Stimulus Plan Ignores Start-Ups at Nation's Peril

Investing in failed companies doesn't make much sense.

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Dawn Rivers Baker
Dawn Rivers Baker
If you were a private investor with a few hundred billion dollars at your disposal, would you pour your money into badly managed companies that were teetering on the brink of collapse?

No, I wouldn't either.

But we do. Our nation's leaders regularly use our tax dollars to bail out companies that no investor in his right mind would buy into without at least a wholesale changing of the management guard and a brand-new business plan.

And what kind of returns can you reasonably expect on those investments? When lawmakers fling money at floundering corporations, they demand nothing. No new management. No new business plan. No new product development. We essentially give them money so that they can continue to do all the things that got them into trouble in the first place, while expecting different results.

That, I've been told, is a sign of insanity.

In the end, we wind up with markets that are cluttered with the resource-hogging dinosaurs of yesteryear, companies that lack the vision to ensure that their products and services remain relevant and yet feel entitled to public resources when they figure out that they are not.

And, in the meantime, they are in the way.

A tiny fraction of the hundreds of billions of dollars in the bailout money we've been reading about—say, 1 percent—would fund previously unheard-of levels of support for the little upstarts that are faster, smarter, better managed, and much more likely to help us solve our problems instead of perpetuating them in the name of corporate profits.

I know where I'd want to put my money.

Dawn Rivers Baker is the award-winning journalist behind the MicroEnterprise Journal , the online business news weekly that covers politics and policy, the economy, and research for and about microbusinesses. Baker also blogs at the Journal Blog.


TAGS:
small business
economic stimulus

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