Number one thing the federal government could do to spur entrepreneurship and innovation:
Simple, single-payer (sure, self-paid in cash until my company can foot the bill) health coverage that I don't have to think about. Without this, it's a huge waste of time, money, and cognitive effort to apply for and maintain COBRA and related coverage until your venture can afford it. And you're boned if you can't get to that stage and your COBRA ages out.
How many otherwise ambitious, eager tech and business people are locked into their current work situation (or stuck working for big-cap companies) due to pre-existing conditions or the threat of a family health emergency? This applies to all kinds of people, not just the Silicon Valley startup crowd. The health care 'leap of faith' is a huge elephant in the room and a real drag on the growth areas of the economy.
I came here to say this exactly (and modded both of yous up).
Health insurance is the THE number 1 worry people have. I know a few really smart people who would be out there creating companies and jobs, _except_ for the fact that they are married, with little kids (and spouses that don't work).
This lack of health insurance is probably stifling entrepreneurship more than anything else. People mention the tax code, the 'red tape', etc., but let me tell you; the USA is way ahead of other countries in making it easy to start companies. Where it lacks is in the health insurance area.
I know I'll never change Hacker News's mind on this issue considering the preexisting bias here, but there are ways to sever health insurance from employment other than single payer national health care. For example, the government could equalize the tax treatment of the employer health care market and the individual market. Or the world's 8th largest economy, California, could pass its own universal health care and prove to the rest of the nation that such services are indeed a boon to innovation, and not an anchor as some of us suspect.
There are a few of us who have valid concerns about what would be the world's second largest bureaucracy, taking the title from Medicare whose price controls and regulations wreak havoc on the US health system as is (The largest in terms of spending is the US military. But a national US health service could surpass that too).
Given the US federal budget deficit, the day is fast approaching where the order of the day will be triaging the old social entitlements of FDR and Johnson, not adding new ones.
Now back to your regular-scheduled Democratic Socialism.
here are ways to sever health insurance from employment other than single payer national health care
That's just silly. Next you'll be trying to tell us that people should buy their own food and housing rather than having it provided by governments or employers.
Your analogy is flimsy and borderline stupid. Insurance is a fundamentally different thing than food and housing, because of the nature of resource-pooling. That's why there isn't a single country on earth with a working healthcare system that relies solely on people selecting and paying for health insurance on a strictly individual basis.
Moreover, without health insurance, many people die slow, agonizing, and utterly avoidable deaths. (In the US, the emergency room will fix your broken femur without insurance, but nobody will treat your long-term cancer or multiple sclerosis without insurance.) For many people, perhaps most, this adds an additional moral dimension to the issue.
I hate hearing people make this flimsy-ass argument about health care. "Should the government pay for your clothes too? How about your lawn service?" Health care is a FUNDAMENTALLY different kind of issue.
I too have misgivings about the federal government being competent to administer such a program effectively, but pretending this problem can be solved without some form of (fairly massive) collective policy doesn't contribute any value to the discussion.
The parent post was modded down (it was zero when I read it) due to a disgraceful lack of mathematical ability in the hacker community. I see no other explanation. Insurance has to do with the law of large numbers. Without it, the most elementary business transactions become inconceivable. For competent programmers not to understand the trivial mathematics of risk pools is a cringe-inducing embarrassment. Of course insurance is not like housing. Suggesting that the government act like the insurer of last resort--which is one of its functions--and manage risk to enable markets to function is anything like asking the government to provide universal free housing is ignorant. Some kind of minimal assistance in the form of food, clothing and shelter to the most deprived persons (or the unemployed) is a kind of insurance against misfortunes that could affect anyone, but again this has to do with the law of large numbers. Beyond that minimal level of insurance the government might provide, universal free housing and food has absolutely nothing to do with insurance.
What is preposterous is the implicit idea that because insurance encourages risk-taking, the benefits of insurance must be ignored. That's the conservative fallacy of personal responsibility: that the possibility of the slightest cost (in the form of the riskier behavior enabled by insurance) outweighs any conceivable benefit, and that no cost-benefit analysis is possible. The cost of not understanding risk pools includes reduced economic growth, fewer startups and inflated insurance premiums. The lack of mathematical sophistication among hackers on this point should be humiliating.
The health care 'leap of faith' is a huge elephant in the room and a real drag on the growth areas of the economy.
It seems to me that the health care "leap of faith" is far less of an issue than the paycheck "leap of faith". It's far easier to survive without health insurance than without money for food and rent.
I'd downgrade subsidized health care to the #2 subsidy the govt could give to small business - a single-payer paycheck system would be the #1 thing the govt could do to subsidize entrepreneurship.
