6 ms·

This program is $12 million total. Chile's per capita GDP is $12,800. Lets say their avg. income, payroll, and VAT burden is 40% of that total. So 2,344 Chile

This program is $12 million total. Chile's per capita GDP is $12,800. Lets say their avg. income, payroll, and VAT burden is 40% of that total. So 2,344 Chilean workers will waste 40% of their working lives this year to pay the taxes to fund these 300 startups.

kragen 16y ago
That sounds like a good bargain. Each startup only needs to create 8 jobs for a year (or 4 for 2 years, or 0.8 for 10 years) in order to pay it back. Right?
- OstiaAntica 16y ago
  Sounds more like forced labor to me. If this money was returned to those taxpayers, there would be more resources for the private Chilean economy to create jobs. This is command economics with a Web 2.0 veneer.
  - kjksf 16y ago
    The false assumption you're making is that an average Chilean can generate better ROI than a bunch of selected, high-tech startups. If that were true, Paul Graham would be giving out handred dollar bills to random people instead of investing in startups that he personally vetted.
    - mynameishere 16y ago
      The average Chilean would spend his money as he pleased, which would go to businesses that are satisfying a real demand, rather than something a bureaucrat guesses might fulfill a demand.
      - kjksf 16y ago
        So you're basically arguing that taxes should be completely abolished.
    - laut 16y ago
      He's saying the market is better than allocating money than government. If the politicians and bureaucrats are so good at investing, why don't they do it privately instead of working for the government? You are assuming that government is better at allocating resources than the market. If the government is better at investing than private capital, why even have a market economy? Why not have a command economy like in the Soviet Union?
  - kragen 16y ago
    Taxation is not the same thing as "forced labor" or "command economics".
- nir 16y ago
  Let's say YC's most prominent success so far is Reddit (or choose Heroku, or whatever you prefer). How many jobs did it create?
  - chrismanfrank 16y ago
    ~40 people work at Airbnb. And a ton of others make money renting their place, or save money when traveling. Massive, massive value creation there in addition to the jobs.
    - nir 16y ago
      Airbnb is a great company (I'm a user and like it a lot) but not a typical web startup. Take all YC startups and divide by number of employees, what's the average?
  - onwardly 16y ago
    New companies create 80% of new jobs. We need more jobs. So, how do we create new companies?
brianbreslin 16y ago
The conditions of the grants are that they create local jobs I believe. So 2,344 Chileans will create at least 300 jobs for 300 fellow Chileans. I wouldn't say those tax payers are "wasting" 40% of their working lives, but you are entitled to your opinion on this. I think its a smart and cheap move to get their entrepreneurial community rolling. All net jobs in the US over the last 30 years have come from startups/small businesses.
- OstiaAntica 16y ago
  Actually the government is displacing whatever private venture market exists in Chile. If there is a lack of venture capital in Chile, the government should address the taxes and regulations that are stifling startup activity.
  - trevelyan 16y ago
    The Chilean government is actively facilitating the growth of private venture markets by reducing taxes on venture gains to a point far below those in the United States. Part of the point of this program is attracting high growth businesses into an environment where local financial networks can invest at their own risk and connect with networks outside Chile. If you believe in markets you should realize the Chilean government is doing something innovative and pro-entrepreneur at very low initial cost and likely negative cost in aggregate. I'd put it in the same boat as the matching funds programs run by Hong Kong and Singapore, with the major difference that the individual sums invested are much smaller and there is less bureaucracy involved.
- trevelyan 16y ago
  There's actually no requirement to hire locally, but the parent poster is wrong for a number of reasons. First because some companies are already generating revenues and spending that cash locally. Add those inflows to the matching funds participants are expected to provide (most end up spending more) and it's clear Chile's exposure per startup is lot less than $40,000. And that's without considering the multiplier effect all this spending has on the local economy. How the exact numbers run will depend on how they pick the teams, but I'm guessing that if two to three percent of the participants take investment or stay on permanently the program will be a net plus. Which makes it an income transfer if it works - but one from other parts of the world to Chile. And it's a good deal for entrepreneurs too so what is not to love?
kjksf 16y ago
It's a manipulative take on this that tries to appeal to (irrational) emotion and not rational analysis. We pay taxes and that's not going to change. This money goes to government which then allocates in various ways to provide services to people of the country. Part of this money can be thought of as an investment i.e. government spends money (e.g. on infrastructure like building roads) in hopes that this will generate more economic activity which will enrich the country as a whole. The only important question is: is this program a better investment that others? That is hard to tell, but at least to me it appears to be a great one. The cost (on the scale that governments operate) is puny and potential upside (companies that keep operating in Chile, hire Chilean people, pay Chilean taxes) huge.
cabalamat 16y ago
That's just stupid. It implies that none of these startups will pay back a single penny in taxes. You might as well argue that the Chilean state shouldn't pay for education or roads or whatever. If even one of these startups is really successful, it will pay for the programme on its own.

kragen 16y ago

That sounds like a good bargain. Each startup only needs to create 8 jobs for a year (or 4 for 2 years, or 0.8 for 10 years) in order to pay it back. Right?

