Obamanomics is bad news for American entrepreneurs.
For an academic macroeconomist, Nobel laureate Edmund Phelps can sound shockingly in touch with the real world. In a recent interview, he described the possible implications of the large government-spending programs in President Obama’s stimulus package: “There’s . . . a chance that the perceived increase in the role of government of this sort will have some unanticipated effects on the animal spirits of entrepreneurs.” In fact, not only the stimulus package itself, but the higher taxes that it will require—both tax increases explicitly proposed in the president’s budget and the expectation of large future tax increases because we’re paying for all this spending with the national credit card—are likely to reduce the number of entrepreneurs in America.
Consider a hypothetical aspiring entrepreneur: an engineer, say, with an idea for a new company. First she has to invest a lot of her own time just to develop her idea to the point that it could win funding from a venture capitalist or angel investor. The odds of going from idea to funding are, say, ten to one against. But letÂ’s assume that after working nights and weekends for a year to produce a working prototype, write a business plan, and recruit a team, she finally gets funded by a professional venture capitalist. Having cleared this hurdle, she gets to quit her job and work much longer hours for much lower wages for about a decade. All the while, our engineer knows that she has only a 20 percent chance of steering the company to a successful exit that makes her a lot of money.
If entrepreneurs had a higher success rate, then many more people would start companies (probably about as many as go into long-hour, high-stress, high-compensation work like investment banking, corporate law, and strategy consulting). But when you multiply the potential payoff by the low odds of success, the expected profit doesnÂ’t look so compelling. The pot of gold has to be big indeed to get people to make such a risky leap. Today, weÂ’re increasing the deficit as a percentage of GDP to levels not seen since World War II. Any prospective entrepreneur must realistically expect higher future tax rates or increased inflation (or both), which will substantially reduce the future payout from a successful start-up company. The pot of gold has suddenly gotten a lot smaller.
Now, it’s easy to say, “Okay, but this engineer will make so much money if she’s successful that higher taxes on the back end won’t change her decision about whether or not to start the company. If the company succeeds, she’s still incredibly rich under anybody’s tax plan, and if it fails, then tax rates don’t matter anyway.” But consider the prospective entrepreneur’s incentives as they exist the moment before she makes the leap. She multiplies her potential payout by the odds of success. Tax increases influence this calculation directly by reducing the size of the payout. The capital-gains tax that hits her when she sells her company is just the first thing for her to consider. Second and more important are increasing tax rates on dividends, interest income, and (again) capital gains—since she will invest the proceeds she gets from selling her company in a portfolio of stocks, bonds, and so forth, and rising taxes will reduce the present value of the after-tax consumption that the portfolio will generate in perpetuity. In the low-odds scenario of success, she will be in a very high-income category, and all of the taxes on the rich that Obama is proposing or implying will apply to her.
Rationally, she would therefore have to foresee higher odds of success in order to make the leap to start the company. How much higher? By my figuring, if you use ObamaÂ’s campaign proposals for long-run capital-gains, income, and FICA tax rates as a (probably conservative) guide to where rates may go, the prospective entrepreneur would have to increase her estimated odds of success at the moment of funding from 20 percent today to about 30 percent under the new tax regime in order to have the same financial incentive to start the company. ThatÂ’s a huge difference; in fact, itÂ’s about the same as the margin of difference between the odds of success for a new venture-backed company started by a first-time entrepreneur and the odds of success for a new venture-backed company started by a founder who has already done at least one successful start-up. Any venture capitalist can tell you how much likelier the second guy is to get funded than the first.
During the campaign, presumably thinking of his Silicon Valley supporters, Obama proposed eliminating capital-gains taxes on start-ups in order to offset some of the tax effects that I’ve highlighted. This idea was always make-believe. As I predicted last July, the president’s just-released budget has “delayed” the proposal until 2014. Translation: it isn’t going to happen. Like the college students who stayed up late to hear Obama’s campaign speeches only to find his first significant action to be a stimulus program that will transfer about $1 trillion from them to the Baby Boomers, Silicon Valley Obama supporters may find themselves in an uncomfortable environment. A government-dominated economic era may not be an auspicious one in which to start companies that threaten big, incumbent corporations with lots of political clout.
