Growthology

Commen Sense Policies for Jobs, UI edition (again)

Robert Barro rides my hobby horse in this WSJ op-ed about the flawed incentive of the unemployment insurance system. 

The peak unemployment rate of 10.1% in October 2009 corresponded to a mean duration of unemployment of 27.2 weeks and a share of long-term unemployment of 36%. The duration of unemployment peaked (thus far) at 35.2 weeks in June 2010, when the share of long-term unemployment in the total reached a remarkable 46.2%. These numbers are way above the ceilings of 21 weeks and 25% share applicable to previous post-World War II recessions. The dramatic expansion of unemployment-insurance eligibility to 99 weeks is almost surely the culprit.

... [S]uppose that the expansion of unemployment-insurance coverage to 99 weeks had not occurred ... the unemployment rate would have been 6.8% rather than 9.5%.

What Banks Can Learn from VCs

I often give venture capital firms a hard time. It's partly because with their crummy performance that they deserve it, partly because with their humorlessness and hubris that they need it, and partly because I know more VCs than bankers -- and it's always more fun to fight with people you know than with people you don't.

But there is a flip side to this.  Financial services industry is in upheaval like at no other time since the previous depression. From banks to brokers to, yes, VCs, financial services is seeing major changes in how and whether it makes money.

So, which part of the industry is changing fastest? Venture capital. More venture firms, as a percentage of the total extant, will have failed over the current period than is the case with banks in the U.S., but with no need for a government-led bailout. We can have widespread VC financial failures without societal consequences.

At the same time, the nature of the VC industry is changing rapidly, with new entrants (micro-VCs and super-angels, but also larger funds), new partners and new brands, and even a change in sectoral & stage emphasis. The industry a couple of years out will look very different from what it did a few years ago, let alone what it looked like a decade ago.  This change is not being driven by regulators, but by the individual actions of new entrants and competitors, trying to respond to changes in the funding market, as well as to changes in their customers -- entrepreneurs.

The result: Radical change in a sector of the otherwise wasted financial services industry. New people, new companies, new markets, new providers of capital, all in the space of a few years. Will it produce higher returns? I hope so, but if it doesn't, rest assured more VC firms will fail, and there will be no talk of a safety net, or a bailout.

Why is venture different? Why is this rapid failure/speciation/innovation sequence not playing out in banking? In part, and not to get all deregulatory about it, because we don't let it. The most important difference between venture and other parts of the financial services system, especially banking, is that the former isn't regulated (okay, regulated very, very lightly), while the latter is highly regulated. That regulation, while well-intended, has the effect of straightjacketing the industry, meanwhile preventing usurpers and change and innovation, and making banks that are already too big to fail, too bigger to fail.

It is wrong and simplistic to say that if we just deregulated banks that all would be well. But it is also true that the path to having half of the banking industry (in assets and firms) shrink away, with no societal consequences (as is happening in venture), could be at least informed by what is happening right now in U.S. venture capital. [-]

Too Many Tourist VCs, or Too Many Apex Predators?

Provocative statistics from Diana Frazier of FLAG Capital this morning in PE Hub. She says the following about venture investing in the period 2001-2009:

• # of VC-backed companies started: 24,100
• # of VC-backed companies with exits over $100m: 750 (3%)
• # of VC firms: ~850

As she archly points out, there were fewer notable VC-backed exits in the period than there were active venture capital firms. Ouch.

Now, what are we to do with this? She approvingly quotes Mike Moritz of Sequoia, who says that "Tourists go home" in venture capital. In other words, it is a tough business, and efforts to make it more democratic have failed. There are simply too many firms and too much capital. I'm on side with that, of course, having argued repeatedly and wearyingly that the industry needs to shrink to health.

It's worth pointing out, however, that this was a woeful exit period. Further, most of the current crop of super-angel and micro-VC firms don't need $100m exits to move the needle on their teensy funds. They can happily exit at half that amount and still seeing solid cash-on-cash multiples.

What this speaks to, I think, it is the essential brokenness of the traditional venture business. There are simply too many apex predators for this market, and there aren't enough large fish. The venture industry needs to shrink, in other words, but most of the shrinkage needs to happen at the top of the food chain. [-]

Where does the Laffer curve peak?*

Ezra Klein asks "Where does the Laffer Curve bend?" but he's really asking where it peaks.  It bends at the origin, of course, a tax rate of 0.1  percent. 

