide citizens with economic security, they embolden them to take more risks.

Opposite the popular view on the right that animals only hunt when they are hungry and the hungrier they are he harder they hunt, so starving the poor will motivate them to get off their duffs right quick.

The Atlantic — Business
Welfare Makes America More Entrepreneurial
Walter Frick

ht Mark them at Economist's View

Roger Parloff — Peter Thiel disagrees with you

Good article on Peter Thiel at Fortune, with video.

… devaluing competition is a central theme of Thiel’s new book. He asserts that “capitalism and competition are opposites,” because “under perfect competition, all profits get competed away.” He exhorts entrepreneurs to seek out monopolies, concluding, “All happy companies are different: Each one earns a monopoly by solving a unique problem. All failed companies are the same: They failed to escape competition.”

Absolutely. Capitalism is not about competition but competitive advantage.

To be successful as an entrepreneur in today's highly competitive environment, you either have to open up a new market, which is chancy and expensive, or else carve out a niche in an existing market that either invisible to competition or not really worth competing for since it is merely a niche that's not very scalable, making it relatively safe and inexpensive for the one who finds it to enter.

This is becoming more and more true as more and more the informal economy is being monetized and then corporatized. It's nearly impossible to compete against the big boyz that enjoy economies of scale and dominate entire industries. The old mom and pop stores have gone the way of the buggy-whip makers.

Another way is to develop a new product and then sell the company. I had an acquaintance who was an engineer for a large tech company. He proposed they develop and introduce a new product he had designed. They liked the idea and told him that they weren't really into startups but that they would fund him with venture capital and then buy the company when it grossing $250 million. He gladly took the deal.

But the article is about much more than this and is definitely worth a read to catch the flavor of where the next Andrew Carnegie and Steve Jobs are coming from.

Fortune
Peter Thiel disagrees with you
Roger Parloff

John Carney — Would Guaranteed Jobs Undermine the Brooklyn Business Revolution?

The modern monetary theory movement proposes that the government should act as an employer of last resort,guaranteeing a job to anyone who needs one at some minimum wage. 

There’s a lot to be said for the idea. Working is a necessary component of living a life of dignity for most people. Joblessness breeds all sorts of social pathologies and extended joblessness is a huge source of economic waste—skills go unused and deteriorate, human resources sit idle, and bringing someone back “online” after a long time out of the workforce can be very difficult. 

One of the strongest objections to the idea of the Job Guarantee, however, is that it may distort the economy is unpredictable ways. The loss of a job for someone is often the spark that ignites the flames of entrepreneurialism. High unemployment reduces the opportunity cost of starting your own venture, for example. If you can’t find work, sometimes you make it.

Read the rest at CNBC NetNet
Would Guaranteed Jobs Undermine the Brooklyn Business Revolution?
by John Carney

From what I am hearing anecdotally a lot of people — typically middle class young  people — are becoming very entrepreneurial. However, this very often takes the form of less than savory enterprise, such as growing or dealing drugs, strip dancing, prostitution, and other high risk-high return "enterprises."

It's apparently pretty good training in entrepreneurship, though, again judging anecdotally based many people who made it growing and dealing and then invested in legitimate entreprise with lower risk and less margin as they got older. But then and again, a lot of others are still "in the business." But, hey, one has to make a living some way when the minimal wage of long term unemployment is zero, or the alternative is to be severely underemployed with few prospects on the horizon.