The concept of “animal spirits” recognizes that not all economic decisions are made entirely with spreadsheets. Some people start companies because they’re driven by a dream that transcends rational economic calculation. But most successful entrepreneurs are pretty serious about comparing risks with opportunities. Higher tax burdens raise the price of entrepreneurship. When you raise the price of something, then, all else held equal, you usually get less of it. Given that something like 7 million people in the U.S. work in companies that are or were venture-backed, including a majority of the employees in high-growth sectors of the economy like computers and software, this is likely to matter a lot in the long run.
James Manzi is a senior fellow at the Manhattan Institute.
Soccer is running America into the ground, and there is very little anyone can do about it. Social critics have long observed that we live in a therapeutic society that treats young people as if they can do no wrong. Every kid is a winner, and nobody is ever left behind, no matter how many times they watch the ball going the other way. Whether the dumbing down of America or soccer came first is hard to say, but soccer is clearly an important means by which American energy, drive, and competitiveness is being undermined to the point of no return.
What other game, to put it bluntly, is so boring to watch? (Bowling and golf come to mind, but the sound of crashing pins and the sight of the well-attired strolling on perfectly kept greens are at least inherently pleasurable activities.) The linear, two-dimensional action of soccer is like the rocking of a boat but without any storm and while the boat has not even left the dock. Think of two posses pursuing their prey in opposite directions without any bullets in their guns. Soccer is the fluoridation of the American sporting scene.
For those who think I jest, let me put forth four points, which is more points than most fans will see in a week of games—and more points than most soccer players have scored since their pee-wee days.
1) Any sport that limits you to using your feet, with the occasional bang of the head, has something very wrong with it. Indeed, soccer is a liberal’s dream of tragedy: It creates an egalitarian playing field by rigorously enforcing a uniform disability. Anthropologists commonly define man according to his use of hands. We have the thumb, an opposable digit that God gave us to distinguish us from animals that walk on all fours. The thumb lets us do things like throw baseballs and fold our hands in prayer. We can even talk with our hands. Have you ever seen a deaf person trying to talk with their feet? When you are really angry and acting like an animal, you kick out with your feet. Only fools punch a wall with their hands. The Iraqi who threw his shoes at President Bush was following his primordial instincts. Showing someone your feet, or sticking your shoes in someone’s face, is the ultimate sign of disrespect. Do kids ever say, “Trick or Treat, smell my hands”? Did Jesus wash his disciples’ hands at the Last Supper? No, hands are divine (they are one of the body parts most frequently attributed to God), while feet are in need of redemption. In all the portraits of God’s wrath, never once is he pictured as wanting to step on us or kick us; he does not stoop that low....
Posted by: Mike ||
03/05/2009 11:49 ||
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#1
Yes, Virginia, soccer does suck. It's a lowest common denominator sport. Sports facilities and equipment cost money, but any third world shit hole has enough open space to kick a ball around (or lacking that, an empty can or even a rock). So, of course, the multiculturalists love it.
And, having attended a couple of games at the World Cup in Palo Alto a few years ago, I agree that it is a miserably boring sort to watch. What was entertaining was the Cameroon royal family sitting in the stands behind me. They brought musicians and obviously know how to have a good time anywhere, anytime -- even at a soccer game.
Posted by: ed ||
03/05/2009 12:43 Comments ||
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#3
Soccer, the official sport of socialism.
You're dead on Iblis. Ever watch a foreign soccer game broadcast? The sport is so boring, people get engaged in cheers and shouting that has literally nothing to do with the action on the field. They have to, to stave off passing out from boredom.
And this business of the short haired, fat assed soccer mommies and their candy-assed metrosexual 'husbands' putting their kids into a league where nobody keeps score is so unrealistic and dysfunctional it oughta be outlawed.
Dodgeball is a good start. A few days at the range is even better.
Posted by: no mo uro ||
03/05/2009 13:55 Comments ||
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#4
Organizied soccer has contributed to the pussification of America.
Ed and no mo suggest "dodgeball' is the cure.
In my day we didn't call it "dodgeball". We called it Artillery. You can look it up.
#6
I suppose this isn't the time for me to admit that I coached my daughter's AYSO soccer team for two years.
We did keep score. Well, I did.
Posted by: Steve White ||
03/05/2009 14:35 Comments ||
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#7
Yeah, soccer sucks. The only good thing about it is on the Spanish stations, when the guy shouts "GOOOOOOAAAAALLLL!!" for three minutes whenever someone scores. Too bad he's only gotta scream it once or twice per game.
#9
I'm no fan of soccer, more commonly and universally known as football, but this thread is a very funny illustration of cultural differences. I can see flaws in football, ESPECIALLY in professional football, but seeing it as pussified and boring and possibly even elitist is a riot, since I can't imagine a more popular and 'common people' sport. But, as I wrote, it's a cultural difference, it's very entertaining and interesting reading this thread, re pop culture, trends, and all. Football IS a girl's sport in the US : what a funny thought! Even the Sopranos had a bit about that one, with the paedo coach...
I wonder how the RB resident britons, who probably are actual fans, unlike me, will/would react to the comments above. I think you can expect to be headbutted (signature move of the street tough who does this a lot playing football), metaphorically speaking.
#10
Soccer is the only sport I know of that generated a war. Small as it might be there is something special about the Soccer War (and the movie Victory was entertaining as well for a lightweight geat escape).
#11
5098: The piece is not entirely serious. Speaking just for myself, both kids played soccer when they were a bit younger and they had fun doing it. I don't find it very engaging, and if my kids hadn't played, I probably would never have watched a single game straight through from end to end.
I don't get basketball, either. Give me hockey, baseball, and the NFL.
Posted by: Mike ||
03/05/2009 17:29 Comments ||
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#12
Football/soccer is the most popular sport in the world bar none!!!!!
Only in America can you have a world series with only one nation in it.If you are not world champions you are not interested!
American football sucks as most players dont touch the ball,Baseball is played by a few contries like Cuba and Japan and Basketball is a chance to get out of the ghettos!
Strange how only USA dont like football/international sport must be like the USA news only interested in only one country ie the most insular nation i have ever visited!!!!
#13
If you are not world champions you are not interested!
And the problem with that is?
American football sucks as most players dont touch the ball
American football players specialize; each contributes to make the team score or prevent the other team from scoring (like rugby). And as comedian George Carlin put it, it's a pretty good metaphor for war (which we in the US are also good at).
#17
First, it's called football, thank you.
Second, it's as "boring" or exciting as American Football. I've sat through extremely boring games of American Football when suddenly that last second kick off return touchdown changed everything.
Same with football. Watched a match yesterday that had:
No goal in the first half.
Then 3 goals for one team.
Then 2 goals for the other team within 2 minutes.
Then a mad tush and the match upside down.
In the last minute the first team scores a 4th goal.
That's football. Ask ANY European boy whether he finds football boring and you'll get a blank stare from 95% of them.
Now don't let me start with baseball.
Posted by: European Conservative ||
03/05/2009 19:37 Comments ||
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#18
I don't watch any sports at all, EC.
Once upon a time I used to pay attention to baseball and basketball (even played basketball - badly - in high school and college), but that was when the players actually played the game instead of getting into fights and/or dancing around like idiots every time they do the job they're being paid for score. I want fights, I'll turn on boxing.
Nowadays, I'd sooner watch oil paint dry - it's a much more productive use of my time than watching "sports" - including football (either kind).
Posted by: Barbara Skolaut ||
03/05/2009 19:50 Comments ||
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Oh my gawd....he's been deboned and filleted. What a lying douchebag. A taste
I wouldn't mention it, except that Olbermann savages anyone who didn't go to an impressive college. As it happens, he didn't go to an impressive college, either.
If you've ever watched any three nights of his show, you know that Olbermann went to Cornell. But he always forgets to mention that he went to the school that offers classes in milking and bovine management. Indeed, Keith is constantly lying about his nonexistent "Ivy League" education, boasting to Playboy magazine, for example: "My Ivy League education taught me how to cut corners, skim books and take an idea and write 15 pages on it, and also how to work all day at the Cornell radio station and never actually go to class."
