Jobs and Business Policy
BY EDWARD J. EGAN, PH.D.
BAKER INSTITUTE FELLOW
DIRECTOR OF THE MCNAIR CENTER FOR ENTREPRENEURSHIP & INNOVATION
The U.S. is a Free Market Economy
 In a free market economy, firms control the means of the
production. This means that by-and-large government can
not change the nation’s economic direction.
 Government can do things that are more or less optimal to
support a free market economy as it evolves.
 Free markets fail to achieve efficiency for well-known
economic reasons. Government should address market
failures.
 Efficiency isn’t the goal — maximizing social welfare is —
so governments should also redistribute wealth in free
market economies.
All of the candidates, even Senator Sanders,
believe in free markets!
“The economy, stupid.”
● US GDP estimated at $18.1 trillion
for Q4 2015
● Current growth rate is around 2.2%
● There is no consensus among
projections — anything in the 2%
to 3% range over the next
presidential term is likely
● GDP growth is declining relative to
the 80’s and the 90’s. We are now
back at pre-recession levels, but
with a gradual downward trend.
Jobs and Small Business
“Don’t believe these phony numbers
when you hear 4.9 and 5 percent
unemployment. The number’s probably
28, 29, as high as 35. In fact, I even
heard recently 42 percent.”
-- Donald Trump
“Instead of small businesses going out of
business in record numbers, imagine small
businesses growing and prospering.”
-- Ted Cruz
How the Candidates Will Help
Small Business
“Pull back the job-crushing
regulations that are killing
small businesses”
-- Ted Cruz
“We're going to get rid of
the regulations”
-- Donald Trump
“Removing such burdensome
regulations would boost
small businesses”
-- Ben Carson
“Regulatory cost and the
tax cost - that's why small
businesses are closing”
-- Jeb Bush
“Small businesses are the
engines of the American
economy... [they] need to
be free from overbearing
government policy”
-- Marco Rubio
“High taxes... punish a
small business owner”
-- John Kasich
“Expand access to capital,
provide tax relief, cut red
tape, and help small
businesses...” -- Hillary Clinton
“Make sure that small
businesses have access
to low-interest loans”
-- Bernie Sanders
Regulations/Subsidies that Affect
Small Business
Small Business Policy
Decrease regulation/activity
Increase regulation/activity
Leave regulation/activity unchanged
No statement available / unknown
Candidate / Social
Regulation
Welfare
Environment
Healthcare
Minimum
Wage
OSHA
Taxes
Access to
Capital
?
Clinton
Sanders Bush
Carson
Cruz
Kasich
Rubio
Trump
It’s Entrepreneurship, not Small
Business, that matters
It is very hard to correctly quantify the
portion of the economy that is in hightechnology, let alone the amount
attributable to entrepreneurship. Estimates
vary wildly and there is no consensus.
Suggestive facts include:
 Patent applications went from around
100,000/yr in 1960s-1980s to around
600,000/yr today.
 The venture capital industry has grown
107% in the last decade.
 The asset value of the top 100 biotech
firms has increased by around 400%
since 2005.
Patents
Venture
Capital
How the Candidates will Help
Entrepreneurship
“We must promote growth in
the technological sector...”
-- Ted Cruz
“Outdated labor regulations, new
taxes, and other bad policies can
prevent new, innovative businesses
and technologies from ever being
able to get off the ground.”
-- Marco Rubio
“We need... highly-skilled immigrants.
Such a system would help create
startups and increase innovation.”
-- Jeb Bush
“Entrepreneurship and innovation...
drive our economy. To continue this...
Bernie has supported increasing access to
education and training, and opposing
intellectual property regimes”
-- Bernie Sanders
Issues that affect Entrepreneurship
New markets
(gains from trade)
Commercializable science
(positive externalities)
High-skilled labor
(positive externalities)
High-skilled labor
(positive externalities)
New markets
(positive externalities)
Entrepreneurship Policy
Decrease public provision
Increase public provision
Leave public provision unchanged
No statement available / unknown
Candidate / Social
Regulation
Welfare
Avail. of
Capital
Education
Free Trade
Healthcare
H/S
Immigration
Research
funds
Clinton
Sanders
Bush
Carson
Cruz
Kasich
Rubio
Trump
Thank you
QUESTIONS OR COMMENTS TO
[email protected]