Yes, if anyone understands the role of government as the insurer of last resort, it would be entrepreneurs. The single-payer option is exactly the kind of thing the government should do to cut health coasts costs and encourage economic growth. Private insurance companies can provide additional insurance. But the present system is designed to impose a huge negative externality on would-be entrepreneurs and others who might have left their jobs to pursue other opportunities. And you are subsidizing the profits of the industries that benefit from the relative immobility of labor. That negative externality you pay is someone else's subsidy. If it were up to me, I'd rather pay into a universal health care system than pay the negative externality to stay tied to an employer on account of health care coverage.
Another negative externality is the administrative burden imposed on companies to handle employee health care.
Exactly this. Almost everyone of any political persuasion who has seriously considered the issue agrees that employer-based health insurance is a horrible system. Liberals want to replace it with single payer, I'd prefer a functioning individual market with a subsidized high risk pool for those who are uninsurable, but either would be better than the worst of both worlds that we have today.
A subsidized high-risk pool probably amounts to the same thing, since almost anyone outside of a sufficiently large insurable group is practically uninsurable by definition. The mathematical necessity to maintain a large risk pool stubbornly resists ideological containment. I don't see why a for-profit entity would have any incentive to reallocate the subsidy that labor already provides to insurance companies (in the form of immobility, high startup costs and the cost of employer administration of health benefits) to pay for a minimal level of health insurance. It seems the government is better situated to provide some minimal level that would stimulate the kind of market for individual insurance that you refer to. I don't see such a market bootstrapping itself into existence--otherwise this already would have happened.
Absolutely, these "initiatives" simply give lip service to the idea of fostering true entrepreneurship. Too bad they are passed off as legitimate actions in most media outlets.
I don't mean that as a criticism of Obama specifically. There is a long history of people promising tax simplification. Very little has ever happened, quickly erased by further complexification.
(Broadly speaking, they're doing it wrong. The solution to a too-complicated tax code is to fix the incentives Congress has to make a complicated tax code, then let the problem address itself incrementally over several years. Simply burning straight for simplication without addressing the underlying problems is doomed to failure. Of course, trying to address the underlying problems is also mostly doomed to failure, so shrug.)
> Broadly speaking, they're doing it wrong. The solution to a too-complicated tax code is to fix the incentives Congress has to make a complicated tax code
Controlling people's purse strings is a main source of congressional power. I don't see them giving much of that up any time soon...
It would take a very-well-thought out Constitutional amendment through a State-powered Constitutional Convention (since Congress isn't going to trim its own wings) at a minimum, I fear. Any one of "very-well-thought out", "Constitutional amendment", and "Constitutional Convention" seems pretty unlikely anytime soon; the combination of all even more so. Still, these are crazy times politically, who knows?
The problem I have with government using tax incentives as a way to spur entrepreneurial growth is that by their nature these incentives reward current activity with future benefits. But the payoff horizon — next year's tax filing – isn't actually useful for a new company. That's why I'm so bullish on using simplified health insurance as an incentive for new business. It provides value and reduces friction on day 1 and continues to do so through the earliest, highest risk phases of a company's lifecycle. Tax incentives reward success but don't help business attain that success.
Sounds good to me. Unfortunately, politicians have more to gain by giving tax breaks to successful company compared to helping new small businesses, which is probably why there's not a lot of political will for ideas like this.
I'm not so sure this is true. For any startup founders here, some questions:
1. How much time did you spend incorporating your business?
2. How much time do you spend per year filing your income taxes, or do you hire an accountant?
3. If the latter, how many billable hours do they put into it? Was this a major expense for your business?
There may be a huge step function if they somehow simplify the tax code such that small and medium business owners can do it themselves in a day rather than having to hire an accountant, but anything short of a major overhaul will leave people in roughly the same position I think.
Look at the entire tax infrastructure - H&R Block and all those accountants basically doing a make work job, that could be eliminated by simplifying the tax structure.
Err, I don't think the H&R Block lobby is conspiring with legislators to keep taxes complicated.
The tax code is complicated because it's layer upon layer of incentives and disincentives and hacks and amendments and loopholes and counter-loopholes built up over decades. It evolved into its current state, it wasn't built this way.
Where can I line up to collect the cash :) seriously the proposals from fairtax.org will go a long way towards encouraging entrepreneurship along with single payer health care but both are politically too risky for any govt.
Simple, single-payer (sure, self-paid in cash until my company can foot the bill) health coverage that I don't have to think about. Without this, it's a huge waste of time, money, and cognitive effort to apply for and maintain COBRA and related coverage until your venture can afford it. And you're boned if you can't get to that stage and your COBRA ages out.
How many otherwise ambitious, eager tech and business people are locked into their current work situation (or stuck working for big-cap companies) due to pre-existing conditions or the threat of a family health emergency? This applies to all kinds of people, not just the Silicon Valley startup crowd. The health care 'leap of faith' is a huge elephant in the room and a real drag on the growth areas of the economy.