Except Keith didn't go to the Ivy League Cornell; he went to the Old MacDonald Cornell.
The real Cornell, the School of Arts and Sciences (average SAT: 1,325; acceptance rate: 1 in 6 applicants), is the only Ivy League school at Cornell and the only one that grants a Bachelor of Arts degree.
Keith went to an affiliated state college at Cornell, the College of Agriculture and Life Sciences (average SAT: about that of pulling guards at the University of South Carolina; acceptance rate: 1 of every 1.01 applicants).
Olbermann's incessant lying about having an "Ivy League education" when he went to the non-Ivy League ag school at Cornell would be like a graduate of the Yale locksmithing school boasting about being a "Yale man."
Among the graduates of the Ivy League Cornell are Ruth Bader Ginsburg, Thomas Pynchon, Paul Wolfowitz, E.B. White, Sanford I. Weill, Floyd Abrams, Kurt Vonnegut, Douglas Ginsburg, Janet Reno, Henry Heimlich and Harold Bloom.
Graduates of the ag school include David LeNeveu of the Anaheim Ducks, Mitch Carefoot of the Phoenix RoadRunners, Darren Eliot, former professional hockey player, and Joe Nieuwendyk, multiple Stanley Cup winner.
One begins to understand why Harvard students threw a chicken on the ice during Cornell's famous rout of Harvard at a 1973 hockey game.
If you actually want to pursue a career related to agriculture, there is no better school than the Cornell ag school. I have nothing but admiration for the farmers and aspiring veterinarians at the ag school. They didn't go there just to have "Cornell" on their resumes.
In addition to the farmers, there are some smart kids who go to the ag school -- as there are at all state universities. But most people who majored in "communications" at an ag school don't act like Marshall Scholars or go around mocking graduates of Regent University Law School.
The sort of insecurity that would force you to always say "trebled" instead of "tripled" could only come from a communications major with massive status anxiety, like Keith. Without even looking it up, I am confident that Harvard, Yale and Princeton do not offer degrees in "communications." I know there is no "communications" major at the Ivy League Cornell.
"Communications" is a major, along with "recreation science," most commonly associated with linemen at USC. But at least the linemen can throw a football, which Keith cannot because his mother decided he was not physically robust enough to play outdoors as a child.
It may seem cruel to reveal the true college of someone who already wakes up in the middle of the night in a cold sweat worried that he's a fraud. But I believe that by pointing out that Olbermann actually is a fraud, I am liberating him.
You may not realize it now, Keith, but you will look back on this day and say, "That was the best thing that ever happened to me!"
Finally, you can stop pretending that you went to the hard-to-get-into Cornell.
Now you won't have to quickly change the subject whenever people idly remark that they didn't know it was possible to major in "communications" at an Ivy League school.
No longer will you have to aggressively bring up Cornell when it has nothing to do with the conversation.
Relax, Keith. Now you can let people like you for you or not. I wouldn't want Coulter as an enemy. She's a tough one
Posted by: Frank G ||
03/05/2009 00:00 ||
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#1
As a grad of Olbermann and Coulter's alma mater (Engineering). I recommend the 'burg disregard this article. It is regrettable that Ms. Coulter took our petty internecine squabbles public in this way.
For what it's worth, we had plenty of hockey players in my engineering classes. The Ag school is arguably the best in the world. Ezra Cornell specifically wanted his University to focus on the practical as well as Arts & Sciences and, as a sort of hybrid land grant college, it had military science, Ag and engineering from day 1. Coulter also fails to mention that our world class Hotel school, which is also an 'endowed' (vs. statutory) college, is not known for its SAT scores either.
As for politics, the famously anti commie former Taiwan president (Lee Teng-hui) was an Ag grad.
That said, Ag Comm was sort of a major of last resort before flunking out when I was there.
#3
I did graduate from an Ivy League school, but I think a Cornell Ag & Life Sciences education would have been more worthwhile. That would explain why Olby claims he attended the Ivy Cornell - he's wrong about everything.
#4
Maybe Olberman dreamed about taking a class titled The Growth Characteristics of Hedera and, instead of using feet and inches, decided to go nautical with his measurements?
#5
The point is not that an AG collage is any better or worse than a Ivy Education.
