Opening Remarks

Bloomberg View: Turning the Jobless into Entrepreneurs; Letting Talent Cross the Border


TURN THE UNEMPLOYED INTO THE SELF-EMPLOYED

Cammie Allie and Ann Costlow are small-scale entrepreneurs who have battled back from unemployment to create successful businesses. Allie manages apartment buildings in Portland, Ore.; Costlow owns four crêperies in Maryland. To get started, each drew on business coaching and income support from an unusual state-funded jobless initiative. These self-employment assistance programs provide 26 weeks of income support, typically about $10,000. Participants try to start enterprises, rather than being required to look full-time for traditional jobs.

Founding a business isn’t for everyone. Hours are long, initial earnings puny, and the failure rate high even in boom times. A weak economy makes everything harder. For some displaced workers, however, self-employment may be their best hope. In Oregon, those opting for self-employment get business pointers and detailed reviews of their startup plans. Examiners look for clear ideas about pricing, supplies, customers, and competition. Only candidates judged to have at least a moderate chance of success can proceed.

Oregon recently surveyed 369 people who have participated in its program since 2000. Seventy percent had started a business; nearly half of those were hiring workers. The small survey’s responses might be skewed toward recipients who thrived. Even so, Oregon’s successful entrepreneurs each created an average of 2.63 jobs.

Self-employment aid closely matches the cost of regular unemployment benefits, which can run $400 a person per week. Britain, France, and Sweden have operated similar entrepreneurial assistance programs since the 1980s, with good results. In the U.S., though, only about a dozen states have followed suit, and most programs are tiny.

Bureaucracy is partly to blame. Current state and federal rules don’t allow unemployed workers to pursue self-employment aid right away; instead they must qualify for regular jobless benefits first, which takes weeks. States also worry that some startup dreams might fizzle quickly, wasting taxpayer money.

Making the entrepreneur’s path risk-free is impossible. Still, that shouldn’t stymie such aid. Three of the biggest states—California, Texas, and Florida—are home to 30 percent of America’s unemployed. These states don’t offer entrepreneurial assistance to the jobless; setting up such programs would be a big help.

Two other changes could help make entrepreneurship a likelier path back to work. First, states should tell the newly jobless about the self-employment option right away, rather than making them wait a month or two before becoming eligible. Second, minor income from a side business—capped at a reasonable level of, say, $750 a month—shouldn’t be automatically counted against jobless benefits. In some cases, this year’s hobby can be built into next year’s business. When 4.7 people are out of work for every job opening, unemployed Americans deserve better odds of becoming their own bosses.

 

WHEN TALENT STOPS AT THE BORDER

David Cameron, the U.K. Prime Minister, had a bright idea: Hire the best person for the job. In the wake of the News Corp. (NWSA) phone-hacking scandal, he reportedly floated the idea of naming William Bratton, the former New York and Los Angeles police chief, to head Scotland Yard.

The suggestion was hit with a flash mob of criticism and was quashed by Theresa May, the Home Secretary, who cited national security and reminded Cameron that only British citizens should be eligible for the post. Her move was seconded by, well, lots of other people, including, not surprisingly, the police unions.

The Prime Minister, who lacks the authority to appoint the Metropolitan Police commissioner, took Bratton on as an unpaid adviser. He had crashed into globalization’s last taboo: the idea that a country could import a talented foreigner to lead a government entity.

What would be so odd about having Bratton, now head of Kroll, an international security firm, run the London police with an American accent, especially given the London riots?

Goods and ideas cross more borders with greater speed and frequency than ever before. Talent travels, too, whether it’s an Indian engineer at Google (GOOG), a Brazilian-Lebanese chairman of Nissan-Renault, a Japanese-French automobile confection, or a Chinese center in the NBA. Sensitive public jobs increasingly are entrusted to foreigners, even if they’re only “consultants.” David Kilcullen, an Australian, helped forge American counterinsurgency strategy in Iraq and Afghanistan. The former head of security at Ben-Gurion Airport in Tel Aviv, Rafi Ron, was brought in to shore up Boston’s Logan Airport. Jay Walder, an American, was the planning and finance chief of London’s transportation authority, then was hired to manage New York’s, and is on the way to do the same job in Hong Kong. When it comes to cities, it’s hard to think of a more sensitive job.

Skill and intellect are exportable commodities, and right now the public sector is largely a closed market. For governments at all levels and in all parts of the world, the most effective route to reform may be to import strong, innovative managers. Politically, perhaps, it remains a difficult sell. Questions of divided loyalties and hurt national pride will have to be addressed, as will citizenship regulations in many places. And yet breaking the Bratton Barrier would be a good thing, especially in the context of security, a transnational threat if ever there was one. “Why shouldn’t someone who has been a proven success overseas be able to turn around a force at home?” David Cameron asked Parliament. Although the answer was harsh, his question was the right one.

To read William D. Cohan on demolishing the SEC and Jonathan Weil on Warren Buffett’s easy sacrifice, go to: Bloomberg.com/view.

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Companies Mentioned

  • NWSA
    (News Corp)
    • $15.14 USD
    • -0.05
    • -0.33%
  • GOOG
    (Google Inc)
    • $534.83 USD
    • -2.16
    • -0.4%
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