I wrote this almost three years ago. It sank without a trace ...
Antidote to The Great Recession: A national small business generation service
Robert Reich asks "Shall We Call it a Depression Now?" ... Brad DeLong says ... not yet.
... In the Great Depression the solution to economic stall was World War II. That's like treating pneumonia with malignant melanoma. Let's not try World War III.
So we can do all the things that have been tried here or elsewhere, depending on how cooperative the rump of the GOP is.
That's good, but maybe we should try a few new things too.
Imagine a national small business generator. A web site built around a knowledge-base of tens of thousands of business plans. Plans for franchise businesses, plans for manufacturing, plans for service businesses. Plans for businesses that need a lot of startup money. Plans for businesses that need a credit card and a mega-Kiva (it's the US, not Uganda) microloan. Plans for all the things people need in bad times, and plans for the good times to come. Plans for business that write the business plans that go into the knowledge-base.
The plans are organized by pre-requisites. Some are tagged for special skills, others for grinding hard work. They come with packaged loans, like the ones the Small Business Administration already offers - and maybe with grants as well. They come with packaged legal infrastructure, and an expedited incorporation package that greatly simplifies current law - a kind of augmented LLC with simplified tax filing. IP protection, the whole nine yards.
Add an option to invest. So would-be investors can browse these small business startups, and choose which to invest in. Optional online skills based training, or sign up with the people who've just launched, you know, teaching businesses.
Most importantly, the plans are tied to a federal health insurance program, modeled after the Minnesota small-business plans available to any two people starting a business.
It's a web site of course.
So one day you're out of work.
Take a day off. Then go to the knowledge-base.
Login. Browse. Search. Compare some plans. Get some advice. Pick on, click, click, sign.
You're in business now. A grant to start. Health insurance. A loan.
It's not new. Similar programs have been very successful in developing nations. It's just a bit bigger.
It could be done.
It's still a good idea, except now I'd add an indemnity program [1] against IP lawsuits combined with reform of the patent process. A reform that might take down the modern plague of Nathan Myhrvold. I know that anything I invent is going to violate somebody's patent. This is poison to high value startups.
The Depression is not going away. I think historians will say it started with the dot com crash, and it feels like we're in the middle of it. It's past time to try something like a national small business generation service combined with patent reform.
[1] For example, the small business generation program would include loans to support payment into a national patent defense program. When a patent attack is launched, government funded lawyers do the fighting. Loans would be repaid from future revenues. It's a form of IP insurance program.
See also
- Uncertainty and Long Depression II - June 2011
- Answering Krugman: Why the Obama administration isn't panicking about the elections - Aug 2010. Not bad for an amateur.
- Causes of the Great Recession: China, GPSII and RCIIIT. Now for Act III - April 2010.
- Employment in the Great Stagnation - Aug 2010. A review, with a focus on education and training and its limitations.
- Krugman on globalization: how to manage the losers - Dec 2007. Back then Krugman was concerned about structural causes of unemployment. For political reasons he doesn't like to mention this now.
- American crisis – imagining a way out - Feb 2010. A sane government could do a lot. American voters gave us the modern GOP, the anti-American party.
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