The point is that Olberdouch is claiming that he went to an Ivy school when he didn't. That is called Fraud. Not only that but he sneers at anyone who didn't. Didn't he sneer at Sarah Palin's creds as well?
Olbermann is a liar and a Fraud. But we already knew that.
#6
Wonder what his employment application to NBC has to say about his education?
Posted by: ed ||
03/05/2009 8:56 Comments ||
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#7
Olbermann could have freaking gone to the Sorbonne and still be a blithering idiot.
He is a complete waste of oxygen and electricity.
And to think at least half the Democratic National Committee watches his show for updates on public opinion. That's like Joe Stalin reading Pravda for the world news.
He's a moron.
Posted by: James Carville ||
03/05/2009 10:50 Comments ||
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#8
Barry gets a pass on acedemic achievements, records, classes, grades, citizenship, etc. Citizenship, did I mention US Citizenship? If Olbermann claims on his next broadcast to have personally discovered Pennicilin, at this point why should anyone give it a second thought?
#9
If you actually want to pursue a career related to agriculture, there is no better school than the Cornell ag school. I have nothing but admiration for the farmers and aspiring veterinarians at the ag school. They didn't go there just to have "Cornell" on their resumes
#11
The dirty little secret about Kieth is that they keep him on the air only to cause controversy (i.e. be as obnoxious as possible). His education is irrelivent to his "job" (make an *ss of himself).
As far as Cornell is concerned, I always considered Sociology to be the ultimate last step before flunk out. Ag had those Food Science classes that could trip you up.
Al (Econ '73)
Posted by: Frozen Al ||
03/05/2009 11:39 Comments ||
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#12
Al, I think the last stop changes from year to year. Not sure if it's still Ag Comm. As you note, everything has the potential to trip you up somehow.
#13
Lying about your credentials is a sure way to get fired from most jobs, and it's appropriate for Ann to bring it up. This is not going to change anyone's mind at the 'burg, but it's exactly the sort of factoid that sways emotional, irrational, largely uninformed swing voting types.
#15
I used to think Ivy League degrees were impressive. Then I got to law school and met some of the people who have them.
They're all smart, in the sense of being able to succeed in school. Most are quite good at what they do in life--one of the best professors I've ever had ("The Murph," who taught contracts and employment law) was a Harvard law grad. However, more than a few are fatally handicapped by arrogance and a sense of entitlement--they went to The Best Law School On Earth and they know it and expect that the rest of us are going to genuflect to them because of it. (Our dean was the worst offender.) They also have a tendency to embrace whacked-out ideologies (e.g., Marx) and stick rigidly to them despite empirical evidence to the contrary, and to travel in cultural and political herds, adopting whatever fads and fashions (NPR, Seinfeld, Obama, Whole Foods, the Toyota Prius, Keith Olbermann, particular vintages of chardonnay) the group around them do.
I'm not the guy in my office who's charged with hiring, but if I were and a Harvard grad applied, I'd be spring-loaded not to hire him. I'd rather have a decent, smart kid from a "lesser" university than G. Percivals Fullovhimself IV from Harvard, because the kid from flyover country is probably more mature and more fun to hang out with.
Posted by: Mike ||
03/05/2009 15:53 Comments ||
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#16
I graduated from Technical school, tell me, can any of you build anything they want from scratch?
I can, and have, and can do it whenever I like.
Gun laws, I can make all i want or need,
Car breakdown, I can build a workable vehicle from junk metal.
You get the idea, It's a tremendous feeling of freedom.
Posted by: Redneck Jim ||
03/05/2009 16:20 Comments ||
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#20
I didn't post this as a slam at Cornell Ag school, or any school. It's a slam on Edwin R. Olbermann's attempt to fluff his credentials for reasons of personal inferiority, desire for acceptance, and all-around tool-hood. He's a fake, a pretentious coward, a p*ssy, and to quote his eminence: "the worst person in the world"
*spit*
Posted by: Frank G ||
03/05/2009 19:07 Comments ||
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A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.
Rantburg was assembled from recycled algorithms in the United States of America. No
trees were destroyed in the production of this weblog. We did hurt some, though. Sorry.
