Can Hot Companies Survive Obama, McCain?
That is the title of a special report today at ABC News, where Silicon Valley insider Michael Malone portrays a dark tale that the “next Facebook, Apple or Twitter might not make it” under either a Barack Obama or John McCain presidency.
Malone suggests that while both candidates understand the importance of boosting the economy, neither knows how to do it nor has a realistic strategy:
There’s a good reason for that. Sen. Barack Obama, being a Democrat, seems to have very little idea of how the economy actually works and ritually evokes business not as the only true creator of wealth in our economy, but as a predatory menace.
Sen. John McCain, being a Republican, has a marginally better understanding of the economy and the role of business — but his attention, as usual with GOP elders, is focused upon established companies, which undergird our economy, but do little to create new jobs or new wealth.
What is missing from the economic debates of this campaign — as it has been from every presidential campaign at least since the Reagan years — is a recognition of the absolutely central importance of the entrepreneur to the health of the American economy.
Entrepreneurs, and the new companies they create, are the source of almost all of the new jobs, the new wealth, technological innovation, revolutionary new products, positive balance of trade, and improvements in productivity (and thus, international competitiveness) in the U.S. economy.
Citing the cost and infrastructure of the Sarbanes-Oxley corporate reform legislation to a tried-and-proven strategy of large businesses hating entrepreneurship so much so they buy the small companies rather than competing with them, Malone suggests neither presidential candidate understands the economic loss to the United States if entrepreneurship is stifled.
Nothing in McCain’s campaign suggests that he understands any of this, or will change the status quo. To look more hip and in-the-know about the tech world, the senator likes to point to the fact that eBay’s Meg Whitman is his campaign’s advisor on business.
She is, in fact, one of the finest business executives I know, but Meg is not an entrepreneur. And this suggests that a McCain presidency is not going to come to the aid of America’s entrepreneurs — and that the best we can hope for is that it will get out of the way, at least when it comes to taxes. That may work, but it will be a long, slow recovery.
As for Obama, leaving aside all of his other proposals for massive social change, the single most frightening plank in his platform is his plan to increase the capital gains tax. If there is one single factor in the U.S. economy that defines the rate of new company creation, it is taxation on capital gains — in particular, the differential between the capital gains and regular tax rates. To understand the long Reagan/Bush/Clinton boom of 1980-2000, you need only look at Reagan’s slashing of that differential.
Assuming that his comments about “corporate greed,” etc. indicate that he has no intention of getting rid of Sarbanes-Oxley or any other crippling corporate regulation, then Obama’s plan to raise the capital gains tax will all but kill creation of new companies — especially new tech companies — in America. No new Apples or Facebooks or Twitters, no explosive new industries spinning off endless amounts of money and jobs, no new competitive advantages in the global economy.
So what does Malone suggest? It’s so easy anyone can do it:
It seems to me that the new president-elect should take a clue. Right after his inauguration, he should invite the nation’s small business owners and entrepreneurs to a summit … and then, during the opening address, announce the death of Sarbanes-Oxley and the cutting of the capital gains tax. I guarantee that before that speech is finished, the attendees will already be rushing out the doors to make the new president’s term in office a roaring economic success.
Evident by numerous comments to Malone’s op-ed, the former Forbes ASAP editor may be off his rockers.
What do you think?
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Ari Herzog is an online media strategist and Newburyport City Councilor-Elect.
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I’m not a political mastermind by ANY stretch of the imagination. So, let me just get that out of the way first.
It seems to me, though, that “accidentally” McCain might actually help the small business owners and entrepreneurs. From my understanding of his plans, this seems very possible, even though he does not have the small business man in mind.
Obama, well it was already stated in the post about the capital gains tax and what that will do to an already struggling economy. So I won’t throw anything else into that mix.
So,I did a quick google on “products discovered by accident.” The first hit was from science.howstuffworks.com. Nine things were on the list. Saccharin, Post-it-Notes…I’ll not list all nine. At any rate, they were prominent, established products.
Ok, my point. Accidents are ok, sometimes, I do believe. So, again, I think McCain’s plan might just help the little guy, even though that’s not in his plan.
“Scott, your siding with someone in hopes of an accident?”, you say. Well with either one I’m afraid a lot of stuff is going to happen, accidentally. Both good and bad.
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