Barbara Pruitt, Kauffman Foundation, firstname.lastname@example.org, 816-932-1288
Kauffman Foundation offers questions about long-term growth
(Kansas City, Mo.), February 11, 2008 — While the presidential candidates are just beginning to address the immediate challenges to the United States economy, there is a more fundamental economic issue at stake: What plans, if any, do the candidates have to sustain America's economic productivity over the long-term?
Economists advise policymakers and consumers alike to put the present U.S. economy into perspective. After growing at nearly 4 percent in the first 25 years of the post-war era, the nation's economic growth rate then fell below 3 percent from 1973 to 1995. Only in the last decade has the economy returned to roughly 4 percent annual growth. When the current slowdown ends, what will the pace of growth be?
The central economic challenge for all policymakers is thus to answer this critical question: "What plans do they have, if any, to get the economy's long-run growth rate back up to the 4 percent range?" (The difference between 4 percent and 3 percent growth, for example, can mean a difference in average living standards in 30 years time of roughly 40 percent.)
There is compelling evidence that policies encouraging innovations spurred by entrepreneurs can be central to returning to the higher path of economic growth. Accordingly, the public would be well served by knowing how candidates for the White House have plans to stimulate innovation that will lead to long-term economic growth.
Extensive research by and for the Kauffman Foundation has identified several policy areas that have the greatest impact on helping innovative entrepreneurs succeed. The following questions are offered to help the public educate itself about how the candidates might propose to address this challenge.
As a private foundation that conducts and supports objective, independent, nonpartisan research and analysis, the Kauffman Foundation does not take positions either for or against any candidate for public office, and no such positions should be inferred or construed from this document or its contents.
1. How will the candidates ensure a skilled workforce to sustain strong long-term economic growth?
Entrepreneurs say finding and attracting highly skilled, entrepreneurial workers is one of the more important challenges facing the U.S. economy. Further, some researchers say that to overcome this challenge, major, entrepreneurially driven improvements are necessary throughout our educational system (K–12 through graduate school). This will help prepare skilled workers, especially in math, science, technology and engineering—the fields that will be most relevant to generating future innovative breakthroughs.
What specific policies, if any, would you implement to ensure that our workforce will continue to develop and commercialize the innovations required to sustain rapid long-run growth?
2. What are the candidates' proposals, if any, regarding how immigration policies should treat highly skilled legal immigrants in light of their impact on our economy?
With so much attention focused on illegal immigration policies, lost in the shuffle are the nation's highly skilled legal immigrants, many of whom who are here on short-term visas and may eventually have to leave the country. Recent studies, however, have identified immigrants as some of our most productive and innovative workers and entrepreneurs. For example, one quarter of the science and technology start-ups launched in the United States between 1995 and 2005 had a foreign-born founder. These companies employed 450,000 workers and generated $52 billion in revenue in 2006.
How should the immigration system be reformed, if at all, to address issues regarding the impact that highly skilled legal immigrants can have on the economy of the United States?
3. What will the candidates do to curb growing health care costs, which are especially burdensome to small and growing firms and deter would-be entrepreneurs from starting new businesses?
Continued escalation of current health care costs and uncertainties about future trends rank high on entrepreneurs' lists of concerns, as well as on those of American business generally. The fear of losing health care most likely deters some employees from leaving their current jobs to launch new enterprises. How do the candidates propose to deal with these concerns?
Do the candidates have approaches to health care that will encourage rather than discourage new firm development?
4. What are the candidates' views about financial reporting and corporate governance requirements (incorporated in the Sarbanes-Oxley Act) that may be dampening entrepreneurship?
Researchers have documented that the Sarbanes-Oxley (SOX) reforms, enacted after the corporate financial reporting scandals earlier this decade (and before), have turned out to be substantially more costly than was expected at the time. In addition, some researchers are concerned that the SOX requirements may be discouraging successful entrepreneurial firms from going public and instead to sell to larger companies, an "exit" path that may reduce the entrepreneurial energy that drove the success of these firms in the first place.
What, if anything, would the candidates do to reform SOX?
5. What is each candidate's position on the global economy/market, which has fostered growth for America's most successful entrepreneurial firms?
In this global market, many successful firms are doing business with the world—and really must do so in order to compete and grow. Innovative, entrepreneurial companies like Intel, Microsoft, eBay and Google would not be the giants they are today without global markets. In addition, research suggests that firms of all sizes benefit from having access to global markets to purchase supplies and services required to produce the goods and services they sell here and abroad. What trade policies do the candidates have, if any, regarding access to global markets by America's entrepreneurs for both inputs and outputs?
6. How do the candidates propose to deal with the long-run fiscal challenges posed by retiring baby boomers and the continued escalation of health care costs (which are driving up the costs of Medicare)? In particular, how can the nation craft a solution to this challenge without discouraging future entrepreneurship and innovation?
The Congressional Budget Office projects extraordinary future fiscal deficits if future entitlement costs are not reduced and/or not funded. Does this prospect worry the candidates, and if so, what specifically do they propose to do about it? And how will their proposals avoid reducing incentives for the entrepreneurship and innovation that will be essential if the American economy is to return to a high-growth path?
About the Kauffman FoundationThe Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman Foundation aims to open young people's eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies, and find alternative pathways for the commercialization of new knowledge and technologies. It also works to prepare students to be innovators, entrepreneurs and skilled workers in the 21st century economy through initiatives designed to improve learning in math, engineering, science and technology. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo. and has more than $2.4 billion in assets. The Foundation does not take positions either for or against any candidate for public office, and no such positions should be inferred or construed.