Entrepreneurs create new jobs, should be coddled

Last week’s seminar at the University of Kansas on the Kansas economy attempted to look ahead to 2015. What’s in store?
Robert Litan of the Kauffman Foundation had bad news — but offered a solution.
Full employment isn’t just around the corner, he warned. The economy must grow at about a 3 percent rate to provide jobs for those entering the work force every year and sop up 1 or 2 percent of those unemployed. Unemployment is now 10 percent. It will take at least three years of 3 to 5 percent growth to bring unemployment back to “normal,” around 4 to 5 percent of the labor force, he predicted. That rate of growth is not yet in sight.
Consumer spending can’t be depended on to revive the economy. The recession hammered those who were in debt especially hard. Families won’t return to that level of borrowing and spending anytime soon. They have been taught the virtue of saving — and that’s good. As a nation we have learned that life is better when there is money put aside to meet unexpected needs and to supplement Social Security when that time comes.
Litan also looked at the federal scene: “It is Medicare and Medicaid, not Social Security, which make the long term picture for the federal budget so bleak,” he said. He illustrated with a chart showing the budget going deeper and deeper in debt if health care costs stay on their present course. Litan’s chart came from Congressional Budget Office projections, which show beyond contradiction that the present rate of spending on health care is unsustainable.
The only solution is to trim benefits and bring everyone into the insurance pool. The best way to reduce costs is to cut the amount of testing and treatment being done, he said, implying that much of today’s spending on health is not making us healthier.
Litan, who may be in his early 60s, said that “our generation” will be the last to have such extravagant — and wasteful — health care coverage.

THE HOPE HE offered is through entrepreneurship. Most of the jobs available today, he said, were created by entrepreneurs, many of whom came to this country as immigrants or grew up in underprivileged homes — and the country’s best hope for growing out of the recession more quickly is to create a new crop of entrepreneurs and then fund them.
One way to stimulate the economy is to recruit students from other countries. They have a record of high achievement and many of them stay in this country after they win their degrees, making the economy stronger.
The Kauffman Foundation is aggressively seeking young men and women with ideas for new products and services and will back them for nine months or more to give them a start in business. It is, he pointed out, putting its money where its mouth is.
He said the State of Kansas should turn to its universities, look for faculty and students eager to try out their ideas in the marketplace and develop programs to help them succeed.
In a parting shot on health care reform, Litan said that many would-be entrepreneurs feel tied to their corporate jobs because they can’t afford to leave their health insurance behind and strike out on their own.
“The average entrepreneur is about 40 years old. Many have pre-existing conditions by that age and can’t get individual health insurance they can afford. Health care reform that creates coverage at affordable prices for everyone will make it possible for more of those who are inspired to do so, to strike out on their own — and that’s where the new jobs come from,” he said.

— Emerson Lynn, jr.