Public Support for Free Enterprise is Overwhelming

June 17, 2010

By Arthur Brooks, President, AEI

Americans prefer capitalism over socialism.  A January 2010 Gallup poll surveyed respondents about their views on the two systems.  It found that 61 percent of Americans hold a positive view of capitalism while about the same percentage have a negative view of socialism.  The older the age group, the more negative the view of socialism.

Of course, capitalism and socialism are charged terms.  The choice of words may influence the results of a survey.  The results are even stronger using the term free markets.  In March 2009 the nonpartisan Pew Research Center asked individuals from a broad range of American demographic groups the following question: “Generally, do you think people are better off in a free market economy, even though there may be severe ups and downs from time to time, or don’t you think so?”

The results are decisive: Almost 70 percent of respondents agree that they are better off in a free market economy.  Only 20 percent disagree with the statement that America is better off with a free market economy.

Free enterprise is even more popular than capitalism and free markets.  In the same Gallup poll mentioned above, a stunning 86 percent have a positive image of free enterprise.  Only 10 percent have a negative image.  Similarly, 84 percent have a positive image of entrepreneurs, while just 10 percent see them negatively.

In sum, no matter how the question is posed, less than 30 percent of Americans say they believe we would be better off without free enterprise at the core of our system.


Entrepreneurship – a Fundamental Human Right?

June 3, 2010

By Jason Duff, Founder & CEO, Community Storage & Properties, Ltd. | COMSTOR Outdoor Media

This blog is part of a series featuring the country’s top young entrepreneurs who speak on the Extreme Entrepreneurship Tour (EET). The National Chamber Foundation is proud to be the title sponsor of the tour, which brings these top young entrepreneurs to college campuses to help spread the entrepreneurial mindset among students during half-day conferences. It is the only tour of its kind. To learn more, visit http://www.extremetour.org

Growing up in a free market economy, I deeply appreciate the value of free enterprise and the vital role that small businesses play in innovation, job creation, and advancement of quality of life.  It’s easy for me to assume that these values and practices are globally recognized when the truth is – they are not.

In some African countries it can take over 100 separate steps to create a new business.  According to a  report published by CNNMoney, the US Ranked 3rd easiest places to create a new business among 181 countries reviewed.  Even with the recent of the growing US debt, expansion of government entitlements, and greater burdens to US businesses and communities – we still have one of the most supportive countries for startups and entrepreneurs to be successful.  Some argue that this is changing.

This brings me to ask the question.   Should entrepreneurship be recognized as a fundamental Human Right garcinia cambogia for weight loss and if so, what are we doing to protect and advocate for it?

In a time that the world faces some of its greatest challenges, why should we trust and assume that government is the only and best solution.  Shouldn’t we advocate for smart governance instead of “Big Government?”  Haven’t we learned that nothing is “too big to fail” and that bigger government is often the greatest failure in itself?  Instead, it’s those of us who work and own small businesses who know and understand how resources can be used to invest and solve some of the world’s greatest challenges.

Democracy is not just about elections, it is about participation, activism and community involvement.  

Now is our opportunity to lead the World by using the collective minds and brainpower of every Main Street and village to advocate for one of the most basic human rights – Entrepreneurship. The rights to think, create, and work hard for the dignity of having a role and purpose in the world.


American Attitudes Toward Taxes

May 26, 2010

By Arthur Brooks, President, American Enterprise Institute

It is no surprise that in a burn belly fat country devoted to the free enterprise system people believe the government takes too much money away from us.  Although polls find a visceral sympathy for increasing taxes on “the rich,” the data show that most Americans believe the maximum fair tax level is far below what the upper classes are currently paying.

By a large margin, Americans feel overtaxed.  According to an April 2009 poll by the Tax Foundation, 56 percent of U.S. adults believe their federal income taxes are “too high.”  Only one-third believe that the amount of taxes they pay is “about right.”  Just 2 percent—people I have never met—say their taxes are too low.

Yes, some surveys suggest that in America there is popular support for increasing taxes on the rich.  Two-thirds of those polled in a FOX News/Opinion Dynamics survey in March 2009 favored raising taxes on households earning more than $250,000 a year if taxes were lowered for other households.

