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US rescue efforts may risk double-dip recession U.S. companies, consumers and communities may grow so addicted to government financial help that cutting them off could trigger another recession soon after the current one ends. Between the U.S. Federal Reserve’s trillions of dollars in lending programs, the $787 billion stimulus package and $700 billion — and counting — in bank bailout funds, no one can accuse officials of soft-pedaling their crisis response. But there is increasing concern that when the flow of public money subsides — beginning next year when much of that stimulus package is spent — the economy still won’t be strong enough to stand on its own. « The stuttering attempts to repair the banking and lending mechanisms so far by the new administration suggests that by late 2010, the specter of a second dip into recession will be looming large, » said Merrill Lynch economist Sheryl King. That did nothing to improve confidence on Wall Street, where investors dumped stocks amid fears that the financial crisis was worsening. |
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Nourri un animal sauvage pendant quelques temps et il ne saura plus comment chasser revenu dans la nature…
Il faudrait que les gouvernements ré-adoptent des loi anti-sodomies.
De cette manière les contribuable arrêteraient de se faire enculer par des politiciens.
Si au moins les politiciens avait la politesse de d’utiliser de la vaseline avant de nous enculer.
Même pas, comme la vaseline c’est un produit du pétrole les politiciens n’en n’utilisent pas pour faire plaisir à Greenpeace.
James Manzi
The Innovation Squelch
Obamanomics is bad news for American entrepreneurs.
3 March 2009
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 let’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 doesn’t look so compelling. The pot of gold has to be big indeed to get people to make such a risky leap. Today, we’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 Obama’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. That’s a huge difference; in fact, it’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.
Alors le capitalisme risque de mourir??? Coooooooooooooooool man!
C’est la liberté qui risque de mourir.
Mais les gauchistes n’ont jamais aimé la liberté. Pour un gauchiste, l’homme est trop bête pour être libre d’où la nécessité d’une élite dirigeante voir d’une dictature.
Ce n’est, en tout cas pas la droite, qui pourrait nous donner des leçons de liberté. La liberté, pour la droite, c’est celle d’aller crever au front, c’est celle du Patriot Act et aussi celle de ne pas pouvoir acheter la pilule du lendemain pour ne pas contrevenir aux rudiments de l’évangélisme…
1-Obama a continuer la politique de Bush en Irak et il est plus militariste en Afghanistan et au Pakistan.
2-Obama a donner son appuis a toutes les mesures controversées du Patriot Act.
3-La décision de vendre la pilule appartient au pharmacien. La liberté est défendue quand l’État ne dit pas au pharmacien comment administrer leur commerce (c’était la position du GOP).
La liberté n’est défendue ni par la gauche, ni par la droite. Ce sont tous des crapules étatistes. Les seuls véritables défenseurs de la liberté sont les libertariens.