Many experts think the Laffer Curve peaks around 60-70 percent, but I'm confident none of them would recommend this as the target rate.  Maximizing government revenue is a hideous goal, fit for the likes of Kim Il Sung.  The goal, one would hope, is to maximize human welfare.  This starts with considerations of private wealth generation, should include deference to liberty and personal property, and end with careful appreciation of long-term growth.  All of those point to an optimal lower rate which would be lower relative to the preferences of the respondents.  My guess is that even the most ardent social planners would opt for a rate no higher than 50 percent. But it would be pretty easy to argue for a top rate of 15 percent.

It's a shame that very little empirical evidence is known on this question.  I've been working on some experiments, but need to finish up those working papers with the results.  At minimum, this seems like ripe material for the next blogger's survey, no?

Sustainable or Green, but not both

Virginia Postrel suggested this fascinating question for the Q3 economics bloggers survey.  So much for green jobs, it seems.

Which taxes will rise?

The great tax debate is likely to dominate fall politics, says CNNMoney's Allan Chernoff:

Tax cuts Congress enacted in 2001 and 2003 are scheduled to expire at the end of this year, which for some Americans would push up federal income tax rates. Also at stake are taxes on dividends and capital gains, as well as tax credits and deductions.

Back in May, the Tax Foundation published a handy summary list of the tax cuts set to expire. 

Jeff Miller (A Dash of Insight) suggested that I ask our panel of econ bloggers about this in the Q3 survey.  Great idea, and the results show more pessimism than either of us expected. See chart below, and Jeff's assessment here.

Politico.com has a nice summary of a debate this week in which Secretary Tim Geithner focused on the tax rate affecting the "top 2 percent" of income earners, which is only one of the components in play.  Since that bracket is often debated in terms of its effect on entrepreneurs, the Secretary was blunt in dismissing that concern, calling it “a political argument masquerading as substance.”

Only 3 percent of small business owners would be affected by the tax policy changes, he added, leaving 97 percent who “would not pay a penny more.”

While that's a true statement, I wonder if it captures the effect of higher tax rates on incentives.  For those 97 percent of business who aren't profitable enough to be affected this time around, we can all agree they want to be more profitable, and envision their firms being so. The question then, is whether higher tax rates affect their payoffs for making the entrepreneurial commitment? I'd say a failure to extend the current low rates on cap gains and dividends would be central to entrepreneurial concerns. In essence, a successful startup is 100 percent capital gain for the founders.

Coming full cirlce, Chernoff's story offers an excellent inside look at the hot button "uncertainty" issue:

As the tax rate deadline ticks, professional tax planners are growing impatient. "They're dysfunctional," complained Evan Snapper, financial advisor with Anchin Block & Anchin. "It's terrible. It's a political game that's hurting the country." Usually accountants advise clients to defer income and investment gains until the following year -- why owe taxes now when you can put them off? But the possibility of higher tax rates in 2011 calls that logic into question.

"It's tax planning turned on its head," said Doug Flynn, a certified financial planner at Flynn Zito Capital Management. Because of the uncertainty, planners can't yet advise clients whether to sell real estate, stocks and bonds or to convert traditional Individual Retirement Accounts into Roth IRAs, which requires payment of taxes on investment gains.

Odds of a Double-dip Recession = 44%

Although most of the 68 economics bloggers who participated in our Q3 Survey think the odds of a double-dip recession are low, the average response is 44 percent.   And notice the number who think there is no chance of a double-dip are negligible.  Thanks to James Hamilton for the question. 

So, should we ask this again next quarter?   

The pessimism behind the pessimsm

In my last post, I presented the summary economic outlook from the Q3 Kauffman survey of top economics bloggers.  Behind the pessimism, the next question is really troubling.  It says that not only is the economic news grim, but things are worse than the news.  Just five percent of bloggers think the economy is doing better than official figures show, while 47 percent think it is doing worse. That's shocking. 

Let's remind ourselves what the official data are.  The latest unemployment rate is 9.5 percent.  Payroll employment declined by 125,000 in June.  GDP growth was estimated to be 3.7 percent in Q1, and 2.4 percent in Q2 (though this was reported after the survey was taken), much lower than expected & hoped.  Maybe the survey reveals some knowledge that GDP growth in Q2 would be disappointing, but I think this response represents something deeper.

