Why We Should Open Up The Border With Canada (And Other Political Tips From Tim Draper)

What a legendary venture capitalist thinks the government should ( and shouldn't) do now.

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I've been at the AlwaysOn OnDC conference, and I just heard an interesting speech from legendary venture capitalist Tim Draper. Draper was a key figure in the launch of Skype, Baidu, and many other companies that took off. He also was an early developer of the concept of viral marketing.

So what does a guy who is so prescient about business think about the role of government in jumpstarting the economy?

Here's my summary of what he thought the government should do:

  • Open up the border with Canada: They've got the oil, and they want more trade.
  • Drop Sarbanes-Oxley regulations for the first ten years in the life of a public company. Sarbox is just too costly for the small public firms getting off the ground, Draper said. Thanks to Sarbanes-Oxley, Draper argued, the U.S. has seen a decline in the number of public companies, while European and Chinese stock exchanges have seen increases.
  • Green incentives: Use carrots, rather than sticks like carbon taxes, to encourage businesses to address public goods problems like global warming.
  • The federal government should make more secure loans to innovative companies like Tesla Motors. But, I should note that Draper has invested in Tesla.
  • More free trade: If we didn't have trade with China, we wouldn't have semiconductors, flat screens, computer memory, etc.
  • Now here's what he said government should not do:

    • Don't invest in equity capital: The government should not be in the business of owning companies, and should sell off any ownership that it has.
    • Don't hire and spend: Government jobs are not permanent jobs that lead to economic growth. There has been a strong correllation over time and across countries that as government spending goes up, GDP does down, Draper argued.
    • Don't scrutinize entrepreneurs.