But these statistics are misleading: If you dig deeper into the data, the popularity of “tax the rich” politics begins to crumble.  Another spring 2009 poll found that 69 percent of Americans think the top federal tax rate should be 20 percent or lower (even 62 percent of Democrats think this).  But of course, the top federal income tax rate is not less than 20 percent.  It is currently 35 percent and will rise at the beginning of 2011 to 39.6 percent.

Americans do not realize that we are a high-tax country already.  When they learn how much we are currently taking from our citizens—even “the rich”—they think it is too much.
 
Find out more about this in my new book The Battle here <http://www.aei.org/book/100036> .


Series: Launching a New Venture

May 19, 2010

By Rob C. Masri, CEO, Cardagin Networks, Inc.

To Raise (money) or Not to Raise (money)

One of the most difficult things to consider when starting a company is financing.

Most companies who are not able to bootstrap their activities typically pursue financing from one of four sources: (1) banks, (2) friends and family, (3) angels and photo cut out (4) venture capital firms.    All sources are fraught with peril.

Assuming you qualify, taking money from a bank is usually done by applying for a loan.  However, unless your company has operational history and assets with which it can collateralize a loan, banks will almost always require a personal guaranty.  Such a guaranty can put all or many of your personal assets at stake to secure the loan.  In addition, you typically have to pay the bank interest on the loan for the amount of time the money is outstanding.  The positive aspect though is that you typically don’t have to dilute yourself or any of your employees by taking money from a bank.

Taking money from friends and family is often considered the easiest way to raise money. Many of these people simply want to be supportive of your efforts.  They often require little or no due diligence and they won’t argue with valuation.  There are two problems with friends and family money though.  First, that money tends to be extremely passive.  Most of these people know nothing about your business and will offer little strategic advice.  Second, there is the moral dilemma that many entrepreneurs have when taking money from friends and family.  What if things don’t work out?  How do you look people in the face at the next family outing?

When raising a lot of money for a venture, VC firms may be the only option.  Moreover, the prestige associated with raising money from a big name VC firm is validation for you and others in the business community.  Finally, the networks that many VCs have could open doors to customers and strategic partners.  However, VCs need to make a significant return on their investment and money from a VC firm comes with many strings attached.  Expect to debate valuation and control.  The valuation is completely correlated with dilution.  If you value your company at $10 million but a VC fund values it at $5 million, then a $1 million investment represents 10% of the company to you but 20% to them.  That delta could make or break a deal.  In addition, VCs often want a Board seat and will impose covenants in your transaction documents that limit what you can do with their investment.

My company Cardagin Networks, Inc. (www.cardagin.com) opted to raise its first round of capital from a group of angel investors.  Angels are typically seasoned entrepreneurs, retired executives or wealthy individuals who are seeking alternative investments.  They often have networks similar to VCs, but they typically don’t require the same sort of control that VCs do.  Valuation can sometimes be a stumbling block since they want to make money as well, but if you have an exit strategy and can effectively communicate it, you can often strike a deal.  The main problem with many organized angel groups is that they try to act like a VC fund when conducting diligence.  Managing the individual agendas (and schedules) of up to 20 people can be burdensome.  Consequently, organized angel groups tend to be very delayed in deciding whether or not to invest.  It’s often quicker for the entrepreneur to divide and conquer by meeting with select individual angels as opposed to making a formal presentation to an angel group.  The difficult part is getting an audience with such individuals.


How Americans View Government and the Regulation of Enterprise

May 14, 2010

By Nick Schulz, DeWitt Wallace Fellow, American Enterprise Institute
Editor-in-Chief, American.com

The financial crisis of 2008 and resultant economic problems have understandably shaken Americans’ confidence in business. Despite this, Americans are also quite wary of greater government regulation of enterprise, according to a new report from my colleague Karlyn Bowman at the American Enterprise Institute. 

