Monday, May 19, 2008 - The Progress & Freedom Foundation Blog

The Big Questions

There are a number of big questions facing the country as we approach an election of great consequence this fall. The whiff of "change" is in the air, after all. One of the very biggest questions is whether, in the face of dramatic changes in the global economy, the U.S. will turn towards comfortable security and "equality" or whether it will recommit to the strategy that put us at the top of the world -- entrepreneurial capitalism.

Michael Malone today has a nice essay on entrepreneurship:

We still have companies and corporations, but now they are virtualized, with online work teams handing off assignments to each other 24/7 around the world. Men and women go to work, but the office is increasingly likely to be in the den. In 2005, an Intel survey of its employees found that nearly 20% of its professionals had never met their boss face-to-face. Half of them never expected to. Last summer, when the Media X institute at Stanford extended that survey to IBM, Sun, HP, Microsoft and Cisco, the percentages turned out to be even greater.

Newspapers are dying, networks are dying, and if teenage boys playing GTA 4 and World of Warcraft have any say about it, so is television. More than 200 million people now belong to just two social networks: MySpace and Facebook. And there are more than 80 million videos on YouTube, all put there by the same individual initiative.

The most compelling statistic of all? Half of all new college graduates now believe that self-employment is more secure than a full-time job. Today, 80% of the colleges and universities in the U.S. now offer courses on entrepreneurship; 60% of Gen Y business owners consider themselves to be serial entrepreneurs, according to Inc. magazine. Tellingly, 18 to 24-year-olds are starting companies at a faster rate than 35 to 44-year-olds. And 70% of today's high schoolers intend to start their own companies, according to a Gallup poll.

An upcoming wave of new workers in our society will never work for an established company if they can help it. To them, having a traditional job is one of the biggest career failures they can imagine.

I agree that the vector of our economy is toward more entrepreneurship. But it is by no means a sure thing that this vector will be sustained. Crucial decisions on free trade, health care, immigration, energy production and usage, Internet regulation, and taxes, among others, will help determine whether entrepreneurs can afford to strike out on their own. Whether the human and financial capital crucial to innovation will continue to flow to the U.S. Whether our sense of risk is tipped toward the ever-brighter future or whether, believing our best days are behind, we decide to draw down on past innovations and accumulated wealth.

Entrepreneurship is always a bit scary. Malone notes that our economy is likely to become even more dynamic. And thus disorienting.

The economy will be much more volatile and much more competitive. In the continuous fervor to create new institutions, it will become increasingly difficult to sustain old ones. New political parties, new social groupings, thousands of new manias and movements and millions of new companies will pop up over the next few decades. Large corporations that don't figure out how to combine permanence with perpetual change will be swept away.

This higher level of anarchy will be exciting, but it will also sometimes be very painful. Entire industries will die almost overnight, laying off thousands, while others will just as suddenly appear, hungry for employees. Continuity and predictability will become the rarest of commodities. And if the entrepreneurial personality honors smart failures, by the same token it has little pity for weakness. That fraction of Americans – 10%, 20% – who still dream of the gold watch or the 30-year pin will suffer the most . . . and unless their needs are somehow met as well, they will remain a perpetually open wound in our society.

This is the trick. The security within our grasp is almost always more appealing than the unknown. For a rich nation like the U.S., this temptation toward known comforts will be even greater than for the poor nation with nothing to lose.

So, as we struggle to keep our bearings in this volatile world of technology and globalization, we should all keep Einstein's simple maxim in mind:

Life is like riding a bicycle. To keep your balance you must keep moving.

The best way to navigate the bumps, curves, and valleys of the global economy is not to stop or slow way down but to keep moving.

posted by Bret Swanson @ 9:23 AM | Innovation