Bailouts Don't Create Jobs: Startups Do

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What's holding workers back from starting businesses? What we learned was that most people simply don't know how to start companies. They have ideas and industry knowledge, but are afraid of the risk, lack certain skills, and need financing. With the recession causing millions to face unemployment, risk isn't much of a factor any more. We have a unique opportunity to start educating these workers on the basics of starting a profitable business.

Boot Camp

The Administration should start by taking some of the money it has allocated for economic recovery to set up entrepreneurship boot camps. It could take advantage of successful programs like Kauffman's FastTrac and set them up in community colleges throughout the country. To ease the financial burden on workers undergoing this training, the government could fund scholarships.

Once trained, entrepreneurs will need seed capital to get going. But most big banks, angel investors, and VCs have been reporting big drops in their small-business funding activities. The Administration should invest a few billion to create a dedicated fund for promising entrepreneurs. The fund would provide loans at attractive interest rates to encourage folks to strike out on their own. Such a fund should not be administered by government bureaucrats who don't understand industry or by venture capitalists preoccupied with exit strategies, but by regional organizations such as the Council for Entrepreneurial Development that have an interest in fostering entrepreneurship and boosting economic growth in their areas.

Imagine what we could have helped create with the $12.9 billion that went to Goldman Sachs (GS): tens of thousands of startups. One or two might have even become the next Google (GOOG), Amazon (AMZN), or FedEx (FDX). They would have ended up creating hundreds of thousands of jobs. And they might've developed innovations like the car, airplane, air conditioner, personal computer, or game-changing Internet applications. After all, previous generations of entrepreneurs invented these products. Let's give the next batch a hand.

Wadhwa is senior research associate at the Labor & Worklife Program at Harvard Law School and executive in residence at Duke University. He is an entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com.

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