OstiaAntica 16y ago
Sounds more like forced labor to me. If this money was returned to those taxpayers, there would be more resources for the private Chilean economy to create jobs. This is command economics with a Web 2.0 veneer.
- kjksf 16y ago
  The false assumption you're making is that an average Chilean can generate better ROI than a bunch of selected, high-tech startups. If that were true, Paul Graham would be giving out handred dollar bills to random people instead of investing in startups that he personally vetted.
  - mynameishere 16y ago
    The average Chilean would spend his money as he pleased, which would go to businesses that are satisfying a real demand, rather than something a bureaucrat guesses might fulfill a demand.
    - kjksf 16y ago
      So you're basically arguing that taxes should be completely abolished.
  - laut 16y ago
    He's saying the market is better than allocating money than government. If the politicians and bureaucrats are so good at investing, why don't they do it privately instead of working for the government? You are assuming that government is better at allocating resources than the market. If the government is better at investing than private capital, why even have a market economy? Why not have a command economy like in the Soviet Union?
- kragen 16y ago
  Taxation is not the same thing as "forced labor" or "command economics".
nir 16y ago
Let's say YC's most prominent success so far is Reddit (or choose Heroku, or whatever you prefer). How many jobs did it create?
- chrismanfrank 16y ago
  ~40 people work at Airbnb. And a ton of others make money renting their place, or save money when traveling. Massive, massive value creation there in addition to the jobs.
  - nir 16y ago
    Airbnb is a great company (I'm a user and like it a lot) but not a typical web startup. Take all YC startups and divide by number of employees, what's the average?
- onwardly 16y ago
  New companies create 80% of new jobs. We need more jobs. So, how do we create new companies?

brianbreslin 16y ago

The conditions of the grants are that they create local jobs I believe. So 2,344 Chileans will create at least 300 jobs for 300 fellow Chileans. I wouldn't say those tax payers are "wasting" 40% of their working lives, but you are entitled to your opinion on this. I think its a smart and cheap move to get their entrepreneurial community rolling. All net jobs in the US over the last 30 years have come from startups/small businesses.

OstiaAntica 16y ago
Actually the government is displacing whatever private venture market exists in Chile. If there is a lack of venture capital in Chile, the government should address the taxes and regulations that are stifling startup activity.
- trevelyan 16y ago
  The Chilean government is actively facilitating the growth of private venture markets by reducing taxes on venture gains to a point far below those in the United States. Part of the point of this program is attracting high growth businesses into an environment where local financial networks can invest at their own risk and connect with networks outside Chile. If you believe in markets you should realize the Chilean government is doing something innovative and pro-entrepreneur at very low initial cost and likely negative cost in aggregate. I'd put it in the same boat as the matching funds programs run by Hong Kong and Singapore, with the major difference that the individual sums invested are much smaller and there is less bureaucracy involved.
trevelyan 16y ago
There's actually no requirement to hire locally, but the parent poster is wrong for a number of reasons. First because some companies are already generating revenues and spending that cash locally. Add those inflows to the matching funds participants are expected to provide (most end up spending more) and it's clear Chile's exposure per startup is lot less than $40,000. And that's without considering the multiplier effect all this spending has on the local economy. How the exact numbers run will depend on how they pick the teams, but I'm guessing that if two to three percent of the participants take investment or stay on permanently the program will be a net plus. Which makes it an income transfer if it works - but one from other parts of the world to Chile. And it's a good deal for entrepreneurs too so what is not to love?

kjksf 16y ago

It's a manipulative take on this that tries to appeal to (irrational) emotion and not rational analysis. We pay taxes and that's not going to change. This money goes to government which then allocates in various ways to provide services to people of the country. Part of this money can be thought of as an investment i.e. government spends money (e.g. on infrastructure like building roads) in hopes that this will generate more economic activity which will enrich the country as a whole. The only important question is: is this program a better investment that others? That is hard to tell, but at least to me it appears to be a great one. The cost (on the scale that governments operate) is puny and potential upside (companies that keep operating in Chile, hire Chilean people, pay Chilean taxes) huge.

cabalamat 16y ago

That's just stupid. It implies that none of these startups will pay back a single penny in taxes. You might as well argue that the Chilean state shouldn't pay for education or roads or whatever. If even one of these startups is really successful, it will pay for the programme on its own.