When asked whether too much or too little regulation of business worries them more, 57% of Americans say too much. What’s more, half of Americans think government should regulate less than it already does, with 24% saying more and 23% saying the level of regulation is about right. Meanwhile 57% of Americans believe big government is a greater potential threat to the country’s future, compared with 26% who think big business is a greater threat.

What explains the support for free enterprise despite the economic troubles? As AEI President Arthur Brooks will outline in a new book he is releasing next week, the free enterprise system is at the core of American culture. Even when the economy is shaky, Americans have abiding confidence in free enterprise to improve lives and worry about harming that engine of progress. 

The National Chamber Foundation and AEI will be co-hosting an event in July on regulation where we plan to examine the surprising return of price regulation, among other recent developments. Please check back for details.


Government Size and Implications for Economic Growth

April 29, 2010

By Nick Schulz, DeWitt Wallace Fellow, American Enterprise Institute
Editor-in-Chief, American.com 

The expansion of government under the policies of the Bush and Obama administrations is prompting many Americans to ask how much government is too much. No one denies needing government services of all kinds, but what are the trade-offs?  Can there be too much government? 

One way to answer that question is to examine the influence of the size of the government on economic growth.  In a new book to be published next month by the American Enterprise Institute, the Swedish economists Magnus Henrekson and Andreas Bergh survey the academic literature on the subject and find a negative correlation between the size of government and the rate of economic growth in rich countries (the book will be the subject of a discussion and debate in early May; details found here). 

What difference might it make?  If it is true that large government reduces economic growth, consider what the authors point out:  

“From one year to the next, the difference between annual economic growth at 2 percent or 2.5 percent is important enough, since it means several billions of dollars, more or less, in the hands of both households and politicians. From a longer perspective, the level of annual growth of GDP per capita is even more important: It ultimately determines which countries will grow rich and which will become or remain relatively poor… an annual growth rate of 2 percent means that the economic standard of living doubles in thirty-six years. But if the annual growth is instead 3 percent, a doubling of the standard of living takes a mere twenty-four years.”


Series: Launching a New Venture

April 27, 2010

By Rob C. Masri, CEO, Cardagin Networks, Inc.

Do Your Homework! 

All too often, people come up with a cool concept or an innovative idea, but fail to identify a business need or market demand.  Even friends and family won’t fund something that can’t be monetized.  For that reason, before raising money for Cardagin or writing the business plan, I needed to prove that there was interest from a two-sided market.  I knew that there was demand from consumers, but what about local merchants?  What were their pressure points? Would we be addressing a market need for them? More importantly, would they be willing to pay for our solution? 

So I went out and interviewed merchants in Charlottesville.  Here’s what I learned:

  1. Local merchants also hate paper and plastic loyalty cards.   They complained that the cards cost money to create and aren’t environmentally friendly.  In addition, there is no quality control with the paper and plastic cards guarding against employee fraud or customer fraud.
  2. Local merchants want to take advantage of the mobile trends occurring at a macro level in the economy on a micro level.  They read about the growth of mobile usage and see many of their customers with the latest mobile phones.  They understand that mobile is the wave of the future. They hear about the Droid, the iPhone or the Google Nexus. And, they are being told that within two years more people will access the Internet via mobile devices than via PC. 
  3. Finally, existing advertising outlets don’t work for local merchants.  A business in Charlottesville (and the same can be applied in virtually any other small city in the US) is limited to ValPak ($750-$1000 per flier per month), local newspapers (up to $250 for ¼ page ad per day), local radio – ($30-$60 for one 30 second spot) and local TV ($60-$90 for one thirty second spot). This doesn’t even include design and production costs.  What’s more is that those costs are blind.  A local business pays and prays, without any sort of tracking or targeting. 

Once I gathered this information, I was able to distill it into one basic theme: local merchants are not simply looking for customer acquisition outlets; they want a customer retention outlet.  They also want the power to create, publish and dispense offers, coupons and promotions at anytime and to a specific customer profile, without relying on the deadlines of a third party advertising outlet. 

Introducing Cardagin Networks.


