Editor’s note: This post was republished with permission from the Ewing Marion Kauffman Foundation’s Policy Dialogue blog.
Of course, both major United States presidential candidate contenders — Hillary Clinton and Donald Trump — have said they will create more jobs in the United States by supporting entrepreneurs. Having just discussed in this blog some of President Barack Obama’s accomplishments to this end, it is time to look forward into what details we know so far as to the presidential candidates’ agendas to help entrepreneurs form and scale new firms.
Former AOL co-founder Steve Case, author of The Third Wave: An Entrepreneur’s Vision of the Future, makes the case that politicians who ignore the new generation of entrepreneurs do so at their own peril. Understanding how to navigate the fast approaching digital revolution will be key to successful leadership at all levels of government. “We’ve already begun to see the initial impact of the Third Wave in sectors like transportation (Uber), hospitality (Airbnb) and health (Fitbit). But there are many more changes to come in these industries, and in markets like energy, food and education. Take financial services for example – what’s likely to ultimately pose the greatest threat to Wall Street isn’t government regulation, but rather it’s a new crop of FinTech startups… These highly regulated and impactful sectors represent significant portions of our economy – healthcare alone is one sixth of the economy,” Case told Forbes.
As Election Day approaches, more Americans might consider which candidate can best understand and work with a fresh generation of entrepreneurs who are already leading us into a new unprecedented wave of digital disruption.
Many skeptics wonder whether entrepreneurs need tech agendas, while others would rather see more proposals on how candidates will incorporate innovation across policy areas, including inside government.
On June 28, Hillary Clinton released a comprehensive technology policy initiative which covers a spectrum of issues. Its overriding theme is that technology should be democratized and become an engine for growth across regions, beyond areas like Silicon Valley. Hillary Clinton’s digital infrastructure initiativecommits “that by 2020, 100 percent of households in America will have the option of affordable broadband,” and pledges to support the Internet of Things, smart factories, driverless cars, 5G wireless, and other transformative technologies.
As noted last week, Facebook founder Mark Zuckerberg believes this one policy priority overrides the rest in terms of how policy can have the biggest impact on leveraging entrepreneurial talent. However, the “rise of the rest” of America – including driverless cars and 5G wireless initiatives – are becoming less likely to be future issues. According to staff at WIRED, Silicon Valley will probably be most interested in a new wave of “man on the moon” challenges, with policies regarding fresh issues that have massive implications around privacy and encryption, both topics that have intersected with the country’s national security interests – and are ones that cannot be handled except through a deep public and private sector partnership.
Of course, critics also see Clinton’s plan as a government spending list. But the fact that she has put forth a technology policy agenda this early in the campaign indicates innovation could be a strong focus of her presidency. As Robert Atkinson, president of the Information Technology and Innovation Foundation said “in setting forth this agenda, Hillary recognizes that technology and the Internet are transforming nearly every sector of our economy – and she believes that with the right public policies, we can harness these forces so that they lead to widely-shared growth, good-paying jobs across the country, and immense social benefits in healthcare, education, public safety, and more.” Her campaign statement is also worth reading.
Ecosystem- and entrepreneur-level support
The official Clinton campaign summary document outlines how Clinton would work with a broad range of traditional ecosystem actors, such as incubators, accelerators, and mentoring programs. Skeptics point to a lack of evidence-based proposals in Clinton’s campaign. “No one seems to be evaluating these programs,” said Thomas Lenard, president of the Technology Policy Institute, to the New York Times. However, as I have discussed in this blog before, the lack of programmatic research providing evidence as to what interventions produce what outcomes is a weakness within the entrepreneurship community being addressed by organizations, such as the Kauffman Foundation, and not necessarily the responsibility or fault of government.
Clinton supporters rightfully focus on some creative policy ideas like “allowing young entrepreneurs todefer their federal student loans for up to three years, so they can get their ventures off the ground,” an idea entrepreneurship thought leaders have put forth over the past year given the low rate at which Millennials are turning their entrepreneurial mindset into actual new ventures.
Donald Trump hasn’t offered a formal roadmap in digital disruption although he has said that as president, he would work with Bill Gates on Internet issues.
Trump does not appear to have offered much startup-specific program proposals. While he clearly understands traditional big business and, like all candidates of course, talks about ways to help small business, we have yet to see much evidence that he understands the more important policy distinction between new and old firms as opposed to big and small ones. Especially given that the Startup Act has listed high skilled immigration and startup visas at or near the top of the list in terms of how Washington can help entrepreneurs, the jury is out as to whether entrepreneurs and founders will identify with him as we might expect on paper when a businessperson runs for office.
