Sunday, June 5, 2011

Restore the American Dream

Like most people, I am worried about the current economy and the fiscal burden that we are leaving to our children. I pray that we are not the last generation in America to be more prosperous than our parents. I have followed the ongoing debate about our fiscal problems and both options seem short-sighted to me. One party wants to add more stimulus through government spending. The other party wants to provide tax breaks to spur business spending. Both solutions are politically difficult because both would exacerbate the record debt load imposed upon our children. But even worse, both solutions are unlikely to cause any real long-term prosperity in America.

Adding money to our economy through stimulus or tax breaks will not create the engines of long-term growth and prosperity. Available capital is not the underlying issue that is dampening the economic recovery. Government stimulus provides a short-term flood of cash that creates an incentive to spend immediately. This spending spree results in little long-term investment to create sustainable industries, companies and jobs. On the other side, big businesses have plenty of cash on their balance sheets. Providing big business with additional tax breaks will not change anything.

What is an alternative solution? Almost everyone agrees that a thriving U.S. economy will be the eventual solution to high unemployment and the deficit. According to Robert Litan who directs research at the Kauffman Foundation, “Between 1980 and 2005, virtually all net new jobs created in the U.S. were created by firms that were 5 years old or less.” We need to create the business environment that enables entrepreneurial companies to innovate the next generation of products and services for the world marketplace. These startups will create the thriving new industries and rewarding job opportunities of the future. How can we help make this happen? As an entrepreneur and small businessman, I can identify three simple ideas:

1.      Overhaul the H1B Visa system: This not an original idea. We must allow foreign-born students to stay and work within the U.S. after they graduate. I have read numerous articles advocating this position from entrepreneurs, businesspeople and academics including Bill Gates, 60 Silicon Valley CEOs, Thomas Friedman, Schuck & Tyler of Yale Law School, etc. I can add my own experience within a high-tech startup where we employ a number of foreign-born engineers. The quality of a person is not determined by country of origin. The quality of a person is determined by his or her character, aptitude and attitude. My experience has shown that foreign-born graduate students are exactly what we need to start and build successful businesses: risk takers with high intellect and education.

2.      Fix the U.S. Patent process: Again, this is not an original idea. Almost everyone agrees that the U.S. Patent & Trademark Office (USPTO) does not serve its original purpose: to protect inventors and encourage the spread of their ideas. In 1876, it took Alexander Graham Bell one month to get a patent for the telephone. In 2011, it takes nearly 3 years on average for the USPTO to review and award a patent. My experience with the USPTO shows a fundamental flaw in its culture. The USPTO takes an adversarial stance against the inventors who submit patents. Instead of assisting with the search and understanding of patentable ideas, the USPTO acts as a bureaucratic obstacle to the inventors it should be serving.

3.      Allow University researchers to own patent rights: Recently, a Swedish CEO colleague told me that the intellectual property (IP) that was the founding basis for his company was developed during the founder's graduate work at a Swedish University. Swedish law gives IP ownership rights to the researchers and/or faculty members (not the University as in U.S. law). Because of this, Sweden has a very high percentage of new businesses founded by University graduates, and natural business incubator communities develop around Universities in Sweden. Why shouldn’t the U.S. copy this excellent idea?

These are not the only ideas, and I am sure that there are many other ways to help restore the "American Dream". For me, the American Dream is what has and will continue to make America great. The American Dream is equality of opportunity for everyone. In America, we are not limited by class or economic status, by religion or race, or any other randomness of birth. We can do and be as much as we are able through our own initiative and hard work. Some people seize this opportunity to create a better life for themselves and their children, and in doing so, help create the prosperity that we all enjoy.

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