Mark Cuban Nails It

What are the lagest barriers to faster innovation, entreprenership, and economic growth?

The best place to look for answer is start, as it were, at the beginning: remove the barriers to lanching and growing a business. Yes, we know, according to the Woprld Bank's well-known Doing Business annual report, the United States ranks at or near the top of countries where it is easiest to get into business. But as Mark Cuban, owner of the Dallas mavericks and founder of Broadcast.com, tellingly notes in this recent blog post, we're still far from perfect:

This is from the State of Texas: (Which I am proud to say makes it far easier than most states to start a business).

Step 1:Legal Structure and Registrations
Step 2:Business Tax Responsibilities
Step 3:Licenses Permits and Registrations (Note to State of TX, this link was broken, I had to find the destination page )
Step 4:Business Employer Requirements

As an entrepreneur , I can tell you that working through the requirements of these four steps is scary and intimidating. Why ? Because to merely start your business, you have to deal with lawyers and accountants, which not only costs a lot of money, but more importantly, requires you to trust those lawyers and accountants to make decisions that could have make or break consequences on your business.

There have to be better ways. One encouraging sign is recent legislation in Vermont which allows companies to form and to operate in a digital fashion [link to article in recent Inc magazine on this, or perhaps there are other stories on the web about this]. But even under this legislation, lawyers and/or computer jocks may be necessary.

States that figure out how to lower the costs of entry into business will grab the brass ring of faster growth -- and, as a nation, we will all benefit.

- Bob Litan and Tim Kane

Comments

[a student of economics]

It's interesting the Texas is lauded as a good state for economic growth. However, despite all its oil wealth, it still has per capita income that is BELOW the national average. In fact, this seems to be true for most "red" states that tout minimal gov't regulation.

Meanwhile "blue" states on the east and west coasts are not only wealthier, but also seem to have increased their lead in recent decades. They are home to more inventors, high tech start ups, patents, R&D, exports, etc. Maybe government spending on services like education, etc. and/or liberal social policies are more correlated with growth than laissez faire?

Bob and Tim, can you provide an explanation for this? Too much of the "growth" debate seems to be based on ideology or anecdotes with little reference to systematic evidence.

[Michael F. Martin]

One of the nicer things about our federalist form of government is that there probably isn't just one best way to encourage entrepreneurship.

The expansion of federal jurisdiction into areas that the framers reserved for state jurisdiction is potentially counterproductive in this regard, although I acknowledge that there are important exceptions (patents, copyright, national defense, certain types of insurance).