Firm-level support via fiscal policy
Simplifying the tax code is where Trump has focused the most when it comes to debates on encouraging jobs and spurring economic growth. Trump promises that, regardless of size, businesses will not pay more than 15 percent of their income in taxes. His proposal states that his corporate tax reform would apply to every business, “from a Fortune 500 to a mom and pop shop to a freelancer living job to job.”
“[S]mall businesses that are the true engine of our economy. Right now, freelancers, sole proprietors, unincorporated small businesses and pass-through entities are taxed at the high personal income tax rates… [L]ower rates will provide a tremendous stimulus for the economy – significant GDP growth, a huge number of new jobs and an increase in after-tax wages for workers”, his tax reform proposal states.
Trump critics point to the fact that cutting tax rates can only go so far in terms of helping high-growth entrepreneurs, who are more focused on trying to prove their concepts and business models, inserting their innovations into the marketplace and hiring talent to grow their teams.
For her part, Clinton has promised to provide tax relief for small businesses that share profits with their employees. She has also called for simplified tax filing and “targeted tax relief” although these measures remain unspecified. While on face value this might appear to mix agendas, founders today care as much about the ethics and social impact of the their businesses as they do the bottom line. It is a new generation with a new definition of how much is enough in terms of wealth.
Trump’s track record as a successful entrepreneur himself gives him the confidence of those voters looking for job creation in the private sectors. We will be looking at his agenda when he releases it to see if he follows the last Republican Presidential candidate who tipped his hat to the new makers and doers of things when he acknowledged that “most net new jobs come from firms less than five years old” suggesting that it is time Washington made a similar distinction when defining policy objectives and agendas.
Immigration and global leadership
Many entrepreneur community leaders argue that Clinton has a clearer track record in supporting new and young businesses globally, and that she is very likely to continue using American entrepreneurship as a diplomatic avenue to positively engage foreign governments and peoples. In case we forget, she was the first Secretary of State to open an entrepreneurship office on her floor of the State Department and she led the first of the President’s Global Entrepreneurship Summits in Washington, D.C., in 2010. Some have even argued that it was our engagement around foreign policy and entrepreneurs that shaped a more sophisticated understanding of the importance of new, young firms domestically.
In terms of attracting global talent, Clinton’s proposal explicitly states that her administration would “staple” a green card to science, technology, engineering, and math (STEM) master and doctoral degree holders from accredited universities. This is not a new proposal, but since it has never reached legislative approval in so many words in Congress, it is new for a president to be so explicit. This measure would allow these degree-holders to bypass temporary H-1B work visas. In addition, Clinton supports the introduction of a “startup visa” that would allow top foreign entrepreneurs to come to the U.S. or stay if they are studying and build companies in technology-oriented, globally traded sectors, provided that they have obtained a commitment of financial support from U.S. investors before receiving the visa. For these immigrant entrepreneurs, obtaining a green card would be tied to creating a certain number of jobs and reach performance benchmarks.
Trump disagrees. Before any new green cards are issued to foreigners abroad, he calls for a pause where employers will have to hire from the domestic pool of unemployed immigrant and native workers. This pool, it appears, excludes immigrants on a student visa. “We graduate two times more Americans with STEM degrees each year than find STEM jobs, yet as much as two-thirds of entry-level hiring for IT jobs is accomplished through the H-1B program,” states his immigration proposal, which also criticizes Facebook’s Mark Zuckerberg for favoring increasing the quota of H-1B visas.
In addition, Trump denounces that more than half of H-1B visas are issued for the program’s lowest allowable wage level, resulting in a large number of black, Hispanic and female workers in Silicon Valley being passed over in favor of the H-1B program. In response, he promises to raise the prevailing wage paid to H-1Bs so as to force companies to give these entry-level jobs to the existing domestic pool of unemployed workers in the U.S.
I hope those who figure out new and better ways of doing things in our society feature in the upcoming debates. Given the unprecedented disruption that technology experts and futurists have projected over the next five years, we will need to see fewer jaded conversations about “helping small business” and “access to capital” and more anticipation of a new species of public policy regulations, as an unprecedented era of disruptions tear through traditional industries. History has shown with a forward-thinking leader in the White House setting an example for all branches of government, we have a much better chance of Washington not being derailed by the issues of the day, bitterness and politics.
America needs a president who not only clears the path for high growth entrepreneurs to create jobs and opportunities for all, but one who – like a futurist – can anticipate and prepare for the inevitable policy challenges they present. Perhaps when the conventions are over, more entrepreneurs will use their lean startup training to validate and test the mettle of our candidates in that iterative process of figuring out who will make the best partner in figuring out smarter ways of doing things.
Jonathan Ortmans serves as president of the Public Forum Institute, an independent, nonpartisan, not-for-profit organization dedicated to creating the most advanced and effective means of fostering public discourse on major issues of the day.