Everyone knows that the unemployment number is lower than what it would be if all the discouraged workers were counted in the labor force.  But that's an official statistic itself: the so-called unemployment rate of 16.5 percent (official the U-6 rate) which is reported on table A-15 of the Employment Situation Report.  So that story isn't driving blogger pessimism.  Another ghastly official state is the weekly report of jobless claims, which has been over 400,000 for years now, and just today climbed uncomfortably close to 500,000.  Think about that.  Nearly half a million Americans filed for jobless benefits in one week.  And that's been the pace for years now.

But according to econ bloggers, even that isn't bad enough to reflect reality.  What could explain their pessimism?

One possible explanation: uncertainty. Look, this was by far the most common adjective used in bloggers' descriptions of the current state of the U.S. economy.  It seems convenient for some pundits to claim unertainty is a cheap explanation. It surprises me that they take themselves seriously.  The notion that economics was clockwork was discredited by none other than JM Keynes, right? Isn't the great insight of 21st century econ that rationality has been oversold and that uncertainty matters?  And in a year when nobody seems to know something as simple as whether the economy will recess or grow in 2011, what tax rates will be in 2011, whether the reform of 1/7th of the economy is Constitutional, one at least has to admit that uncertainty has rarely been so high as it is now. 

The other explanation: certainty.  In other words, the wrong policies are in place, and bloggers are certain that they're wrong.  This shows up in the following survey response:

The third explanation, and the one that animates my fears is the realization that yes, Virginia, the Fed is out of ammo.  It's not that the Fed couldn't manufacture inflation if it wanted to. I have no doubt about that.  Rather, I think the economy is finally coming to grips with a genuine constraint. We can't just reinflate this bubble by pushing back the debt to the next generation with lower and lower interest rates keeping the bubble economy inflated. The gig is up.  

 

Econ Bloggers' Consensus is Grim

Sometimes a picture really is worth a thousand words. But why stop with one picture? The Kauffman Foundation’s Q3 of economics bloggers was just released, and uncertainty rules the mood, literally.  Here some of the best charts. 

First, I composed this word cloud based on "five adjectives" that each blogger used to describe the current state of the U.S. economy.  It speaks for itself (and the fine print is truly worth examination).

 

The biggest surprise in blogger attitudes is revealed by the simplest questions.  Below, for instance, is the overall assessment when confined to five choices.  Looking at the chart for the first time, I would be shocked that this was the assessment of an economy in recovery. Some 68 percent of respondents described the economy as “mixed” – a word that seems today’s modern day equivalent of the 1970s “malaise.” But I'm not looking at this for the first time.  The charts from the previous quarter showed negative attitudes, but not this negative. Literally nobody thnk the economy is strong and growing now.

 

While 52 percent say that the U.S. economy is doing roughly the same as official stats would indicate, regrettably, some 47 percent of respondents think that the U.S. economy is doing worse. And when asked about prospects for growth of numerous different variables over the next 3 years, well, the outlook is grim.  Budget deficits and interest rates in the U.S. are expected to grow more strongly than just about anything else.  I'm afraid all this confirms my expectation for a 5-year recovery. 

After Inception: Durability of Startup Jobs

Now that we've settled the argument whether startup firms create the most jobs in the economy (Yes, 100%), a common counter-argument needs some attention.  Do startup jobs last?  Critics say no.  But what does the data say?

Along comes doctoral candidate and Kauffman research analyst Michael Horrell and colleague Robert Litan with this new report, After Inception. Highlighted points here:

• Cohorts of firms started each year retain, on average, 80 percent of their initial total employment to age five.
• Older cohorts of firms exhibit increasingly higher employment retention rates over five years, but these rates are not substantially higher than those of new startup cohorts.
• Cohorts that start during a recession hire fewer people in the first few years following their birth, but they catch back up to the same levels of employment at age five.
• Prolonged recessions, on the other hand, appear to lower employment among cohorts. Cohorts at age five that had survived through portions of three recession years had roughly 10 percent less employment (as compared to their startup years) than cohorts of firms that encountered no recessions in their first five years.

