WASHINGTON – Not every economic policy change has got to cost money. Entrepreneur Henry Nothhaft in an op-ed piece in The Wall Street Journal, (A Labor Day Message for President Obama, September 3-4, 20110), provided a short but compelling agenda that President Obama could focus on. Acting upon it would have beneficial impact on start-ups, and business in general.
And this would cost any money. Nothhaft premise is that the real lever to get growth and employment creation moving again in America is to favor start-ups. This is where the real action is, in the US as in most of the world. Dynamic entrepreneurs and risk takers are also job creators. They give life to new businesses that require people in order to grow.
Reduce Sarbanes-Oxley burdens for small business
Well, for starters Sarbanes-Oxley legislation makes it far too onerous and expensive for small businesses to comply with all that is needed in order to keep their books in accordance to the law and particularly expensive to go public. And yet it is proven that start-ups get going and become truly profitable only after a successful IPO. It would be enough –Nothhaft suggests– to exempt firms that have less than $ 500 million in revenue from Sarbanes-Oxley mandates. This would allow many more small firms to go public, thus creating the preconditions for more rapid growth that would bring along more jobs.
Eliminate US patent office backlog
Furthermore, the US needs to overhaul its patent system. Right now America, supposedly the land of that encourages innovators more than any other, has an under resourced US patent office. Amazingly, currently there is a backlog of 1.2 million patent applications. It is obvious that patent protection in many instances is a critical precondition for launching a business based on one or more patents.
Allowing speedy processing and granting of patents would expedite the launching of hundreds, possibly thousands new businesses capable of creating, according to patent office estimates, ”millions of jobs”. Well, may be this an inflated estimate. But it looks intuitive that patent protection may be absolutely crucial to start a variety of new companies. Giving more resources to the US patent office cannot be that complicated. So, why not do it now?
Tax incentives for foreign manufacturers
The final recommendation is about offering tax and other incentives to manufactures willing to establish themselves in the USA. All countries offer incentives to lure new industries. And manufacturing is a force multiplier. For every new job in industry about 15 additional jobs are created up and down the supply chain and with other businesses that benefit from the creation of industrial activities.
Not a Grand Plan, just sound policy
This does not sound like a “Grand Plan”, a silver bullet for Obama bound to create millions of jobs between now and November 2012. So, politically these ideas may not be that hot. But these are sensible policy changes that would simplify and expedite the trajectory to success for enterprises, while encouraging many more would be entrepreneurs to start a new business.
Just think of it: Fast patent processing, diminished administrative burdens for small companies, easier transition to public company at a lower cost, incentives if you come from abroad. All this makes good sense. It would not cost anything and it would improve an investment climate no longer perceived by investors as truly favorable to business.