Creating Peace & Productivity in a Stressed-Out World

April 21, 2010

By Elizabeth Grace Saunders, Chief Encouragement Officer, Real Life E, RealLifeE.com

This blog is part of a series featuring the country’s top young entrepreneurs who speak on the Extreme Entrepreneurship Tour (EET). The National Chamber Foundation is proud to be the title sponsor of the tour, which brings these top young entrepreneurs to college campuses to help spread the entrepreneurial mindset among students during half-day conferences. It is the only tour of its kind. To learn more, visit http://www.extremetour.org

Stressed out, overwhelmed, frustrated and stuck. I developed Real Life E time coaching services to help people struggling with these emotional pains through practical, customized, schedule management techniques. With the increase of entrepreneurship and the decrease in staff resources, the downward push of the economy actually widens my circle of potential clients.

But as I’ve developed and refined my sales techniques and time coaching services, I’ve come across interesting findings that:

  • Yes, people need guidance on how to proactively plan their days and weeks so they are investing their time instead of having everyone spend it for them.
  • Yes, people need direction on how to set boundaries so they can be present in the moment and feel good about their productivity at work and their contribution at home.
  • Yes, people need accountability and encouragement to clarify goals, strategize actions, upgrade skills and overcome external and internal barriers to success.

But most of all… they need to not feel alone.

I’ve found the Real emotional pain that turns prospects into clients is a deep, craving to be heard and understood that languishes below the surface of their hectic lives. I’m integrating this knowledge into my sales process to empower even more people to get the support they need. What’s most exciting to me about growing Real Life E is that when my business increases, it means more people are creating lives of peace and productivity.

How about you?

What’s the Real Pain you need to address so your business has the largest positive impact on as many people as possible?


The Fairness Doctrine in These Taxing Times

April 16, 2010

By Arthur Brooks, President, AEI

Think the current administration’s redistributionist tax plans—its desire to “spread the wealth around”—are fair?  The way I see it, they’re profoundly unfair.  Real fairness does not mean bringing the top down.  It means giving the bottom a fighting chance to rise.
 
This is an argument some of us in the free enterprise movement have made with insufficient force.  Instead, we too easily cede the fairness argument to the other side and busily set about showing how entrepreneurship and markets are more, well…efficient.  (Inspiring stuff indeed.)
 
This is a mistake.  It reduces free enterprise to a mechanistic system of production—and ignores its ability to provide individual Americans the opportunity to earn their own success.  
 
We should always avoid the temptation to argue “My efficiency can beat your fairness.”  That’s a losing proposition. We must show that fairness is not the trump card of the redistributionists, but their Achilles’ heel.  
 
In my forthcoming book, The Battle: How the Fight Between Free Enterprise and Big Government Will Shape America’s Future <http://www.aei.org/book/100036> , I define fairness this way: “a system that rewards hard work, merit, excellence, and  the honest makers in society.” And as I point out in my April 14 Wall Street Journal op-ed <http://www.aei.org/article/101913> , these are not just my views.  They’re the views of the overwhelming majority of Americans, who rarely get these things wrong.


State Budget Woes Could Get Worse: The Ticking Pension Time Bomb

April 15, 2010

By Nick Schulz, DeWitt Wallace Fellow, American Enterprise Institute
Editor-in-Chief, American.com 

States all across the country are struggling with soaring budget deficits. The reasons are twofold: the recession slashed tax revenues to state treasuries while there has been insufficient political will to cut spending. 

But a bad situation might get much worse. Public-employee pensions are woefully underfunded. States say the shortfall is about $438 billion. But my colleague Andrew Biggs points out, the real number is more like $3 trillion. According to Biggs:

“The accounting methods that states currently use to measure their liabilities assume plans can earn high investment without risk. Should plan assets fall short, as is likely, taxpayers are required to make up the difference. But the value of this taxpayer guarantee is not disclosed. As a result, while states recognize that their public-employee pensions are underfunded, the situation is far worse than their accounting demonstrates. Without taking proactive steps now, taxpayers will be made to cover an enormous shortfall when the bills come due.” 

Later this year, AEI and NCF will be hosting a conference to discuss the problems with state budget deficits and what some practical solutions might be.  Stay tuned.