Blogger Survey Preview

The 3rd quarter Econ Blogger Survey is coming soon.  I just collected the responses over the weekend, and our designer is formatting the report.  I wanted to share the "word cloud" with you, which I refined this time by asking bloggers for five adjectives to describe the state of the U.S. economy.  It's quite a picture (thanks to Tagcedo.com):

 

Andy Grove is Anakin Skywalker

What did I think of Andy Grove's essay in Business Week?  Shocked, disappointed, betrayed, and a little hungry for revenge. I poke some fun at him in a response that Forbes just published.

Andy Grove, former entrepreneur and head of Intel, has gone over to the dark side. Once the greatest Jedi in all of the Republic of Entrepreneurship, he's become a Sith Lord, calling for state-planned investments at big companies.  ... more here

Repression of Entrepreneurs, Coyoto Blog edition

Typically taxation issues get a lot more attention than these regulatory issues in discussions of government drags on the economy. But these small regulations, licenses, and approvals consume management time, the most valuable commodity in small businesses that typically are driven by the energy and leadership of just one or two people.

That's from a Forbes essay by Warren Meyer, author of Coyoteblog.com.  Best line:

[W]e needed permission from the county to demolish the building the county had condemned--that cost us a couple hundred dollars and several forms.

UPDATE: Check out the follow-up post on Warren's own blog about the July 4 weekend sting on his campground.

My Failed Jobs Program ... from the archives of?

Guess who wrote the following article (quoted in part)?

(a) Brad DeLong
(b) George Will
(c) Michael Kinsley
(d) Amity Shlaes

The government makes it comically difficult for the honest citizen to hire a single employee -- and makes it virtually impossible to do it correctly. I'm fairly bright. My assistant is very bright. Between us we have spent many, many hours struggling over the forms. Yet it is inconceivable that we can have got it all right. Now, as a result of my rash attempt to create a job, neither one of us can ever become Attorney General.

Obeying the rules for a part-time household employee is fairly simple, once you get the hang of it. The government sends you a form every three months. You return it with an easy-to-compute check. Once a year, the government sends you a W-2 form, which you fill out in something like octuplicate.

But hiring a full-time business employee plunges you into an entirely new dimension of complexity. By my count (which undoubtedly is wrong), it takes a minimum of 37 different forms and 50 separate checks to hire a single employee for a year, even if she graciously agrees to be paid only once a month.

Forms. At the federal level, there is the employer-registration form, which gets you your employer number; the W-4, which counts the employee's deductions; the annual W-2, listing all income earned and taxes withheld; the W-3, summarizing all the W-2s (required, even when there is only one W-2); Form 941, "Employer's Quarterly Federal Tax Return"; plus forms with each check you write. The District of Columbia requires its own employer- registration form (with, of course, a different employer number); its own D-4 model of the federal W-4; and the ever-popular FR-900BO, "Annual Reconciliation and Report," plus forms with each check.

Checks. Once a month, one check goes to the employee, and another goes to pay for health insurance. One monthly check goes to the feds and another goes to the District of Columbia, reflecting federal income-tax withholding, federal Social Security and Medicare (employee's and employer's shares), and local income-tax withholding. Separate checks go to the feds and the District of Columbia -- only one a year each! -- for unemployment insurance. (The District of Columbia form is called "Quarterly" but needs to be filed annually. Or so I think.) The chance that all these checks are for the right amounts is slim.

***

Hiring an assistant is a wonderful way to keep an assistant busy -- and to keep busy yourself. It wasn't long after we started sending paperwork to the government before the government started firing paperwork back at us. The IRS wanted to know: Where was my Form 941 for the quarter before my employee was hired? We confidently batted that one right back again -- no Form 941 was due for that quarter, you idiots! -- and got the undaunted response, "We are taking no further action at this time, but we may need to contact you again if other tax issues arise." And indeed they have arisen.

You can find out the answer here, where the essay was originally published in 1994.  Or you can find the author's archives here. This is one of my favorite pundits, fyi, and the archives are a treasure.

This is Why Entrepreneurs are Repressed

This is a tale of two stories.  The Neocor story is about when my first company, Neocor Tech, decided to hire its first worker.  Robert Reich's story is about a hypothetical worker named George who is laid off then hired back in a new capacity.  Reich's story is what motivates the thousands of rules and regulations in America that are hostile to new firm formation.

