How to Save Our Dying Country
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| by Wayne Mulligan |
Before the U.S.A. even came into existence, entrepreneurship defined its culture.
European settlers journeyed here to start fresh...
Pioneers pushed westward to stake their claims...
Pioneers pushed westward to stake their claims...
And nowadays, tech entrepreneurs flock to Silicon Valley to pursue world-changing ideas.
Entrepreneurship is the original American Dream, and it's created one of the most prosperous nations on the globe.
Recently, however, a study revealed that the American Dream might be dying – and with it, our entire economy.
Although some farsighted people have made it their mission to tackle this problem head-on, their efforts may be in vain. Let me explain…
For the past 25 years, consumer spending – the money you spend on goods and services – has accounted for over 70% of our GDP growth.
What drives consumer spending? Primarily it's your income. Where does income come from? Well, unless you have a multi-million dollar portfolio, it comes from your job.
And who are the largest employers in the country? Small businesses.
According to the Small Business Administration, small businesses accounted for 55% of all jobs, and 66% of all new jobs.
To put it simply, as small businesses grow, so does the economy. So as you can see, entrepreneurship isn't just part of our culture...
It's one of the primary drivers of our economy. But a recent study from the Brookings Institution has shown that, since 1978, the US has become "less entrepreneurial."
According to the study, after three decades of steady decline, we reached an "inflection point" in 2008. For the first time, the percentage of new businesses shutting their doors was greater than the percentage of new businesses being created.
Fewer new companies means fewer jobs. Fewer jobs leads to less consumer spending. And less spending equals a contracting economy.
This effect isn't showing up just in the data. Americans are feeling the effects of this phenomenon in their day-to-day life.
A Gallup Poll taken in 2011 showed that, for the first time in 30 years, the majority of Americans believe their children will have a lower quality of life than they themselves have had. Unless this trend can be reversed, we'll be leaving our children a country that's on a downward spiral. This realization is one of the factors that led Congress to pass the Jumpstart Our Business Startups Act – or the JOBS Act, for short.
The SEC still has the final say (and, unfortunately, they're dragging their feet), but simply put, the goal of the JOBS Act is to create more jobs.
By allowing companies to publicly advertise that they're raising capital – and in the future, by allowing companies to raise money from all US citizens, not just wealthy "accredited" investors – Congress believes we'll see a dramatic increase in new business creation. New businesses would lead to more jobs – and to greater economic growth and prosperity. Here's how the "math" behind the JOBS Act works:
If Americans use the JOBS Act to allocate just 1% of their investable assets into early-stage companies, a $300 billion marketplace will be born. To put that in perspective, that's 5x more capital than venture capitalists and angel investors put into start-ups each year. This new capital could create 300,000 new businesses each year. And if each business employed just 10 people, 3 million new jobs would be created annually. Now that's growth for America.
But for all of the support the JOBS Act has received, it has its opponents as well. Specifically, the SEC.
While the SEC seems to have investors' best interests at heart, we question the solutions they're proposing to protect them. Introducing unnecessary regulation, costs and inefficiencies to the process could ultimately cripple the JOBS Act – and it could put the very future of our economy in jeopardy.
For example, the SEC is proposing that companies raising equity crowdfunding will have to spend tens of thousands of dollars each year on accounting, audit and legal services. Those dollars would be better spent on hiring. One report recently calculated that under the SEC's proposed rules, a company raising $100,000 in equity crowdfunding would actually LOSE $38,000. This has us concerned… actually, angry is the more appropriate term. So what I'd like to do today is take a quick vote…
We're contemplating putting together a formal petition against the SEC's burdensome rules and submitting it to Congress. If you'd be willing to sign the petition, please write in to Tomorrow in Review. If we receive enough emails, we'll start collecting signatures. It may not make a difference in the end, but we can't stand by and do nothing. Not when the stakes are this high.