Welfare encourages entrepreneurship

Originally published at: http://boingboing.net/2015/03/27/welfare-encourages-entrepreneu.html

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Who are you going to trust, a bunch of unelected bureaucrats? Or the man in the soft-focus video?

Snark aside, some years back I drew UC while getting started in insurance. Without that I have no idea where I’d be, certainly a much crappier job today.

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And entrepreneurship encourages individualistic, selfish, money grubbing, profit focused solutions to society’s problems rather than social and collective ones.


I think you underestimate how many people (including relatively poor people) see taxation as one of the biggest problems with the US.

I would think that a strong social safety net would make it more likely for people to take risks (in an entrepreneurial sense). Is that true though? Are levels of entrepreneurship higher in countries with better social welfare programs?

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I dunno, but there’s a BUTTLOAD of variables to control for there, which is why these studies are a little better. The same population, with assistance and without, what effect does it have on starting new businesses? Looks like a positive one.

Which, honestly, mirrors how rich doofuses start business all the time – with a hand out and a hand up from mummy and daddy or rich uncle gilbert or with an unpaid internship while living on your trust fund or whatever.

Businesses are risks, and to take a risk, you first need to have the knowledge that failure isn’t going to make you unable to feed, clothe, and house yourself and keep yourself generally healthy.


If you think a strong societal safety net encourages entrepreneurship by making the risk of failure less severe, you should look into the comparable effects of a strong familial safety net, such as, oh, I dunno, being born into a wealthy family. Those people show a surprisingly strong tendency to pull themselves up by their bootstraps!


I don’t know, but there are excellent graphs here. It’s hard to say looking at the data in the link, because there’s no way to control for economic conditions and other variables. I don’t think that making the kind of baseline comparison you’re suggesting is meaningful. We might be doing well despite our poor social welfare programs.

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Oh. My. God. Yes. I’m at a stage in my education right now where I’m looking at internships as a way of gaining new skills. The rub? I can’t afford an unpaid internship. I missed the deadline by a hair (found out about them too late) for a couple of paid internships with Dow and Monsanto, but they would both have required I temporarily relocate (which I would have done, but that would have broken the bank, bad.)


Which, honestly, mirrors how rich doofuses start business all the time

In the past 30 years, I’ve started 6 businesses, 4 of which failed. What keeps me coming back are the protections afforded by an LLC. When you have little to lose and lots to gain, it’s an easy choice. I really don’t understand why more people don’t start businesses.

BTW, most entrepreneurs are not rich doofuses. The typical small business person is very middle-class.

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Not sure what you mean here. Can you elaborate?

Dearth of money-time, lack of available capital, and a sensitivity to risk, by and large. Can’t start a business when you can’t get a loan and you don’t have connections to people with disposable income to spare on your little project.

Yeah, lots are. But rich doofuses start businesses by having money to begin with, and middle-class folks start businesses with loans or old-school money pooling and both rely on things that a lot of Americans don’t have good access to.


Can’t tell if this is sarcasm, some sort of Marxist bot, or someone very naive to the way the world works.

Unfortunately, all the businesses involved walking other people’s pets.

NY state has a program where it sounds like you can receive unemployment checks while you start up a business, and keep your business profits too. I just happened to be in a situation where I was eligible for unemployment and I looked into it. The person I spoke to on the phone said you really have to have the stars align to make it work, but it’s a great leg up for the people who can do it - you have to have a business plan in place and be starting your business up almost as soon as you become unemployed. Unfortunately, when I attended the informational meeting, even this slim hope of a modest hand up to start a business was dashed. It was really a sad meeting, with about 15 or 20 people in attendance who had business ideas in the works and were hoping for just a small headstart, and then the catch was revealed - you could only receive unemployment for 13 weeks and not apply for an extension, whereas, if you continued to look for a job you were eligible to extend your benefits for another 13 weeks. I don’t think anyone at the end of the meeting felt that there was any benefit in getting involved. They all said that if they did start a business would just do it under the table and not tell the unemployment office. I thought it was such a waste that it didn’t live up to its promise, and wonder how many people would have started businesses if they could collect that money for 6 months instead of just 3.


Anecdotally from my circles, entrepreneurship is much higher in countries where quitting your job and starting a business doesn’t mean you risk homelessness, but anecdotes aside, the science has been crystal clear for a long time on a related point: social mobility (ie “the American Dream”) is MUCH higher in these other countries, correlating with social security. (Among the developed nations, America is one of the worst soils for planting the American Dream, so either the name is ironic, or the key concept is “dream” rather than “American” :slight_smile: ). It seems to be partly for the same reason - lack of security in the USA increases the hurdles and risks of trying to upskill or better yourself, to the point that for many people’s situations, the obstacles are too great, or risk is too high and the consequences too dire.

People don’t just use welfare to start businesses, they use it to become more skilled and more productive and achieve higher-paying careers than they otherwise could.


All I can say is I know I’d be more willing to start a business if I didn’t need the damn health care benefits from my job. As a parent of a child with a chronic disease, I’d feel a lot better if the U.S. had a single-payer health care system. In fact, I’m kind of shocked at how many people I know who work for health care benefits that otherwise would be semi-retired or would be doing their own thing, freeing up those jobs for someone else.


Conservatives wring their hands at the “moral hazard” of letting people earn without working…

Capitalists can invest money, do no work, and “earn” money from it, but somehow conservatives don’t wring their hands over that.


Given that most countries deal with IP in a way that limits entrepreneurs to service/franchise/property/VC-chasing, the numbers will be kind of crammed together and difficult to gauge full effects.

It’s a real dealbreaker for some, but I’ve found “homelessness” to be underrated. There is more of a psychological factor/stigma about it as a sort of “benchmark of failure”, but I think it’s more empowering than spending a quarter million dollars on a big wooden box. I laugh when I hear people avoid homelessness at all costs, yet say they want “mobility”.