First, consider Reich's story, which comes from his essay in the NY Times last month reacting to a new study showing higher rates of entrepreneurship in 2009:

[The Kauffman Foundation's] upbeat interpretation doesn’t include lots of people who don’t particularly relish becoming their own employers, like an acquaintance whom I’ll call George. George was an associate partner at one of the world’s largest technology and consulting firms until he lost his job last year in a wave of layoffs. For months, George knocked on doors but got nowhere because of the deep recession.

Finally, his old firm got some new projects that required George’s skills. But it didn’t hire George back. Instead, it brought him back through a “contingent workforce company,” essentially a temp agency, that’s now contracting with George to do the work. In return, the agency is taking a chunk of George’s hourly rate.

Technically, George is his own boss. But he’s doing exactly what he did before for less money, and he gets no benefits — no health care, no 401(k) match, no sick leave, no paid vacation. Worse still, his income and hours are unpredictable even though his monthly bills still arrive with frightening regularity.

The nation’s official rate of unemployment does not include George, nor anyone in this new wave of involuntary entrepreneurship. Yet to think of them as the innovative owners of startup businesses misses one of the most significant changes to have occurred in the American work force in many decades.

Wow.  Scary story, even if it lacks factual evidence.  It leaves the impression that George needs the protective hands of the state to police his employer.

My story isn't from last year, but I didn't start a company last year. I started Neocor with Jim Coyer in 1994, and this is the story of how a new firm hires its first worker.  We were joined by Ken Herskind in 1995 as a partners not an employee. We gave him some equity and a chunk of monthly revenues. I worked for free. Jim lived on the good graces of Mister Visa. In truth, we were terrified of hiring an employee because the process looked like it would involve a lot of legal stuff that we didn't have time to digest. The benefits of being an employer didn't outweight the costs until late in 1996 when we started bursting at the seams. 

I notified the state and federal authorities that Neocor wanted to be a registered employer.  Keep in mind this was three guys in an LLC, one (yours truly) a grad student, the others living hand to mouth. The company was really four computers and a T1 line piped into Jim's studio apartment, which lacked air conditioning, by the way.  Our desks were old doors on sawhorses.  So the government sends me back four or five reams of forms, printed regulations (fine print on newspaper, center-stapled), pamphlets, and on top, a short letter.  The letter said, "You are officially a U.S. employer, and a known oppressor of the working man. Congratulations!"  Sure, it didn't literally say that. But that was the message.

The fact is that American style capitalism is not the Wild West of freedom-worshipping cowboys that the media pretends it to be. Our laws assume all companies are potential exploiters, and regardless of size, treat them as if each one has a layer of lawyers and accountants that can handle the weight of the protective regulations. My favorite, to this day, is the tax Neocor had to start paying to help fund California's unemployment insurance program. But we were employing people!  We were solving the problem that they were taxing us, as if we had caused it. Only George Orwell could appreciate the irony: employers shall pay the unemployment tax.

Which story is true, mine or Reich's? Both are.  But which story is right? The economy naturally wants to create jobs for people, but in too many cases the government says those jobs are illegal.  The reigning philosophy says that workers need protected, wether or not they want to be protected.  If an individual wants to work 20 hours a week so they can be a part-time mom (or dad), the philosophy of Robert Reich assumes this choice is somehow involuntary.  Any trend towards greater flexibility must be bad, must be resisted.  A rise in independent contracts -- even if those are the only jobs to be found -- must be squelched.

Maybe Reich is right, but he can only be right if economics is wrong. The marginal product of labor must be a fiction. George must prefer unemployment to working as a contractor. Allowing workers to choose higher pay instead of government mandated protections must be a dangerous illusion of liberty. And if he's right, then hundreds of millions of pages of paternalism actually are necessary to trump the free will of 300 million Americans.  But don't kid yourself, cowboy, because regardless whether that story is right, it's the story that rules.

Startups Are Everything

My new study just released from the Kauffman Foundation, The Importance of Startups in Job Creation and Job Destruction, is available now. It's short and sweet (7 pages of text), with about as simple a talking point as can be: "New firms add an average of 3 million net jobs in their first year, while older companies combined lose 1 million net jobs annually."  The surprise for me, and I expect most economists/data geeks, is that aggregate gross job creation and destruction curves along the firm age axis are convex, not concave.

