Some of the right-wing blogs I read are convinced that President Obama sincerely wants to destroy entrepreneurship in this country. This is nonsense. Obama loves entrepreneurship, but he would like to make a few changes to it. It’s the nature of the changes that worries me. If these changes worry you as well – and if they don’t, read on – you need to do something about it.
Barack Obama loves what I think of as blue state entrepreneurship. In the President’s world, most people are highly educated. Companies never do anything “irresponsible.” An extremely strong social safety net protects those who can’t take care of themselves, permanently or temporarily. Finally, the guiding hand of government enforces and promotes our progress toward these lofty ideals. What the President wants is targeted entrepreneurship.
All this is quite familiar to me, because I lived it for decades as a resident of Massachusetts. Massachusetts, widely known as one of the bluest states in the country, really is like that. You can find similar blue state economies in states like California, New York, New Jersey and Michigan.
The political leaders of Massachusetts, including Governor Deval Patrick (who is a close friend of President Obama), are also often accused of being anti-business. They don’t think of themselves that way, however. In fact, I often hear Governor Patrick on the radio touting Massachusetts as a great place to do business. Government, in the view of Governor Patrick and President Obama, is using your tax dollars to “invest” in what they think will be a stronger economy down the road.
So how’s that working out for them?
If Massachusetts really was a great place to be an entrepreneur, it would outperform other states in job creation and new business startups. However, that is not the case. Massachusetts is lagging other states in both categories. The targeted entrepreneurship that the government promotes actually discourages real entrepreneurs.
The problem, of course, is that targeted entrepreneurship is really the opposite of entrepreneurship. Real entrepreneurship is messy. It fails a lot. It makes mistakes. It is guided by the market and the decisions of millions of real consumers, not government. It thrives on economic freedom. It wants to breathe air that is not polluted by over-regulation. It does not want to carry the weight of high taxes.
Recently I found the U.S. Economic Freedom Index, published by the Pacific Research Institute. Read the PDF study and you’ll find that the most economically free states are places like South Dakota, Idaho, Colorado, Wyoming, and Oklahoma. Not coincidentally, those states also lead the nation in job growth and new business starts. They’re not doing great in this economy – nobody is – but they’re doing better than the rest. They’re doing a lot better than the deep blue states I mentioned above.
The blue states have unemployment that is higher than the national average. Productive people are moving out of those states, and taking their ideas and work ethic with them. The blue state governments are almost all deeply in debt.
The President and the blue state governors really need to read this report. You do, too.
The key point to remember is that this is not ideology. It is a simple fact that the states which have the least oppressive regulations, and the lowest reasonable tax burdens, have the healthiest economies. Their approaches, not the ones used by Massachusetts, California and the like, are the ones that the federal government should be applying.
It’s not really a Democrat or Republican thing
I call the illiberal, business-killing approach blue state economics because it is mostly practiced in states which tend to vote for Democrats (blue states). But a number of Republican governors believe in it as well. One is Arnold Schwarzenegger of California. California’s economy, guided by the Terminator since 2003, is on the verge of collapse. On the other hand, Brian Schweitzer of Montana is a Democrat who espouses red state economics. His state economy is relatively strong.
Red state economics work around the world as well. Countries such as India, Singapore and the nations of Eastern Europe are doing much better economically than their blue state neighbors. Their economies are some of the most free in the world.
So whether you are a Republican or Democrat, please read the U.S. Economic Freedom Index report and you’ll see why red state economies work, and blue state economies don’t. After you’ve read it, send copies to any of your friends who you might be able to convince. Then, get in touch with the people who really need convincing – your Governors, Senators and Representatives, and especially the folks at the White House.