Tag Archives: Kauffman Foundation

Rules for Economic Growth: Finding a “golden mean” for laws affecting innovation & entrepeneurship

“There has never been a prosperous society without some form of government,” said Richard Vedder, Distinguished Professor of Economics, Ohio University; Adjunct Scholar, American Enterprise Institute. On the other hand, “a society that has been controlled by government has never had extended prosperity.”

So what is the golden mean?

Whether we agree on the level that government should be involved in the economy or not, I think it’s a truism that some level of governmental involvement is necessary, if just to provide for stability to allow markets to exist.

Don’t agree? For an example of what stability and security can do for a free market, look to, at one extreme, Somalia (as one reader of this blog observed): it is total chaos, administered at the hands of war lords and rampant famine.

On the other hand, and at the other extreme, look at the United States (a gratuitous comparison, I know). Much of the economic growth has been permissible due to our geographic buffer from the wars of Europe in the first half of the last century and the lack of conflict here. There are many other factors, of course, but one cannot look at the history of Europe, as well as Asia, and not see the disastrous effect that war, especially the world wars, has on economic growth and prosperity.

So, assuming some level of government: what should laws are important to the promotion of economic growth? This discussion is especially important in the present context of budget debates and a looming government shutdown. Rep. Ryan’s budget, while it works to decrease the budget deficit, does little to promote growth. What should the federal government do (other than get out-of-the-way) do to help innovation, entrepreneurs, and employers, short of actually picking winners and subsidization policies?


Read the Rules for Growth PDF here.

The Kauffman Foundation has recently put out a book that makes a few recommendations for laws that would promote economic growth. A few of them:


  • Open our borders to skilled labor: Reform U.S. immigration laws so that more high-skilled immigrants can launch businesses in the United States.
  • Licensing practices: Improving university technology licensing practices so university-generated innovation is more quickly and efficiently commercialized.
  • Fewer income taxes, more consumer taxes:Moving away from taxes on income that penalize risk-taking, innovation, and employment while shifting toward a more consumption-based tax system that encourages saving that funds investment. In addition, the research tax credit should be redesigned and made permanent.
  • Rapid patent review: Reforming the intellectual property system to allow for a post-grant opposition process and address the large patent application backlog by allowing applicants to pay for more rapid patent reviews.
  • Ease corporate paperwork: Authorizing corporate entities to form digitally and use software as a means for setting out agreements and bylaws governing corporate activities.

And there are others. What other rules might open up the market, support innovation and entrepreneurship, and grow our economy?