I don't have the individual charts in GIF format, but here's a raw one from my spreadsheet. Notice how gross job creation at startups dwarfs gross flows at other firms. For example, startups create 10x more jobs than 10-year old firms, gross, and infinitely more net.  How many economists even guess this is how the U.S. economy works?  I didn't until I saw the data.

 

  

Fight on the Right

Grab your popcorn: there's nothing better than a fight on the Right.  In one corner, there is Arthur Brooks, head of AEI and author of the recently published "The Battle: How the Fight between Free Enterprise and Big Government Will Shape America's Future." In the other corner is Brink Lindsey, a long-time CATO scholar and author of The Age of Abundance: How Prosperity Transformed America’s Politics and Culture. 

Normally, you would expect these two allies to be allied on the issue of a call for free markets in the USA, but in what I'll call the "Brink vs Brooks battle," Brooks is getting what must be unexpected friendly fire from Brink. Here's an excerpt from Lindsey's essay in American Prospect:

First, free markets. Is Brooks' distinction between all-American freedom and European-style statism a valid one? And here at home, do elites really support the state while everyone else supports the market? No and no. When it comes to establishing and maintaining open and competitive markets, the U.S. institutional and policy environment isn't really that exceptional at all. Meanwhile, elites are actually more likely to support free-market policies than is the American demos.

At heart, what Lindsey is really disturbed by is veiled racism.  So am I.  But I think Lindsey is off base here:

But Brooks doesn't want to use economic arguments. He counsels against "getting stuck in the old arguments over money." Instead, he wants to defend America's track record of more modest social spending on cultural grounds. And that is a really bad idea. Our tragic history of race relations may have inhibited spending, but we should be ashamed of that cultural heritage. We certainly shouldn't embrace it and brag about it. Brooks apparently doesn't realize what he's doing; he thinks he's touting good old Yankee self-reliance. But his argument is offensive even if he's oblivious to how offensive he's being.

Let's back up and consider the two substantive arguments: (a) that America doesn't have a distinct culture of economic freedom vis-a-vis the Europeans and (b) the American public isn't really more free market than elites (a point which Lindsey relies on Bryan Caplan's book, The Myth of the Rational Voter). 

On the first point, Lindsey's own words make a weak case: "Plenty of European countries have markets about as free as those in the land of the free."  Plenty?  He then cites the same countries Paul Krugman cites when comparing American capitalism to European socialism: the Nordics. And yes, on balance, these economies perform much better than Southern, Eastern, and Central European economies.  But they are still less free than the U.S. (at least according to the Heritage/WSJ Index), and their Euro siblings are downright tragedies.  Lindsey does make a valid distinction between regulatory freedom and fiscal freedom (tax burdens and redistributive spending), but there's no denying the size of the state is about more than the homogeneity of the populace. France, Denmark, Italy ... these are nations where government expenditure is more than half of the economy.  For any entrepreneur who instinctively feels there should be a limit to the state's claim on his profit, 50 percent is bright line symbolizing a kind of serfdom on the other side.

The second argument, however, seems very effective.  Caplan documents a number of irrational economic beliefs of the public, such as the hostility to free trade and a hostility to labor efficiency.  He also shows that educated people think more correctly (that is "rationally") like economists on these and other issues. But Lindsey muddies the waters when he conflates Caplan's educated group with Brooks' 30 percent group, and especially with media elites (shown elsewhere to have biases of various kinds).  More properly, and I've challenged Caplan on this, voter irrationality should not be overinterpreted.  It simply means that busy people don't bother with complex policy designs, a kind of policy agnosticism.  It does not mean they lack core policy convictions (e.g. for lower taxes and smaller government).  Nor does it mean they are agnostic about outcomes, which explains the strong relationship between unemployment rates and results at the ballot box. I've written a more complex assessment of Caplan's book here (for all you rational voters). 

What Brooks is ultimately arguing is that the fundamental direction of the country will be determined by a clash of values, not mathematical models. Lindsey wants to amend that argument to include front and center our newish values about racial equality, not just traditional values about freedom and federalism. Three cheers for that. Still, I think Brooks is ultimately correct. The statist argument has always been an emotional one, laden with appeals to sympathy, empathy, justice, and equality. For the anti-statist argument to rest on mathematical proofs and cold-hearted logic favoring efficiency is a loser. It's not enough to win the intellectual case for smaller government and entrepreneurial economies. The cause of entrepreneurial freedom needs to be made at an emotional level in the public arena.