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According to economic theory, at least, the last thing a profit-seeking firm is going to do is shell out money to workers they don’t really need to employ. Stil

According to economic theory, at least, the last thing a profit-seeking firm is going to do is shell out money to workers they don’t really need to employ. Still, somehow, it happens. I think that's, at best, a twisting of any economic theory I've ever read. As a software engineer, I have a skill that is fairly valuable in today's economy, and yet I've had a number of clients - mostly startups and small businesses looking to add automation - where I never added any real economic value to the organization at all. I'd work with the client, trust their domain expertise, build a solution to the problem they had, and then watch as no one ever used it. And yet, this is an important facet of capitalism - investments that fail. In the age of globalization and automation, entrepreneurs have an out-sized advantage over employees. The ones that fail are effectively working "bullshit jobs", but the ones that succeed grow the economy many times what was lost from the failures. That, in effect, is why Keynes's 15-hour work week didn't materialize. The value of the extra productivity went to the entrepreneurs and their investors, which in turn tilted the playing field even further toward entrepreneurs and investors. The good news: the barriers to entrepreneurship shrink further and further every cycle of productivity increase. 10 years ago you could start a business with a laptop and some coding knowledge, and build an app or a website that could be worth millions. Now, you can start your own television station with a smart phone and some niche domain knowledge, as YouTube and Patreon are proving. As a result, there are going to be more and more people out there working for inevitable failures, but the winners are going to grow the economy for everyone. So, eventually, everyone is going to become an entrepreneur, the singularity is going to make us irrelevant, or we're going to have to re-think how we distribute scarce resources.

dukeluke 10y ago
The barrier to entry may be lower for some parts of the market, but I don't know if the barrier to entrepreneurship is lower overall. Growing inequality and lack of growth potential for the uneducated means only those who have already made it can afford the startup capital(not just in equipment, but in time too) needed to get a business going. In fact, the rate of small business creation has been declining: https://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/?utm_term=.f1bfc28467dc https://www.washingtonpost.com/news/on-small-business/wp/201...
- padobson 10y ago
  I've read a lot of the same slowing entrepreneurship statistics. Ben Casselman[0] over at FiveThirtyEight has written some good pieces about it. It seems to be directly linked to personal debt. Most individuals are more risk averse because they have to work to pay off their debts. New college graduates are a great example: they have huge college loans, so a chunk of the potential entrepreneurs have to take jobs instead of starting a business. I'd call that a big negative externality to the accessibility of loans for higher education. If it was me, I'd rather have a few more blue collar entrepreneurs and a few less white collar employees who'd rather be running their own business. [0]https://fivethirtyeight.com/contributors/ben-casselman/ https://fivethirtyeight.com/contributors/ben-casselman/
  - bante 10y ago
    "I'd call that a big negative externality to the accessibility of loans for higher education." That's only one side of it though. The other being the expectations discussed in the article. You see this quite clearly in housing markets where the price is dictated by the profile of who's going to live there and when they are expected to pay off the loan. A house with an expected 100 year loan in a professional market is of course much more expensive than a 30 year loan in a worker market. For what could be more or less the exact same thing.

dukeluke 10y ago

The barrier to entry may be lower for some parts of the market, but I don't know if the barrier to entrepreneurship is lower overall. Growing inequality and lack of growth potential for the uneducated means only those who have already made it can afford the startup capital(not just in equipment, but in time too) needed to get a business going. In fact, the rate of small business creation has been declining: https://www.washingtonpost.com/news/on-small-business/wp/2015/02/12/the-decline-of-american-entrepreneurship-in-five-charts/?utm_term=.f1bfc28467dc https://www.washingtonpost.com/news/on-small-business/wp/201...

padobson 10y ago
I've read a lot of the same slowing entrepreneurship statistics. Ben Casselman[0] over at FiveThirtyEight has written some good pieces about it. It seems to be directly linked to personal debt. Most individuals are more risk averse because they have to work to pay off their debts. New college graduates are a great example: they have huge college loans, so a chunk of the potential entrepreneurs have to take jobs instead of starting a business. I'd call that a big negative externality to the accessibility of loans for higher education. If it was me, I'd rather have a few more blue collar entrepreneurs and a few less white collar employees who'd rather be running their own business. [0]https://fivethirtyeight.com/contributors/ben-casselman/ https://fivethirtyeight.com/contributors/ben-casselman/
- bante 10y ago
  "I'd call that a big negative externality to the accessibility of loans for higher education." That's only one side of it though. The other being the expectations discussed in the article. You see this quite clearly in housing markets where the price is dictated by the profile of who's going to live there and when they are expected to pay off the loan. A house with an expected 100 year loan in a professional market is of course much more expensive than a 30 year loan in a worker market. For what could be more or less the exact same thing.