May 24, 2006

Socialized Entrepreneurship

Dr. Jeff Cornwall is writing a lot these days about "socialized entrepreneurship," - essentially, government using public funds to seed entrepreneurial ventures. His first post, about Chile's foray in socialized entrepreneurship, drew a comment from the Chilean coordinator of the Global Entrepreneurship Monitor program. Follow-up posts look at Ireland, and even the U.S., where 44 state governments are trying to become venture capitalists. That last post cites a report from the National Association of Seed and Venture Funds, which "surveyed every state in the nation to identify state venture capital programs." The report doesn't mention Tennessee as being among the 44 states that are taking tax dollars and investing them in business start-ups. The report does say this:

"The states believe their programs are working."

No government bureaucrat in charge of handing out money to fund new businesses to generate jobs and economic growth is going to say it isn't working, lest the program be axed and he lose his very fun job. But, as Cornwall says, "Studies have clearly shown that governmental efforts to guide investment have little long-term economic impact. Markets create sustainable economic growth, not bureaucrats."