Share on Facebook
December 10, 2009
The $64,000 question going into 2010 is: How can this economy create jobs? As one of many answers to that question, the Obama administration has championed giving loans and awards to innovative companies through programs such as the Department of Energy's ARPA-E. But it is not a simple journey from funding these programs to actually creating jobs. There are many hiccups along the way. For example, Darryl Siry recently wrote in Wired about how the Department of Energy can actually stifle innovation by making the cleantech sector and other innovative industries cater to its whims.
One start-up that came to the OnDC conference (I blogged about that earlier this week) that is hoping not get left out of the cleantech investment shuffle is CFX Battery, a Southern California start-up founded in 2007 to develop and sell longer-lasting batteries based on Caltech research. Robert Grubbs, Caltech professor and 2005 Nobel Laureate in chemistry, helped found the company and provide it with brainpower. Next year CFX hopes to roll out everything from advanced lithium batteries for powering new electric cars to rechargeable batteries that could be used by soldiers in Iraq to reduce the amount of power supplies they need to carry.
Share on Facebook
December 8, 2009
At his jobs summit on Thursday, President Obama said, "…while I believe that government has a critical role in creating the conditions for economic growth, ultimately true economic recovery is only going to come from the private sector.”
But when Obama says "the private sector," he seems to really mean "the private sector with significant prodding from the federal government." And indeed, his administration has already done much to change the relationship between government and the entrepreneurial sector. I use entrepreneurs as a stand-in for private-sector economic growth because empirically, small start-up companies are the most important drivers for job growth. A study from the Kauffman Foundation found that in 2007, companies less than five years old created two thirds of the new jobs.
But while entrepreneurs have usually placed their business development first and foremost, there is some evidence that the increasing role of the federal government has forced many to emphasize lobbying, politicking, and jumping through administrative hurdles.
What got me thinking about this subject was a conference last October here in D.C., the AlwaysOn "Entrepreneurs' March on Washington" conference on October 20. One panelist, Jonathan Wolfson, CEO of South San Francisco biofuel firm Solazyme, was somewhat surprised he found himself in Washington, D.C. "In the 50, 60s, and 70s, entrepreneurs did not come to Washington," he said.
There was a clear reason why AlwaysOn, an online media company that promotes Silicon Valley businesses, held an event in D.C. in the first place: For entrepreneurs, this is where the money is. The difference in culture has been stark between the world of politics and the world of entrepreneurship. "Silicon Valley is a meritocracy. Best business strategy wins," said Wolfson, whose company Solazyme recently won a contract with the Department of Defense to develop clean biofuel produced from algae for the U.S. Navy, as well as a Department of Energy grant to build a biorefinery.
Share on Facebook
December 3, 2009
Senator Byron Dorgan said he needed to get something off his chest, for "therapeutic reasons." "I'm so furious that the same institutions that we threw a lifeline, the same institutions whose selfishness and greed steered us into the ditch, have now decided that once they got their lifeline... they're going to turn their backs on lending needs to small businesses," Dorgan said at a Democratic Policy Committee hearing on Wednesday. This statement was in reaction to statistics Dorgan cited that over the past six months, the 22 banks that received the most money from TARP cut their small-business lending by a collective $10.5 billion.
At the hearing, several small-businesspeople testified that this lack of lending is putting their abilities to employ additional workers in jeopardy. The recession is supposed to be over, but unemployment is still high, and the freeze in small-business lending might be a big reason. Mark Zandi of Moody's Economy.com testified at the hearing that firms under 100 employee accounted for half of the net job loss since 2007. "Without small businesses, the job machine can't get going again," said Zandi.
Two main solutions emerged that the Democrats in Congress may be putting forth as job creation tools:
Share on Facebook
December 2, 2009
Nearly a decade ago, Washington turned to tax cuts as the solution to unemployment in the economic recession following the September 11th attacks. But at President Obama's jobs summit this Thursday, he will be getting advice to go down a different route--direct federal spending through public works programs to create jobs. Economist Paul Krugman, who will be attending the summit, wrote in the New York Times on Sunday that "it’s time for at least a small-scale version of the New Deal’s Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment."
Tax credits will still be on the table, of course--a $3,000 to $5,000 per-employee credit is likely to be offered to businesses. But Obama has also come under pressure to spend billions on public works. Last month AFL-CIO President Richard Trumka gave a speech calling for the federal government to "directly create jobs that put people to work in our communities." A pro-public works stance would fit in with previous comments Obama has made in speeches about a greater federal government role in infrastructure and jumpstarting the green economy.
But while public works spending would be a break from the Bush administration, many American presidents have launched ambitious jobs programs in the past. Decades after their passage, economists and historians are still divided in many cases over the effectiveness of these job creation plans. Expect any plans that might come out of this summit to be divisive as well.
A look at two of the most significant federal public works programs illustrates why: